##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q



| |  | (Mark One)                                                                                                                 
| |  | ---------------------------------------------------------------------------------------------------------------------------
|
| |  | [X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Quarterly Period Ended:

SEPTEMBER 30, 2002
OR



| |  | [ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Transition Period from     to      .
| |  | -----------------------------------------------------------------------------------------------------------------------------------------

Commission File Number 33-83740

DIAMOND CABLE COMMUNICATIONS LIMITED

(Exact name of registrant as specified in its charter)


|                                                                                                               |  |                                                                                                                                            
|-------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------
|England and Wales
(State or other jurisdiction of
incorporation or organization)                               |  | N/A
(I.R.S. Employer
Identification No.)                                                                                                   
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               |  |                                                                                                                                            
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Diamond Plaza, Daleside Road
Nottingham NG2 3GG, England
(Address of Registrants principal
executive offices) |  | Secretary
NTL Incorporated
110 East 59th Street
New York, NY 10022
(212) 906-8440
(Name, address and telephone
number of agent for service)

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

|          |  |  |  |          
|--------- |  |  |  | ---------
|Yes   [X] |  |  |  | No   [  ]

As of September 30, 2002, there were 59,138,851 shares of the Registrants
Ordinary Shares of 2.5 pence each outstanding. The Registrant is an indirect,
wholly owned subsidiary of NTL Incorporated and there is no market for the
Registrants shares.





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TABLE OF CONTENTS



|                              |                                                                                               |                                                              |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------ |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                              |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS                       
|                              |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS             
|                              |                                                                                               | CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS DEFICIENCY
|                              |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS             
|                              |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS        
|                              | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                              | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                              | ITEM 4. CONTROLS AND PROCEDURES                                                              
|                              | RISK FACTORS                                                                                 
|PART II. OTHER INFORMATION   
|                              | ITEM 1. LEGAL PROCEEDINGS                                                                    
|                              | ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS                                            
|                              | ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                                      
|                              | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                   
|CERTIFICATION                



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##### Table of Contents



DIAMOND CABLE COMMUNICATIONS LIMITED
(DEBTOR IN POSSESSION)
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2002

TABLE OF CONTENTS

|                              |                                                                                               |                                                                                                                             |  |        |   | 
|----------------------------- | --------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------- |  | ------ | - | 
|                              |                                                                                               |                                                                                                                             |  | Page  
|                              |                                                                                               |                                                                                                                             |  | Number
|                              |                                                                                               |                                                                                                                             |  |       
|PART I. FINANCIAL INFORMATION |                                                                                               |                                                                                                                             |  |       
|                             
|                             
|                             
|                             
|                              | Item 1. Financial Statements                                                                  |                                                                                                                             |  |        |  
|                             
|                             
|                             
|                             
|                              |                                                                                               | Condensed Consolidated Balance Sheets as of September 30,
2002 (Unaudited) and December 31, 2001                            |  |        | 3 | 
|                             
|                             
|                             
|                             
|                              |                                                                                               | Condensed Consolidated Statements of Operations for the
Nine and Three Months Ended September 30, 2002 and 2001
(Unaudited) |  |        | 4 | 
|                             
|                             
|                             
|                             
|                              |                                                                                               | Condensed Consolidated Statement of Shareholders
Deficiency for the Nine Months Ended September 30, 2002
(Unaudited)       |  |        | 5 | 
|                             
|                             
|                             
|                             
|                              |                                                                                               | Condensed Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 2002 and 2001
(Unaudited)           |  |        | 6 | 
|                             
|                             
|                             
|                             
|                              |                                                                                               | Notes to the Condensed Consolidated Financial Statements
(Unaudited)                                                        |  |        | 7 | 
|                             
|                             
|                             
|                             
|                              | Item 2. Managements Discussion and Analysis of Financial
Condition
and Results of Operations |                                                                                                                             |  | 27     |  
|                             
|                             
|                             
|                             
|                              | Item 3. Quantitative and Qualitative Disclosures about Market Risk                            |                                                                                                                             |  | 48     |  
|                             
|                             
|                             
|                             
|                              | Item 4. Controls and Procedures                                                               |                                                                                                                             |  | 49     |  
|                             
|                             
|                             
|                             
|                              | Risk Factors                                                                                  |                                                                                                                             |  | 49     |  
|                             
|                             
|                             
|                             
|PART II. OTHER INFORMATION    |                                                                                               |                                                                                                                             |  |       
|                             
|                             
|                             
|                             
|                              | Item 1.
Legal Proceedings                                                                     |                                                                                                                             |  | 55     |  
|                             
|                             
|                             
|                             
|                              | Item 2.
Changes in Securities and Use of Proceeds                                             |                                                                                                                             |  | 55     |  
|                             
|                             
|                             
|                             
|                              | Item 3. Defaults Upon Senior Securities                                                       |                                                                                                                             |  | 55     |  
|                             
|                             
|                             
|                             
|                              | Item 6. Exhibits and Reports on Form 8-K                                                      |                                                                                                                             |  | 55     |  
|                             
|                             
|                             
|                             
|                              | SIGNATURES                                                                                    |                                                                                                                             |  | 56     |  

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

2



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##### Table of Contents






PART I. FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS




DIAMOND CABLE COMMUNICATIONS LIMITED
(DEBTOR IN POSSESSION)
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2002
CONDENSED CONSOLIDATED BALANCE SHEETS

|                                                                                                |                                                                                             |                                |           |               |          |              |          |           |           |  
|----------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------- | ------------------------------ | --------- | ------------- | -------- | ------------ | -------- | --------- | --------- | -
|                                                                                                |                                                                                             |                                |           | September 30, |          | December 31,
|                                                                                                |                                                                                             |                                |           | 2002          |          | 2001        
|                                                                                                |                                                                                             |                                |           |               |          |             
|                                                                                                |                                                                                             |                                |           | (Unaudited)   |          | (See Note)  
|                                                                                                |                                                                                             |                                |           | (in
£000s)  
|Assets                                                                                          |                                                                                             |                                |           |               |          |              |          |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Current assets                                                                                  |                                                                                             |                                |           |               |          |              |          |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Cash and cash equivalents                                                                   |                                |           | £13,232       |          |              |          | £4,535    |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Trade receivables  less allowance
for doubtful accounts of £3,039
(2002) and £8,373 (2001) |                                |           | 15,977        |          |              |          | 20,049    |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Other                                                                                       |                                |           | 839           |          |              |          | 212       |          
|                                                                                                |                                                                                             |                                |           |               |          |              |          |          
|                                                                                                |                                                                                             | Total current assets           |           |               | 30,048   |              |          |           | 24,796    |  
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Property and equipment  net                                                                    |                                                                                             |                                | 497,809   |               |          |              | 530,215  |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Deferred financing costs  net of accumulated
amortization of £14,766 (2002) and £12,667 (2001) |                                                                                             |                                | 10,386    |               |          |              | 12,485   |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Goodwill                                                                                        |                                                                                             |                                | 66,647    |               |          |              | 66,647   |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Franchise costs                                                                                 |                                                                                             |                                | 316       |               |          |              | 316      |          
|                                                                                                |                                                                                             |                                |           |               |          |              |          |          
|Total assets                                                                                    |                                                                                             |                                | £605,206  |               |          |              | £634,459 |          
|                                                                                                |                                                                                             |                                |           |               |          |              |          |          
|Liabilities and shareholders deficiency                                                        |                                                                                             |                                |           |               |          |              |          |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Liabilities not subject to compromise                                                           |                                                                                             |                                |           |               |          |              |          |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Current liabilities                                                                             |                                                                                             |                                |           |               |          |              |          |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Accounts payable and accrued expenses                                                       |                                |           | £21,445       |          |              |          | £30,767   |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Deferred revenue                                                                            |                                |           | 4,720         |          |              |          | 4,017     |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Due to affiliates                                                                           |                                |           | 19,017        |          |              |          | 2,971     |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Interest payable                                                                            |                                |           |              |          |              |          | 16,788    |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Current portion of long-term debt                                                           |                                |           | 1,995         |          |              |          | 1,059,662 |          
|                                                                                                |                                                                                             |                                |           |               |          |              |          |          
|                                                                                                |                                                                                             | Total current liabilities      |           |               | 47,177   |              |          |           | 1,114,205 |  
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Long-term debt                                                                                  |                                                                                             |                                |          |               |          |              |         |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Commitments and contingent liabilities                                                          |                                                                                             |                                |           |               |          |              |          |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Liabilities subject to compromise                                                               |                                                                                             |                                | 1,045,661 |               |          |              |         |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Shareholders deficiency:                                                                       |                                                                                             |                                |           |               |          |              |          |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Ordinary shares: 150,000,060 authorized; 59,138,851 issued
and outstanding                  |                                |           | 1,478         |          |              |          | 1,478     |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Additional paid-in-capital                                                                  |                                |           | 317,506       |          |              |          | 317,366   |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Accumulated deficit                                                                         |                                |           | (806,616      | )        |              |          | (798,590  | )        
|                                                                                                |                                                                                             |                                |           |               |          |              |          |          
|                                                                                                |                                                                                             | Total shareholders deficiency |           |               | (487,632 | )            |          |           | (479,746  | )
|                                                                                                |                                                                                             |                                |           |               |          |              |          |          
|Total liabilities and shareholders deficiency                                                  |                                                                                             |                                | £605,206  |               |          |              | £634,459 |          
|                                                                                                |                                                                                             |                                |           |               |          |              |          |          

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

See accompanying notes.

3



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##### Table of Contents






DIAMOND CABLE COMMUNICATIONS LIMITED
(DEBTOR IN POSSESSION)
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2002
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

|                                            |                                                                                                          |  |                   |         |                    |  |           |         |      |  |         |        |   |  |         |         |  
|------------------------------------------- | -------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | ------------------ |  | --------- | ------- | ---- |  | ------- | ------ | - |  | ------- | ------- | -
|                                            |                                                                                                          |  | Nine Months Ended |         | Three Months Ended
|                                            |                                                                                                          |  | September 30,     |         | September 30,     
|                                            |                                                                                                          |  |                   |         |                   
|                                            |                                                                                                          |  | 2002              |         | 2001               |  | 2002      |         | 2001
|                                            |                                                                                                          |  |                   |         |                    |  |           |         |     
|                                            |                                                                                                          |  | (in £000s)      
|Revenue                                     |                                                                                                          |  | £133,161          |         |                    |  | £132,482  |         |      |  | £42,965 |        |   |  | £44,634 |        
|                                           
|                                           
|                                           
|                                           
|Costs and expenses                          |                                                                                                          |  |                   |         |                    |  |           |         |      |  |         |        |   |  |         |        
|                                           
|                                           
|                                           
|                                           
|                                            | Operating costs (exclusive of depreciation shown separately
below)                                       |  |                   | 66,290  |                    |  |           | 73,768  |      |  |         | 21,354 |   |  |         | 23,275  |  
|                                           
|                                           
|                                           
|                                           
|                                            | Selling, general and administrative                                                                      |  |                   | 42,087  |                    |  |           | 60,320  |      |  |         | 13,698 |   |  |         | 23,141  |  
|                                           
|                                           
|                                           
|                                           
|                                            | Other
charges                                                                                            |  |                   | 577     |                    |  |           |        |      |  |         | 577    |   |  |         |        |  
|                                           
|                                           
|                                           
|                                           
|                                            | Depreciation                                                                                             |  |                   | 45,938  |                    |  |           | 39,853  |      |  |         | 14,873 |   |  |         | 13,201  |  
|                                           
|                                           
|                                           
|                                           
|                                            | Amortization                                                                                             |  |                   |        |                    |  |           | 3,251   |      |  |         |       |   |  |         | 813     |  
|                                            |                                                                                                          |  |                   |         |                    |  |           |         |      |  |         |        |   |  |         |        
|                                            |                                                                                                          |  | 154,892           |         |                    |  | 177,192   |         |      |  | 50,502  |        |   |  | 60,430  |        
|                                           
|Operating loss                              |                                                                                                          |  | (21,731           | )       |                    |  | (44,710   | )       |      |  | (7,537  | )      |   |  | (15,796 | )      
|                                           
|Other income (expense)                      |                                                                                                          |  |                   |         |                    |  |           |         |      |  |         |        |   |  |         |        
|                                           
|                                           
|                                           
|                                           
|                                            | Interest income and other, net                                                                           |  |                   | 345     |                    |  |           |        |      |  |         | 164    |   |  |         |        |  
|                                           
|                                           
|                                           
|                                           
|                                            | Interest expense (contractual interest of £92,628 (2002)) and
amortization of debt discount and expenses |  |                   | (53,819 | )                  |  |           | (91,012 | )    |  |         | (5,841 | ) |  |         | (30,197 | )
|                                           
|                                           
|                                           
|                                           
|                                            | Foreign exchange gains (losses), net                                                                     |  |                   | 69,558  |                    |  |           | (15,518 | )    |  |         | 26,161 |   |  |         | 39,930  |  
|                                            |                                                                                                          |  |                   |         |                    |  |           |         |      |  |         |        |   |  |         |        
|(Loss) income before recapitalization items |                                                                                                          |  | (5,647            | )       |                    |  | (151,240  | )       |      |  | 12,947  |        |   |  | (6,063  | )      
|                                           
|                                           
|                                           
|                                           
|Recapitalization items                      |                                                                                                          |  | (2,379            | )       |                    |  |          |         |      |  | (2,349  | )      |   |  |        |        
|                                            |                                                                                                          |  |                   |         |                    |  |           |         |      |  |         |        |   |  |         |        
|Net (loss) income                           |                                                                                                          |  | £(8,026           | )       |                    |  | £(151,240 | )       |      |  | £10,598 |        |   |  | £(6,063 | )      
|                                            |                                                                                                          |  |                   |         |                    |  |           |         |      |  |         |        |   |  |         |        

See accompanying notes.

4



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##### Table of Contents






DIAMOND CABLE COMMUNICATIONS LIMITED
(DEBTOR IN POSSESSION)
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2002
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS DEFICIENCY
(Unaudited)
(in £000s)

|                              |  |                 |            |         |  |         |        |            |  |            |          |             |  |               |           |       |  |  |           |  
|----------------------------- |  | --------------- | ---------- | ------- |  | ------- | ------ | ---------- |  | ---------- | -------- | ----------- |  | ------------- | --------- | ----- |  |  | --------- | -
|                              |  |                 |            |         |  |         |        |            |  | Additional |          |             |  |               |           | Total
|                              |  |                 |            |         |  |         |        |            |  | Paid-in-   |          | Accumulated |  | Shareholder's
|                              |  | Ordinary Shares |            | capital |  | Deficit |        | Deficiency
|                              |  |                 |            |         |  |         |        |           
|                              |  | Shares          |            | Par     |  |         |        |            |  |           
|                              |  |                 |            |         |  |         |        |            |  |           
|Balance at December 31, 2001  |  |                 | 59,138,851 |         |  |         | £1,478 |            |  |            | £317,366 |             |  |               | £(798,590 | )     |  |  | £(479,746 | )
|                             
|                             
|                             
|                             
|Capital contribution          |  |                 |            |         |  |         |        |            |  |            | 140      |             |  |               |           |       |  |  | 140       |  
|                             
|                             
|                             
|                             
|Net loss                      |  |                 |           |         |  |         |       |            |  |            |         |             |  |               | (8,026    | )     |  |  | (8,026    | )
|                              |  |                 |            |         |  |         |        |            |  |            |          |             |  |               |           |       |  |  |           |  
|Balance at September 30, 2002 |  |                 | 59,138,851 |         |  |         | £1,478 |            |  |            | £317,506 |             |  |               | £(806,616 | )     |  |  | £(487,632 | )
|                              |  |                 |            |         |  |         |        |            |  |            |          |             |  |               |           |       |  |  |           |  

See accompanying notes.

5



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##### Table of Contents






DIAMOND CABLE COMMUNICATIONS LIMITED
(DEBTOR IN POSSESSION)
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2002
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

|                                                    |                                                     |                                           |         |                   |        |      |           |         |         | 
|--------------------------------------------------- | --------------------------------------------------- | ----------------------------------------- | ------- | ----------------- | ------ | ---- | --------- | ------- | ------- | 
|                                                    |                                                     |                                           |         | Nine Months Ended
|                                                    |                                                     |                                           |         | September 30,    
|                                                    |                                                     |                                           |         |                  
|                                                    |                                                     |                                           |         | 2002              |        | 2001
|                                                    |                                                     |                                           |         |                   |        |     
|                                                    |                                                     |                                           |         | (in £000s)      
|Net cash provided by (used in) operating activities |                                                     |                                           | £12,976 |                   |        |      | £(107,310 | )      
|                                                    |                                                     |                                           |         |                   |        |      |           |        
|Investing activities                                |                                                     |                                           |         |                   |        |      |           |        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Purchase of property and equipment                  |                                           |         | (16,717           | )      |      |           | (51,142 | )      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Proceeds from disposition of property and equipment |                                           |         | 31                |        |      |           |       
|                                                    |                                                     |                                           |         |                   |        |      |           |        
|                                                    | Net cash used in investing activities               |                                           |         | (16,686           | )      |      |           | (51,142 | )      
|                                                    |                                                     |                                           |         |                   |        |      |           |        
|Financing activities                                |                                                     |                                           |         |                   |        |      |           |        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Principal payments                                  |                                           |         | (694              | )      |      |           | (1,097  | )      
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Loan notes payable to NTL Communications Corp.      |                                           |         | 12,961            |        |      |           |        |        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Contributions from NTL Communications Corp.         |                                           |         | 140               |        |      |           | 157,612 |        
|                                                    |                                                     |                                           |         |                   |        |      |           |        
|                                                    |                                                     | Net cash provided by financing activities |         |                   | 12,407 |      |           |         | 156,515 | 
|                                                    |                                                     |                                           |         |                   |        |      |           |        
|Increase/(decrease) in cash and cash equivalents    |                                                     |                                           | 8,697   |                   |        |      | (1,937    | )      
|                                                   
|                                                   
|                                                   
|                                                   
|Cash and cash equivalents at beginning of period    |                                                     |                                           | 4,535   |                   |        |      | 8,166     |        
|                                                    |                                                     |                                           |         |                   |        |      |           |        
|Cash and cash equivalents at end of period          |                                                     |                                           | £13,232 |                   |        |      | £6,229    |        
|                                                    |                                                     |                                           |         |                   |        |      |           |        
|Supplemental disclosure of cash flow information    |                                                     |                                           |         |                   |        |      |           |        
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Cash paid during the period for interest            |                                           |         | £23,598           |        |      |           | £69,069 |        
|                                                    |                                                     |                                           |         |                   |        |      |           |        

See accompanying notes.

6



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##### Table of Contents






DIAMOND CABLE COMMUNICATIONS LIMITED
(DEBTOR IN POSSESSION)
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2002
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.     Petition for Relief under Chapter 11

On May 8, 2002, Diamond Cable Communications Limited (formerly Diamond Cable
Communications Plc) and Diamond Holdings Limited (formerly Diamond Holdings
Plc) (the Debtors) filed a petition for relief under Chapter 11 (Chapter
11) of Title 11 of the United States Code (the Bankruptcy Code) in the
United States Bankruptcy Court for the Southern District of New York (the
Bankruptcy Court). The Debtors filed jointly with NTL Incorporated, NTL
(Delaware), Inc., NTL Communications Corp., Diamond Cable Communications
Limited, Diamond Holdings Limited and Communications Cable Funding Corp. Also,
on May 8, 2002, the Debtors filed proceedings for Administration in England.
Under Chapter 11, certain claims against the Debtors in existence prior to the
filing of the petitions for relief under the federal bankruptcy laws are stayed
while the Debtors continue business operations as
Debtor-in-Possession. These
claims are reflected in the balance sheet as liabilities subject to
compromise. Additional claims (liabilities subject to compromise) may arise
subsequent to the filing date. Claims secured against the Debtors assets
(secured claims) also are stayed, although the holders of such claims have
the right to seek relief from the stay in the Bankruptcy Court.

The Debtors received approval from the Bankruptcy Court to pay or otherwise
honor certain of its prepetition obligations.

The Debtors have determined that there is insufficient collateral to cover the
interest portion of scheduled payments on certain of their prepetition debt
obligations, therefore Diamond Cable Communications Limited has discontinued
accruing interest expense on its obligations. Diamond Holdings Limited has
continued to accrue interest on its notes because upon emergence from Chapter 11 proceedings such
interest will be paid. For the nine
months ended September 30, 2002, contractual interest on those obligations
amounts to £92.6 million, which is £38.8 million in excess of reported interest
expense. Total contractual interest was £92.6 million and £30.0 million in
the three and nine months ended September 30, 2002, respectively.

The principal purpose of the administration orders of the Courts of England and
Wales under Part II of the Insolvency Act relating to the Debtors is the
survival of the Debtors and the whole or any part of their undertakings as
going concerns. The effect of the administration orders is to provide
moratorium protections similar to the effect of the automatic stay of section
362 of the Bankruptcy Code with respect to any creditor action in the United
Kingdom (referred to as the UK) pending confirmation and consummation of the
Debtors joint reorganization plan.

2.     Basis of Presentation

Throughout this report, NTL Incorporated together with its consolidated
subsidiaries are referred to as NTL. Diamond Cable Communications Limited is
referred to as the Company or Diamond.

The Company is a holding company which holds all of the shares of various
companies which operate broadband communications networks for telephone, cable
television and Internet services in the UK. The Company holds these shares
through an intermediate holding company, Diamond Holdings Limited (Diamond
Holdings). The Company is an indirect, wholly-owned subsidiary of NTL
Incorporated.

The accompanying unaudited condensed consolidated financial statements of the
Company and its Subsidiaries (the Group) have been prepared in accordance
with accounting principles generally accepted in the United States for interim
financial information, including AICPA Statement of Position 90-7, Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code, and with
the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three and nine months ended September 30, 2002 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2002. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Companys Annual
Report on Form 10-K for the year ended December 31, 2001.

As indicated below, substantial doubt exists about the Companys ability to
continue as a going concern. The accompanying consolidated

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financial statements have been prepared assuming that the Company will continue
as a going concern. The financial statements do not include any adjustments to
reflect the possible future effects on the recoverability of assets or
classification of assets or the amounts and classification of liabilities that
may result from the outcome of this uncertainty.

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

3.     Recapitalization Process and Ability to Continue Operations

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

The Group has historically incurred operating losses and negative operating
cash flow. In addition, the Group required and expects to continue to require
significant amounts of capital to finance construction of its networks,
connection of customers to the networks, other capital expenditures and for
working capital needs including debt service requirements. The Group
historically met these liquidity requirements through issuances of high-yield
debt securities in the capital markets and equity contributions and loans from
NTL Communications Corp. Both the equity and debt capital markets have
experienced periods of significant volatility, particularly for securities
issued by telecommunications and technology companies. The ability of
telecommunications companies to access those markets as well as their ability
to obtain financing provided by bank lenders and equipment suppliers has become
more restricted and financing costs have increased. During some recent periods,
the capital markets have been largely unavailable to new issues of securities
by telecommunications companies. NTL Incorporateds public equity is no longer
trading on the New York Stock Exchange, and NTLs debt securities are trading
at or near all time lows. These factors, together with NTLs substantial
leverage, means the Group does not currently have access to its historic
sources of capital.

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

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

Assuming the Plan is consummated, New NTLs and NTL Eurocos ability to meet
their respective funding requirements following consummation of the Plan are
dependent upon a number of factors, including the revenue generated by their
operating subsidiaries, their existing cash balances, and their ability to draw
upon an exit facility (in the case of New NTL) or any other financing. NTL will
be required to replace the DIP facility with an exit facility for New NTL and
its subsidiaries upon emergence from Chapter 11, in part because the DIP
facility will mature concurrently with NTLs emergence from Chapter 11, or on
December 1, 2002, whichever is earlier (unless such maturity is extended by the
DIP lenders). There can be no assurance that these sources of financing will
be or will remain available. Assuming consummation, each of New NTL and NTL
Euroco will require substantial funds for general corporate and other

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expenses and may require additional funds for working capital fluctuations.
Failure to achieve profitability or maintain or achieve various other financial
performance levels could in the future diminish New NTLs and Eurocos
respective ability to sustain operations, meet financial covenants, obtain
additional funds required for capital expenditures or other purposes, and make
required payments on any indebtedness they have incurred, may incur or that may
then, as a result, become due. We can provide no assurance that New NTL and/or
NTL Euroco will be successful in raising additional financing if required, or
if successful, that the terms of such financing will be favorable. In the
event that NTL fails to consummate the Plan, the foregoing description will
continue to apply to NTL.

As of September 30, 2002, the Group had approximately £13.2 million in cash and
cash equivalents on hand. The Group may require additional cash in the twelve
months from October 1, 2002 to September 30, 2003. The Group estimates that its
capital expenditures and debt service requirements, net of cash from
operations, will aggregate up to approximately £10.0 million from October 1,
2002 to September 30, 2003. Management of the Company believes that cash and
cash equivalents on hand at September 30, 2002, and the cash
available from the DIP facility and subsequently the planned exit
facility will be sufficient for its and its subsidiaries cash
requirements during the twelve months from October 1, 2002 to September 30,
2003.

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

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

Events Leading to the Proposed Recapitalization and Chapter 11 Filings

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

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

Promptly upon obtaining the requisite waivers from the lenders under its credit
facilities, in March 2002, NTL commenced negotiations with the steering
committee of the unofficial committee of bondholders and its legal and
financial advisors. On April 16, 2002, NTL announced that it had reached a
comprehensive agreement in principle with the unofficial committee and France
Telecom, a significant holder of NTL Incorporateds preferred stock, on
implementing a recapitalization plan.

To implement the proposed recapitalization, on May 8, 2002, the Debtors filed
cases and a pre-arranged joint reorganization plan under Chapter 11. NTLs
operating subsidiaries were not included in the Chapter 11 filing. On June 21,
2002, the United States Trustee appointed an official unsecured creditors
committee. The creditors committee is comprised of the three indenture
trustees for the debt securities of NTL and the members of the steering
committee of NTLs bondholders. The members of the creditors committee are:
The Bank of New York; Wilmington Trust Company; Wells Fargo Bank Minnesota,
National Association; Angelo Gordon & Co. LP; Capital Research & Management
Company; Franklin Mutual Advisers, LLC; Oaktree Capital Management LLC; Salomon
Brothers Asset Management; Appaloosa Management, LP; Fidelity Management &
Research Co.; SAB Capital Management, L.P.; and W.R. Huff Asset Management Co.,
LLC.

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

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Assuming the Plan is consummated, the Plan will result in the cancellation of
all of NTL Incorporateds outstanding shares of common stock, preferred stock
and redeemable preferred stock, and the cancellation of all of the publicly
held notes of NTL Incorporated, NTL (Delaware), Inc. and NTL Communications
Corp. and the transfer of the publicly held notes of Diamond Cable
Communications Limited to New NTL. In addition, when the Plan is implemented,
NTL will be discharged from its obligation to pay dividends accruing on the
canceled preferred stock and interest accruing on the canceled notes. The Plan
contemplates that the UK bank debt and the notes issued by NTL (Triangle) LLC
and Diamond Holdings will remain in place. NTL will be split into New NTL and
NTL Euroco.

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

Recapitalization Expense

Recapitalization items of £2.4 million were incurred in the nine months ended
September 30, 2002. NTL expects to incur approximately $26 million in
additional recapitalization costs until the completion of the process. The
proposed joint reorganization plan provides that recapitalization costs will be
allocated between new NTL and NTL Euroco.

A subsidiary of NTL in the UK has incurred recapitalization expenses of
approximately £33 million through September 30, 2002, including approximately
£19 million for employee retention related to substantially all of NTLs UK
employees and approximately £14 million for financial advisor, legal,
accounting and consulting costs. The recapitalization items incurred by the
Company include its share of these expenses.

DIP Facility

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

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

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

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

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

NTL (Delaware), Inc. is also a lender under the DIP facility in the amount of
up to $130 million. NTL (Delaware), Inc. has cash on hand and NTL Incorporated
and its debtor subsidiaries and the steering committee of bondholders concluded
that the cash at NTL (Delaware),

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Inc. was to be used to partially fund the reorganization of all of the debtors.
Pursuant to the terms of the DIP facility, NTL (Delaware), Inc. receives fees,
will receive interest if and when it makes any loans, and is entitled to the
same protections as the other bondholder DIP lenders.

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

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

Exit Facility

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

NTL expects that the exit facility will be secured by various assets of New
NTL, including those which secure the DIP facility, will rank senior to all
current and future subordinated debt of New NTL, and will be guaranteed by
certain subsidiaries of New NTL.

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

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

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

The Plan

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



| |  | Holders of notes of NTL Incorporated (other than France Telecom), NTL
(Delaware), Inc. (other than France Telecom), NTL Communications Corp. and
Diamond Cable Communications Limited will in the aggregate receive 100% of
the initial common stock of New NTL (excluding shares issuable in the
rights offerings and upon the exercise of warrants (discussed below) and
upon the exercise of options which will be granted to certain employees of
New NTL).                                                                                                                                                                                          
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Holders of notes of NTL Incorporated (other than France Telecom), NTL
(Delaware), Inc. (other than France Telecom) and NTL Communications Corp.
will in the aggregate receive (i) 100% of the preferred stock of NTL
Euroco and (ii) a certain amount of cash as specified in the Plan. Holders
of the subordinated notes of NTL Incorporated (other than France Telecom),
NTL (Delaware), Inc. (other than France Telecom) and NTL Communications Corp. will in the
aggregate receive 86.5% of the initial common stock of NTL Euroco (excluding
shares issuable upon the exercise of options which will be granted to certain
employees of NTL Euroco).

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| |  | Holders of senior notes of NTL Communications Corp. will receive the value
of a specified number of shares of common stock of NTL Euroco pursuant to
the amended joint reorganization plan. Notes of NTL Communications Corp.s
subsidiaries Diamond Holdings Limited and NTL (Triangle) LLC will remain
outstanding and interest payments will be made on the notes of NTL
(Triangle) LLC and, upon emergence from Chapter 11, the notes of Diamond
Holdings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | In addition to the above, holders of several series of NTLs outstanding
convertible subordinated notes were granted an option to elect to purchase
additional shares of New NTL common stock (and accompanying Series A
Warrants) not subscribed for in the equity rights offering as described
below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| 
| |  | Current preferred and common stockholders of NTL Incorporated, including
France Telecom, will receive Series A warrants to purchase common stock of
New NTL and have received equity rights entitling them to purchase common
stock of New NTL. For each share of common stock purchased upon exercise
of equity rights, the person exercising such equity rights will receive a
Series A warrant to purchase one share of common stock of New NTL. The
Series A warrants will be exercisable for a period of eight years at an
exercise price of $77.47 per share. The exercise price and the number of
shares to be received upon exercise of the Series A warrants is subject to
customary adjustments for stock splits, stock recapitalizations and
distributions of property (other than cash) to holders of New NTL common
stock. The exercise price per share of New NTL common stock under the
equity rights offering and the noteholder election option was $25.28,
which NTL expects will substantially exceed the likely initial market
price for a share of New NTL common stock upon consummation, and which is
also subject to adjustment consistent with the Series A warrants.
| 
| |  | The equity rights offering and the noteholder election option expired on
October 3, 2002. Since the expiration of the equity rights offering and
the noteholder election option, NTL has allowed equity holders who have
exercised equity rights and noteholders who have exercised their
noteholder election option to revoke such exercises. As of November 12,
2002, there were a total of 2,654 exercises of equity rights (including
oversubscriptions) and 1,861 exercises of the noteholder election option
which had not been revoked. Prior to consummation of the Plan, NTL will
continue to permit persons who have exercised equity rights and the
noteholder election option to revoke their exercise so the final number of
exercises may be lower.                                                                                                                                                                                                                                                                                                                                                                                                                             
| 
| |  | Current preferred stockholders, other than France Telecom, will receive
approximately 3.2% and current common stockholders, other than France
Telecom, will receive approximately 10.3% of the primary equity of NTL
Euroco. France Telecom will also receive NTL Incorporateds 27% interest
in Noos, pursuant to a pledge of such interest to France Telecom given at
the time of its acquisition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

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

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

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

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Bank Waivers

Before NTL could commence negotiations with the unofficial committee of
bondholders, it was necessary to obtain waivers from the lenders under its UK
credit facilities and the credit facility utilized by Cablecom GmbH, the
principal trading subsidiary of its Swiss companies. Diamond does not have any
ownership interest in this group, although the condition of this group can
indirectly impact Diamond to the extent it impacts NTL Incorporated or NTL
(Delaware), Inc., both parent companies of Diamond, or otherwise impacts the
recapitalization process. Effective March 8, 2002, these lenders granted
waivers which, until March 29, 2002, provided that the commencement of
negotiations with bondholders with a view to rescheduling its debt would not
constitute an event of default under the credit facilities.

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



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

Effective March 28, 2002, the lenders under the credit facilities agreed to
amend the initial waivers. The amendments to the initial waivers extended the
duration of the initial waivers to April 29, 2002 in the case of the UK credit
facilities or May 14, 2002 in the case of the Cablecom facility, unless the
missed interest payments on April 1, 2002 were remedied or a sufficient number
of bondholders agreed to forbear in respect of such non-payment, in which case,
the UK credit facilities waivers would be extended to May 14, 2002. As a
condition to the waivers continuing effectiveness, the UK lenders required NTL
(Delaware), Inc. to loan £90 million to NTL (UK) Group, Inc. following receipt
of the proceeds from the sale of NTL Australia. This loan is structurally
senior to the outstanding public notes issued by NTL but contractually
subordinated to the working capital facility. In connection with the amendments
to the waivers, NTL affirmed the provisions of the initial waivers and in
addition, NTL agreed, among other things, to:



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

The amended waivers also prohibited NTL from commencing voluntary dissolution
proceedings, including proceedings under Chapter 11, without the consent of
these lenders.

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

13



---



##### Table of Contents



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

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

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

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

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

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

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

14



---



##### Table of Contents



Interest Payments on Public Notes

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

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

Interest payments of $18.9 million were made, when due, on April 2, 2002
in respect of the Diamond Cable Communications 13-1/4% senior discount notes
due 2004. Upon emerging from Chapter 11, NTL intends to make any required
interest payments on the notes of Diamond Holdings Limited. In accordance with
the Plan, NTL will not make future interest payments on its currently
outstanding publicly traded notes except notes issued by NTL (Triangle) LLC (a
non-debtor) and, upon emergence from Chapter 11, Diamond Holdings Limited.

15



---



##### Table of Contents



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

Credit Rating Downgrades

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

Delisting of NTL Incorporated Common Stock

On March 28, 2002, the New York Stock Exchange (NYSE) announced that it was
suspending NTL Incorporateds common stock from trading on the NYSE, which was
followed by the delisting of NTL Incorporateds common stock. NTL
Incorporateds common stock is currently quoted on the Over the Counter
Bulletin Board under the symbol NTLDQ.OB. Pursuant to the Plan, NTL
Incorporateds currently outstanding common stock will be cancelled upon
effectiveness of the Plan. The common stock and Series A warrants of New NTL
have been conditionally approved to trade on the Nasdaq National Market. The
common and preferred stock of NTL Euroco have not been approved to trade on any
exchange.

Sale of NTL Australia

On April 2, 2002, NTL announced that it had completed the previously announced
sale of its Australian broadcast business to Macquarie Communications
Infrastructure Holding Pty Limited for A$850 million (US$451.3 million). The
net proceeds from the sale were approximately A$575.3 million (US$304.5
million). At that time, the business bank debt outstanding totaled A$227.3
million (US$121.7 million). Diamond did not have any ownership interest in NTL
Australia.

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

Potential Sale of, or Outside Investment in, Cablecom

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

Under an agreement made between the Cablecom lenders and NTL, if a sale of all
or a part of the Cablecom Group is consummated on or before August 31, 2003,
the Cablecom lenders will be entitled to receive additional interest equal to
20% of the net proceeds of such a sale after repayment of the amounts outstanding under the Cablecom credit facility
and related finance documents and other expenses and taxes of the sale.

16



---



##### Table of Contents



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

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

Investments in and Loans to Affiliates

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

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

Diamond
does not have any ownership interest in B2 and/or Premium TV Limited,
although the condition of B2 and/or Premium TV Limited could indirectly impact Diamond to the extent it impacts NTL
Incorporated or NTL (Delaware), Inc., both parent companies of Diamond, or
otherwise impacts the recapitalization process. Upon consummation of the Plan,
NTL Euroco will succeed to the rights and obligations of NTL
described in the two preceding
paragraphs.

17



---



##### Table of Contents



Relationships with Suppliers

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



|4. |  | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | On July 30, 2002, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 146, Accounting for
Costs Associated with Exit of Disposal Activities. SFAS No. 146 replaces
Emerging Issues Task Force Issue No. 94-3 Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring). SFAS No. 146 requires that a
liability for costs associated with an exit or disposal activity is
recognized when the liability is incurred. Under Issue No. 94-3, a liability
for an exit cost as defined is recognized at the date of a commitment to an
exit or disposal plan. SFAS No. 146 is effective for exit or disposal
activities that are initiated after December 31, 2002. The adoption of this
standard is not expected to have a significant effect on the results of
operations, financial condition or cash flows of the Company.
|  
|   |  | In April 2002, the FASB issued SFAS No. 145, Recission of FASB Statements
No. 4, 44 and 54, Amendment of FASB Statement No. 13, and Technical
Corrections, which is effective for the Company on January 1, 2003. The
adoption of SFAS No. 145 will require a gain or loss recognized on the
extinguishment of debt to be classified as income or loss from continuing
operations. Prior to SFAS No. 145, gain or loss from the extinguishment of
debt was classified as an extraordinary item.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   |  | In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets, effective for the Company on January 1,
2002. This Statement superceded SFAS No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of and other
related accounting guidance. The adoption of this new standard had no
significant effect on the results of operations, financial condition or cash
flows of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   |  | In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations, effective for the Company on January 1, 2003. This Statement
addresses financial accounting and reporting for obligations associated with
the retirement of tangible fixed assets and the associated asset retirement
costs. The Company is in the process of evaluating the financial statement
impact of the adoption of SFAS No. 143.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   |  | In June 2001, the FASB issued SFAS No. 141, Business Combinations, and No.
142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that the
purchase method of accounting be used for all business combinations initiated
after June 30, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

18



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##### Table of Contents





| |  | Use of the pooling-of-interests method is no longer permitted. SFAS No. 141 also
includes guidance on the initial recognition and measurement of goodwill and
other intangible assets acquired in a business combination that is completed
after June 30, 2001. SFAS No. 142 ends the amortization of goodwill and
indefinite-lived intangible assets. Instead, these assets must be reviewed
annually (or more frequently under certain conditions) for impairment in
accordance with this statement. This impairment test uses a fair value
approach rather than the undiscounted cash flow approach previously required
by SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of. The Company adopted SFAS No. 142 on
January 1, 2002. The adoption of this new standard did not have a significant
effect on the results of operations, financial condition or cash flows of the
Company.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Upon the adoption of SFAS No. 142, the Company performed an analysis of its
intangible assets acquired before July 1, 2001 to determine whether they
should be classified and accounted for as part of or separate from goodwill.
The Company determined that franchise costs should continue to be classified
separate from goodwill, and that these costs would no longer be subject to
amortization since they are deemed to have an indefinite useful life.
Effective January 1, 2002, the Group has no amortization expense.                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | The Company also performed an evaluation for impairment of its goodwill and
franchise costs as of January 1, 2002 and determined that no impairment
charge was required. The Companys next evaluation of impairment will be the
annual test as of October 1, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | The following table shows the Groups net loss as adjusted for the adoption
of SFAS No. 142, had SFAS No. 142 been in effect on January 1, 2001
(unaudited) (in £000s).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

|                                |                 |  |                    |   |                   |  |         |     |      |  |         |   |  |  |           |       | 
|------------------------------- | --------------- |  | ------------------ | - | ----------------- |  | ------- | --- | ---- |  | ------- | - |  |  | --------- | ----- | 
|                                |                 |  | Three Months Ended |   | Nine Months Ended
|                                |                 |  | September 30,      |   | September 30,    
|                                |                 |  |                    |   |                  
|                                |                 |  | 2002               |   | 2001              |  | 2002    |     | 2001
|                                |                 |  |                    |   |                   |  |         |     |     
|Net income (loss)  as reported |                 |  | £10,598            |   |                   |  | £(6,063 | )   |      |  | £(8,026 | ) |  |  | £(151,240 | )    
|                               
|                               
|                               
|                               
|Amortization of:                |                 |  |                    |   |                   |  |         |     |      |  |         |   |  |  |           |      
|                               
|                               
|                               
|                               
|                                | Goodwill        |  |                    |  |                   |  |         | 806 |      |  |         |  |  |  |           | 3,231 | 
|                               
|                               
|                               
|                               
|                                | Franchise costs |  |                    |  |                   |  |         | 7   |      |  |         |  |  |  |           | 20    | 
|                                |                 |  |                    |   |                   |  |         |     |      |  |         |   |  |  |           |      
|                                |                 |  |                   |   |                   |  | 813     |     |      |  |        |   |  |  | 3,251     |      
|                                |                 |  |                    |   |                   |  |         |     |      |  |         |   |  |  |           |      
|Net income (loss)  as adjusted |                 |  | £10,598            |   |                   |  | £(5,250 | )   |      |  | £(8,026 | ) |  |  | £(147,989 | )    
|                                |                 |  |                    |   |                   |  |         |     |      |  |         |   |  |  |           |      



|5. |  | Other Charges                                                                                                                                                                                                                                                                                     
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Other charges of £577,000
are the Groups allocated share of UK restructuring costs. These charges are made on the basis
of an allocation formula appropriate to each category of charge that is based
on managements judgement of a reasonable methodology given the facts and
circumstances.   
|  
|6. |  | Comprehensive Income (Loss)                                                                                                                                                                                                                                                                       
|  
|   |  | Consolidated comprehensive (loss) for the nine months ended September 30,
2002 and 2001 was £(8.0) million and £(151.2) million, respectively.
Consolidated comprehensive income (loss) for the three months
ended September 30, 2002 and 2001 was £10.6 million
and £(6.1) million, respectively.

19



---



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|7. |  | Property and Equipment                         
|-- |  | -----------------------------------------------
|  
|   |  | Property and equipment consists of (in £000s):

|                                    |                           |               |             |  |               |  |              |         |          |  |          |         | 
|----------------------------------- | ------------------------- | ------------- | ----------- |  | ------------- |  | ------------ | ------- | -------- |  | -------- | ------- | 
|                                    |                           |               | Estimated   |  | September 30, |  | December 31,
|                                    |                           |               | Useful Life |  | 2002          |  | 2001        
|                                    |                           |               |             |  |               |  |             
|                                    |                           |               |             |  |               |  | (Unaudited)  |         |          |  |         
|Set-top boxes and materials         |                           | 3 Years       |             |  | £163,547      |  |              |         | £161,527 | 
|                                   
|                                   
|                                   
|                                   
|Head-ends, switches and electronics |                           | 15 Years      |             |  | 280,087       |  |              |         | 275,921  | 
|                                   
|                                   
|                                   
|                                   
|Civil work                          |                           | 40 Years      |             |  | 320,620       |  |              |         | 311,849  | 
|                                    |                           |               |             |  |               |  |              |         |          |  |          |        
|                                    | Total Operating Equipment |               |             |  |               |  |              | 764,254 |          |  |          | 749,297 | 
|                                    |                           |               |             |  |               |  |              |         |          |  |          |        
|Land and Buildings                  |                           | 50 Years      |             |  | 6,031         |  |              |         | 5,872    | 
|                                   
|                                   
|                                   
|                                   
|Leasehold Buildings                 |                           | 25 Years      |             |  | 2,550         |  |              |         | 2,440    | 
|                                   
|                                   
|                                   
|                                   
|Computer Equipment                  |                           | 3 to 5 Years  |             |  | 12,354        |  |              |         | 12,354   | 
|                                   
|                                   
|                                   
|                                   
|Vehicles, furniture and other       |                           | 3 to 15 Years |             |  | 3,640         |  |              |         | 3,720    | 
|                                    |                           |               |             |  |               |  |              |         |          |  |          |        
|                                    | Total Other Equipment     |               |             |  |               |  |              | 24,575  |          |  |          | 24,386  | 
|                                    |                           |               |             |  |               |  |              |         |          |  |          |        
|Construction in progress            |                           |               |             |  |               |  | 9,015        |         |          |  | 10,738   |        
|                                    |                           |               |             |  |               |  |              |         |          |  |          |        
|                                    |                           |               |             |  |               |  | 797,844      |         |          |  | 784,421  |        
|                                   
|                                   
|                                   
|                                   
|Accumulated depreciation            |                           |               |             |  |               |  | (300,035     | )       |          |  | (254,206 | )      
|                                    |                           |               |             |  |               |  |              |         |          |  |          |        
|                                    |                           |               |             |  |               |  | £497,809     |         |          |  | £530,215 |        
|                                    |                           |               |             |  |               |  |              |         |          |  |          |        



|8. |  | Liabilities subject to compromise                        
|-- |  | ---------------------------------------------------------
|  
|   |  | Liabilities subject to compromise consist of (in £000s):

|                                                                                     |  |               |            | 
|------------------------------------------------------------------------------------ |  | ------------- | ---------- | 
|                                                                                     |  | September 30,
|                                                                                     |  | 2002         
|                                                                                     |  |              
|                                                                                     |  | (Unaudited)  
|Accrued interest                                                                     |  |               | £40,634    | 
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|13-1/4% Senior Discount Notes                                                        |  |               | 181,593    | 
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|11-3/4% Senior Discount Notes                                                        |  |               | 338,187    | 
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|10-3/4% Senior Discount Notes                                                        |  |               | 267,834    | 
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|10% Senior Sterling Notes                                                            |  |               | 135,000    | 
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|9-1/8% Senior Notes                                                                  |  |               | 70,000     | 
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|30% Loan Note payable to NTL Communications Corp.
including accrued interest of £382 |  |               | 12,413     | 
|                                                                                     |  |               |            | 
|                                                                                     |  |               | £1,045,661 | 
|                                                                                     |  |               |            | 

Pursuant to the proposed plan of reorganization, the Diamond Holdings 10%
Senior Sterling Notes and 9-1/8% Senior Notes will remain outstanding upon
emergence from the Chapter 11 proceedings.

20



---



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|9. |  | Long  Term Debt                                                                      
|-- |  | --------------------------------------------------------------------------------------
|  
|   |  | Long  term debt, exclusive of amounts subject to compromise, consists of
(in £000s):

|                              |  |               |       |              |  |   |           | 
|----------------------------- |  | ------------- | ----- | ------------ |  | - | --------- | 
|                              |  | September 30, |       | December 31,
|                              |  | 2002          |       | 2001        
|                              |  |               |       |             
|                              |  | (Unaudited)   |       |              |  |  
|13-1/4% Senior Discount Notes |  | £             |      |              |  | £ | 196,040   | 
|                             
|                             
|                             
|                             
|11-3/4% Senior Discount Notes |  |               |      |              |  |   | 365,092   | 
|                             
|                             
|                             
|                             
|10-3/4% Senior Discount Notes |  |               |      |              |  |   | 285,446   | 
|                             
|                             
|                             
|                             
|10% Senior Sterling Notes     |  |               |      |              |  |   | 135,000   | 
|                             
|                             
|                             
|                             
|9-1/8% Senior Notes           |  |               |      |              |  |   | 75,569    | 
|                             
|                             
|                             
|                             
|Mortgage loan                 |  |               | 1,995 |              |  |   | 2,098     | 
|                             
|                             
|                             
|                             
|Capital leases                |  |               |      |              |  |   | 417       | 
|                              |  |               |       |              |  |   |           | 
|                              |  |               | 1,995 |              |  |   | 1,059,662 | 
|                             
|                             
|                             
|                             
|Less current portion          |  |               | 1,995 |              |  |   | 1,059,662 | 
|                              |  |               |       |              |  |   |           | 
|                              |  | £             |      |              |  | £ |          | 
|                              |  |               |       |              |  |   |           | 

See Note 2 for discussion of the events of default and uncertainties about
compliance with the terms and conditions of the Notes. The holders of the debt
have the right to accelerate repayment, or may have such right, which has
caused all of the debt to be classified as current. The automatic stay of
Section 362 of the United States Bankruptcy Code prevents the holders of such
debt from seeking to enforce their collection rights under the indentures,
except within the context of the Chapter 11 cases, and even then only with the
prior approval of the bankruptcy court.



|10. |  | Related Party Transactions
|--- |  | --------------------------

On April 2, 2002, NTL Communications Corp. loaned Diamond Cable Communications
Limited $18.9 million in cash in exchange for 30% Senior Notes due September
29, 2004. Interest is payable semiannually in cash at a rate of 30% per annum
beginning on September 30, 2002. The principal amount outstanding of £12.0
million plus accrued interest of £382,000 (total of £12.4 million) at September
30, 2002 is included in liabilities subject to compromise. Pursuant to the
proposed plan of reorganization, the Companys note payable to NTL
Communications Corp. is expected to be contributed by NTL Communications Corp.
to the Company in exchange for one additional share of common stock of the
Company.

Since the acquisition of the Company by NTL in March 1999, a subsidiary of NTL
has been providing infrastructure and management support services to the Group.
Benefits include usage of NTL network assets, network maintenance, marketing
and shared overhead. Additionally, in 2001 certain elements of the Groups
network operations and customer operations were integrated with NTLs national
and regional operations in order for the Group to gain the advantage of NTLs
scale.

The related charges, which began in the fourth quarter of 1999, represent the
Groups portion of costs incurred by a subsidiary of NTL for the benefit of all
UK operations within NTL. These charges are made on the basis of an allocation
formula appropriate to each category of charge. The Group was charged £70.5
million and £66.5 million for the nine months ended September 30, 2002 and
2001, respectively. For 2002, £28.4 million was included in operating costs and
£42.1 million was included in selling, general and administrative expense. For
2001, £26.5 million was included in operating costs and £40.0 million was
included in selling, general and administrative expense. It is not practicable
to determine the amount of these expenses that would have been incurred had the
Group operated as an unaffiliated entity. In the opinion of management of the
Group, the allocation method is reasonable.

As of September 30, 2002 and December 31, 2001, the due to affiliates balance
includes payments made to third parties on behalf of the Group by a subsidiary
of NTL. The Group has reduced direct transactions with third parties as a
result of the continued integration of the Group with NTL. The Group has
therefore had its liabilities to third parties significantly reduced, with a
rise in amounts due to affiliates. The payments made on behalf of the Group
represent directly attributable expenses incurred by the Group. The due to
affiliates balance is not subject to compromise because it is a liability of
subsidiaries not in reorganization.

In addition, other charges includes
amounts allocated to the Group by a subsidiary of NTL as described in
Note 3 and Note 5.



|11. |  | Commitments and Contingent Liabilities
|--- |  | --------------------------------------

The Group is involved in legal proceedings and claims which arise in the
ordinary course of its business. In the opinion of management,

21



---



##### Table of Contents



the amount of the ultimate liability with respect to these actions will not
materially affect the financial position, results of operations or liquidity of
the Group.



|12. |  | Condensed Consolidating Financial Statements of Entities in
Reorganization and Entities Not in Reorganization including Summarized
Financial Information about Diamond Holdings Limited
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following condensed consolidating financial statements of the Company as of
September 30, 2002 and December 31, 2001 and for the three and nine months
ended September 30, 2002 and 2001 have been provided pursuant to AICPA
Statement of Position 90-7, Financial Reporting by Entities in Reorganization
Under the Bankruptcy Code. Diamond Cable Communications Limited and Diamond
Holdings Limited are included in Entities in Reorganization. All other wholly
owned direct and indirect subsidiaries of the Company are included in Entities
Not in Reorganization.

On February 6, 1998, Diamond Holdings, a subsidiary of the Company, issued
£135.0 million principal amount of its 10% Senior Notes due February 1, 2008
and $110.0 million principal amount of its 9 1/8% Senior Notes due February 1,
2008 (together, the 1998 Notes). The 1998 Notes have been fully and
unconditionally guaranteed by the Company as to principal, interest and other
amounts due. The Company has no independent operations and no subsidiaries
other than Diamond Holdings. Diamond Holdings is restricted in its ability to
make funds available to the Company except for funds to pay interest on the
Companys Notes and £5.0 million annually. The following condensed
consolidating financial information of the Company as of September 30, 2002 and
for the three and nine months ended September 30, 2002 and 2001 is being
provided pursuant to Article 3-10(c) of Regulation S-X.

22



---



##### Table of Contents



|                                                                |  |                                      |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |          |   |  |   |          |   |  |   |         |  
|--------------------------------------------------------------- |  | ------------------------------------ | ------- | -------- |  | ----------- | ------- | -------------- |  | -------------- | ------ | --------------- |  | ------------- | ------- | - |  | ------------ | -------- | - |  | - | -------- | - |  | - | ------- | -
|                                                                |  | Nine months ended September 30, 2002
|                                                                |  | (unaudited)
(in £000s)             
|                                                                |  |                                     
|                                                                |  | Diamond                              |         | Diamond  |  |             |         |                |  | Entities in    |        | Entities not in |  |               |         |   |  | Consolidated
|                                                                |  | Cable                                |         | Holdings |  | Adjustments |         | Reorganisation |  | Reorganisation |        | Adjustments     |  | Diamond Cable
|                                                                |  |                                      |         |          |  |             |         |                |  |                |        |                 |  |              
|Statements of Operations                                        |  |                                      |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |          |   |  |   |          |   |  |   |         |  
|                                                               
|                                                               
|                                                               
|                                                               
|Revenue                                                         |  | £                                    |        |          |  | £           |        |                |  | £              |       |                 |  | £             |        |   |  | £            | 133,161  |   |  | £ |         |   |  | £ | 133,161 |  
|                                                               
|                                                               
|                                                               
|                                                               
|Costs and expenses                                              |  |                                      |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |          |   |  |   |          |   |  |   |         |  
|                                                               
|                                                               
|                                                               
|                                                               
|Operating                                                       |  |                                      |        |          |  |             |        |                |  |                |       |                 |  |               |        |   |  |              | 66,290   |   |  |   |         |   |  |   | 66,290  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Selling, general and
administrative                             |  |                                      |        |          |  |             |        |                |  |                |       |                 |  |               |        |   |  |              | 42,087   |   |  |   |         |   |  |   | 42,087  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Other
charges                                                   |  |                                      |        |          |  |             |        |                |  |                |       |                 |  |               |        |   |  |              | 577      |   |  |   |         |   |  |   | 577     |  
|                                                               
|                                                               
|                                                               
|                                                               
|Depreciation and amortization                                   |  |                                      |        |          |  |             |        |                |  |                |       |                 |  |               |        |   |  |              | 45,938   |   |  |   |         |   |  |   | 45,938  |  
|                                                                |  |                                      |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |          |   |  |   |          |   |  |   |         |  
|                                                                |  |                                      |        |          |  |             |        |                |  |                |       |                 |  |               |        |   |  |              | 154,892  |   |  |   |         |   |  |   | 154,892 |  
|                                                                |  |                                      |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |          |   |  |   |          |   |  |   |         |  
|Operating loss                                                  |  |                                      |        |          |  |             |        |                |  |                |       |                 |  |               |        |   |  |              | (21,731  | ) |  |   |         |   |  |   | (21,731 | )
|                                                               
|                                                               
|                                                               
|                                                               
|Other income (expense)                                          |  |                                      |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |          |   |  |   |          |   |  |   |         |  
|                                                               
|                                                               
|                                                               
|                                                               
|Interest income and other, net                                  |  |                                      | 86,428  |          |  |             | 14,134  |                |  |                |       |                 |  |               | 100,562 |   |  |              | 345      |   |  |   | (100,562 | ) |  |   | 345     |  
|                                                               
|                                                               
|                                                               
|                                                               
|Interest expense and
amortization of debt
discount and expenses |  |                                      | (38,083 | )        |  |             | (15,618 | )              |  |                |       |                 |  |               | (53,701 | ) |  |              | (100,680 | ) |  |   | 100,562  |   |  |   | (53,819 | )
|                                                               
|                                                               
|                                                               
|                                                               
|Foreign
exchange gains (losses), net                            |  |                                      | (5,314  | )        |  |             | (10     | )              |  |                |       |                 |  |               | (5,324  | ) |  |              | 74,882   |   |  |   |          |   |  |   | 69,558  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Equity in net loss
of subsidiary                                |  |                                      | (49,867 | )        |  |             | (47,184 | )              |  |                | 49,867 |                 |  |               | (47,184 | ) |  |              |         |   |  |   | 47,184   |   |  |   |        |  
|                                                                |  |                                      |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |          |   |  |   |          |   |  |   |         |  
|Loss before
recapitalization items                              |  |                                      | (6,836  | )        |  |             | (48,678 | )              |  |                | 49,867 |                 |  |               | (5,647  | ) |  |              | (47,184  | ) |  |   | 47,184   |   |  |   | (5,647  | )
|                                                               
|                                                               
|                                                               
|                                                               
|Recapitalization items                                          |  |                                      | (1,190  | )        |  |             | (1,189  | )              |  |                |       |                 |  |               | (2,379  | ) |  |              |         |   |  |   |         |   |  |   | (2,379  | )
|                                                                |  |                                      |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |          |   |  |   |          |   |  |   |         |  
|Net
(loss)                                                      |  | £                                    | (8,026  | )        |  | £           | (49,867 | )              |  | £              | 49,867 |                 |  | £             | (8,026  | ) |  | £            | (47,184  | ) |  | £ | 47,184   |   |  | £ | (8,026  | )
|                                                                |  |                                      |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |          |   |  |   |          |   |  |   |         |  

|                                                                |  |                                      |          |          |  |             |          |                |  |                |         |                 |  |               |          |   |  |              |          |   |  |   |         |   |  |   |          |  
|--------------------------------------------------------------- |  | ------------------------------------ | -------- | -------- |  | ----------- | -------- | -------------- |  | -------------- | ------- | --------------- |  | ------------- | -------- | - |  | ------------ | -------- | - |  | - | ------- | - |  | - | -------- | -
|                                                                |  | Nine months ended September 30, 2001
|                                                                |  | (unaudited)
(in £000s)             
|                                                                |  |                                     
|                                                                |  | Diamond                              |          | Diamond  |  |             |          |                |  | Entities in    |         | Entities not in |  |               |          |   |  | Consolidated
|                                                                |  | Cable                                |          | Holdings |  | Adjustments |          | Reorganisation |  | Reorganisation |         | Adjustments     |  | Diamond Cable
|                                                                |  |                                      |          |          |  |             |          |                |  |                |         |                 |  |              
|Statements of Operations                                        |  |                                      |          |          |  |             |          |                |  |                |         |                 |  |               |          |   |  |              |          |   |  |   |         |   |  |   |          |  
|                                                               
|                                                               
|                                                               
|                                                               
|Revenue                                                         |  | £                                    |         |          |  | £           |         |                |  | £              |        |                 |  | £             |         |   |  | £            | 132,482  |   |  | £ |        |   |  | £ | 132,482  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Costs and expenses                                              |  |                                      |          |          |  |             |          |                |  |                |         |                 |  |               |          |   |  |              |          |   |  |   |         |   |  |   |          |  
|                                                               
|                                                               
|                                                               
|                                                               
|Operating                                                       |  |                                      |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              | 73,768   |   |  |   |        |   |  |   | 73,768   |  
|                                                               
|                                                               
|                                                               
|                                                               
|Selling, general and
administrative                             |  |                                      | 7        |          |  |             |         |                |  |                |        |                 |  |               | 7        |   |  |              | 60,313   |   |  |   |        |   |  |   | 60,320   |  
|                                                               
|                                                               
|                                                               
|                                                               
|Other
charges                                                   |  |                                      |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |        |   |  |   |         |  
|                                                               
|                                                               
|                                                               
|                                                               
|Depreciation and
amortization                                   |  |                                      |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              | 43,104   |   |  |   |        |   |  |   | 43,104   |  
|                                                                |  |                                      |          |          |  |             |          |                |  |                |         |                 |  |               |          |   |  |              |          |   |  |   |         |   |  |   |          |  
|                                                                |  |                                      | 7        |          |  |             |         |                |  |                |        |                 |  |               | 7        |   |  |              | 177,185  |   |  |   |        |   |  |   | 177,192  |  
|                                                                |  |                                      |          |          |  |             |          |                |  |                |         |                 |  |               |          |   |  |              |          |   |  |   |         |   |  |   |          |  
|Operating (loss)                                                |  |                                      | (7       | )        |  |             |         |                |  |                |        |                 |  |               | (7       | ) |  |              | (44,703  | ) |  |   |        |   |  |   | (44,710  | )
|                                                               
|                                                               
|                                                               
|                                                               
|Other income (expense)                                          |  |                                      |          |          |  |             |          |                |  |                |         |                 |  |               |          |   |  |              |          |   |  |   |         |   |  |   |          |  
|                                                               
|                                                               
|                                                               
|                                                               
|Interest income and
other, net                                  |  |                                      | 83,283   |          |  |             | 14,188   |                |  |                |        |                 |  |               | 97,471   |   |  |              |         |   |  |   | (97,471 | ) |  |   |         |  
|                                                               
|                                                               
|                                                               
|                                                               
|Interest expense and
amortization of debt
discount and expenses |  |                                      | (75,135  | )        |  |             | (15,877  | )              |  |                |        |                 |  |               | (91,012  | ) |  |              | (97,471  | ) |  |   | 97,471  |   |  |   | (91,012  | )
|                                                               
|                                                               
|                                                               
|                                                               
|Foreign exchange gains
(losses), net                            |  |                                      | 478      |          |  |             | (92      | )              |  |                |        |                 |  |               | 386      |   |  |              | (15,904  | ) |  |   |        |   |  |   | (15,518  | )
|                                                               
|                                                               
|                                                               
|                                                               
|Equity in net loss of
subsidiary                                |  |                                      | (159,859 | )        |  |             | (158,078 | )              |  |                | 159,859 |                 |  |               | (158,078 | ) |  |              |         |   |  |   | 158,078 |   |  |   |         |  
|                                                                |  |                                      |          |          |  |             |          |                |  |                |         |                 |  |               |          |   |  |              |          |   |  |   |         |   |  |   |          |  
|Net (loss)                                                      |  | £                                    | (151,240 | )        |  | £           | (159,859 | )              |  | £              | 159,859 |                 |  | £             | (151,240 | ) |  | £            | (158,078 | ) |  | £ | 158,078 |   |  | £ | (151,240 | )
|                                                                |  |                                      |          |          |  |             |          |                |  |                |         |                 |  |               |          |   |  |              |          |   |  |   |         |   |  |   |          |  

23



---



##### Table of Contents



|                                                                |  |   |                                       |   |          |   |             |   |                |   |                |  |                 |   |               |   |  |   |              |   |  |   |         |   |  |   |         |   | 
|--------------------------------------------------------------- |  | - | ------------------------------------- | - | -------- | - | ----------- | - | -------------- | - | -------------- |  | --------------- | - | ------------- | - |  | - | ------------ | - |  | - | ------- | - |  | - | ------- | - | 
|                                                                |  |   | Three months ended September 30, 2002
|                                                                |  |   | (unaudited)(in £000s)               
|                                                                |  |   |                                      
|                                                                |  |   | Diamond                               |   | Diamond  |   |             |   |                |   | Entities in    |  | Entities not in |   |               |   |  |   | Consolidated
|                                                                |  |   | Cable                                 |   | Holdings |   | Adjustments |   | Reorganisation |   | Reorganisation |  | Adjustments     |   | Diamond Cable
|                                                                |  |   |                                       |   |          |   |             |   |                |   |                |  |                 |   |              
|Statements of
Operations                                        |  |   |                                       |   |          |   |             |   |                |   |                |  |                 |   |               |   |  |   |              |   |  |   |         |   |  |   |         |  
|                                                               
|                                                               
|                                                               
|                                                               
|Revenue                                                         |  | £ |                                      |   |          | £ |            |   |                | £ |               |  |                 | £ |              |   |  | £ | 42,965       |   |  | £ |        |   |  | £ | 42,965  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Costs and expenses                                              |  |   |                                       |   |          |   |             |   |                |   |                |  |                 |   |               |   |  |   |              |   |  |   |         |   |  |   |         |  
|                                                               
|                                                               
|                                                               
|                                                               
|Operating                                                       |  |   |                                      |   |          |   |            |   |                |   |               |  |                 |   |              |   |  |   | 21,354       |   |  |   |        |   |  |   | 21,354  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Selling,
general and administrative                             |  |   |                                      |   |          |   |            |   |                |   |               |  |                 |   |              |   |  |   | 13,698       |   |  |   |        |   |  |   | 13,698  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Other
charges                                                   |  |   |                                      |   |          |   |            |   |                |   |               |  |                 |   |              |   |  |   | 577          |   |  |   |        |   |  |   | 577     |  
|                                                               
|                                                               
|                                                               
|                                                               
|Depreciation and
amortization                                   |  |   |                                      |   |          |   |            |   |                |   |               |  |                 |   |              |   |  |   | 14,873       |   |  |   |        |   |  |   | 14,873  |  
|                                                                |  |   |                                       |   |          |   |             |   |                |   |                |  |                 |   |               |   |  |   |              |   |  |   |         |   |  |   |         |  
|                                                                |  |   |                                      |   |          |   |            |   |                |   |               |  |                 |   |              |   |  |   | 50,502       |   |  |   |        |   |  |   | 50,502  |  
|                                                                |  |   |                                       |   |          |   |             |   |                |   |                |  |                 |   |               |   |  |   |              |   |  |   |         |   |  |   |         |  
|Operating income (loss)                                         |  |   |                                      |   |          |   |            |   |                |   |               |  |                 |   |              |   |  |   | (7,537       | ) |  |   |        |   |  |   | (7,537  | )
|                                                               
|                                                               
|                                                               
|                                                               
|Other income (expense)                                          |  |   |                                       |   |          |   |             |   |                |   |                |  |                 |   |               |   |  |   |              |   |  |   |         |   |  |   |         |  
|                                                               
|                                                               
|                                                               
|                                                               
|Interest income and
other, net                                  |  |   | 27,469                                |   |          |   | 4,611       |   |                |   |               |  |                 |   | 32,080        |   |  |   | 164          |   |  |   | (32,080 | ) |  |   | 164     |  
|                                                               
|                                                               
|                                                               
|                                                               
|Interest expense
and amortization of
debt discount and
expenses |  |   | (753                                  | ) |          |   | (5,061      | ) |                |   |               |  |                 |   | (5,814        | ) |  |   | (32,107      | ) |  |   | 32,080  |   |  |   | (5,841  | )
|                                                               
|                                                               
|                                                               
|                                                               
|Foreign exchange
gains (losses), net                            |  |   | (1,975                                | ) |          |   | (7          | ) |                |   |               |  |                 |   | (1,982        | ) |  |   | 28,143       |   |  |   |        |   |  |   | 26,161  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Equity in net loss
of subsidiary                                |  |   | (12,968                               | ) |          |   | (11,337     | ) |                |   | 12,968         |  |                 |   | (11,337       | ) |  |   |             |   |  |   | 11,337  |   |  |   |        |  
|                                                                |  |   |                                       |   |          |   |             |   |                |   |                |  |                 |   |               |   |  |   |              |   |  |   |         |   |  |   |         |  
|Income
(loss) before recapitalization items                     |  |   | 11,773                                |   |          |   | (11,794     | ) |                |   | 12,968         |  |                 |   | 12,947        |   |  |   | (11,337      | ) |  |   | 11,337  |   |  |   | 12,947  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Recapitalization items                                          |  |   | (1,175                                | ) |          |   | (1,174      | ) |                |   |               |  |                 |   | (2,349        | ) |  |   |             |   |  |   |        |   |  |   | (2,349  | )
|                                                                |  |   |                                       |   |          |   |             |   |                |   |                |  |                 |   |               |   |  |   |              |   |  |   |         |   |  |   |         |  
|Net income (loss)                                               |  |   | £10,598                               |   |          |   | £(12,968    | ) |                |   | £12,968        |  |                 |   | £10,598       |   |  |   | £(11,337     | ) |  |   | £11,337 |   |  |   | £10,598 |  
|                                                                |  |   |                                       |   |          |   |             |   |                |   |                |  |                 |   |               |   |  |   |              |   |  |   |         |   |  |   |         |  

|                                                                |  |                                       |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|--------------------------------------------------------------- |  | ------------------------------------- | ------- | -------- |  | ----------- | ------- | -------------- |  | -------------- | ------ | --------------- |  | ------------- | ------- | - |  | ------------ | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                                                |  | Three months ended September 30, 2001
|                                                                |  | (unaudited)
(in £000s)              
|                                                                |  |                                      
|                                                                |  | Diamond                               |         | Diamond  |  |             |         |                |  | Entities in    |        | Entities not in |  |               |         |   |  | Consolidated
|                                                                |  | Cable                                 |         | Holdings |  | Adjustments |         | Reorganisation |  | Reorganisation |        | Adjustments     |  | Diamond Cable
|                                                                |  |                                       |         |          |  |             |         |                |  |                |        |                 |  |              
|Statements of
Operations                                        |  |                                       |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|                                                               
|                                                               
|                                                               
|                                                               
|Revenue                                                         |  |                                       | £      |          |  |             | £      |                |  |                | £     |                 |  |               | £      |   |  |              | £44,634 |   |  |   | £      |   |  |   | £44,634 |  
|                                                               
|                                                               
|                                                               
|                                                               
|Costs and expenses                                              |  |                                       |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|                                                               
|                                                               
|                                                               
|                                                               
|Operating                                                       |  |                                       |        |          |  |             |        |                |  |                |       |                 |  |               |        |   |  |              | 23,275  |   |  |   |        |   |  |   | 23,275  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Selling, general and
administrative                             |  |                                       | 3       |          |  |             |        |                |  |                |       |                 |  |               | 3       |   |  |              | 23,138  |   |  |   |        |   |  |   | 23,141  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Other
charges                                                   |  |                                       |        |          |  |             |        |                |  |                |       |                 |  |               |        |   |  |              |        |   |  |   |        |   |  |   |        |  
|                                                               
|                                                               
|                                                               
|                                                               
|Depreciation and
amortization                                   |  |                                       |        |          |  |             |        |                |  |                |       |                 |  |               |        |   |  |              | 14,014  |   |  |   |        |   |  |   | 14,014  |  
|                                                                |  |                                       |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|                                                                |  |                                       | 3       |          |  |             |        |                |  |                |       |                 |  |               | 3       |   |  |              | 60,427  |   |  |   |        |   |  |   | 60,430  |  
|                                                                |  |                                       |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|Operating (loss)                                                |  |                                       | (3      | )        |  |             |        |                |  |                |       |                 |  |               | (3      | ) |  |              | (15,793 | ) |  |   |        |   |  |   | (15,796 | )
|                                                               
|                                                               
|                                                               
|                                                               
|Other income (expense)                                          |  |                                       |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|                                                               
|                                                               
|                                                               
|                                                               
|Interest income and
other, net                                  |  |                                       | 27,307  |          |  |             | 4,586   |                |  |                |       |                 |  |               | 31,893  |   |  |              |        |   |  |   | (31,893 | ) |  |   |        |  
|                                                               
|                                                               
|                                                               
|                                                               
|Interest expense and
amortization of debt
discount and expenses |  |                                       | (24,918 | )        |  |             | (5,279  | )              |  |                |       |                 |  |               | (30,197 | ) |  |              | (31,893 | ) |  |   | 31,893  |   |  |   | (30,197 | )
|                                                               
|                                                               
|                                                               
|                                                               
|Foreign exchange gains
(losses), net                            |  |                                       | 2,010   |          |  |             | 316     |                |  |                |       |                 |  |               | 2,326   |   |  |              | 37,604  |   |  |   |        |   |  |   | 39,930  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Equity in net loss of
subsidiary                                |  |                                       | (10,459 | )        |  |             | (10,082 | )              |  |                | 10,459 |                 |  |               | (10,082 | ) |  |              |        |   |  |   | 10,082  |   |  |   |        |  
|                                                                |  |                                       |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|Net (loss)                                                      |  | £                                     | (6,063  | )        |  | £           | (10,459 | )              |  | £              | 10,459 |                 |  | £             | (6,063  | ) |  | £            | (10,082 | ) |  | £ | 10,082  |   |  | £ | (6,063  | )
|                                                                |  |                                       |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  

24



---



##### Table of Contents



|                                               |  |                               |          |          |  |             |           |                |  |                |          |                 |  |               |           |   |  |              |           |   |  |   |            |   |  |   |           |  
|---------------------------------------------- |  | ----------------------------- | -------- | -------- |  | ----------- | --------- | -------------- |  | -------------- | -------- | --------------- |  | ------------- | --------- | - |  | ------------ | --------- | - |  | - | ---------- | - |  | - | --------- | -
|                                               |  | September
30, 2002(unaudited)
|                                               |  | (in £000s)                  
|                                               |  |                              
|                                               |  | Diamond                       |          | Diamond  |  |             |           |                |  | Entities in    |          | Entities not in |  |               |           |   |  | Consolidated
|                                               |  | Cable                         |          | Holdings |  | Adjustments |           | Reorganisation |  | Reorganisation |          | Adjustments     |  | Diamond Cable
|                                               |  |                               |          |          |  |             |           |                |  |                |          |                 |  |              
|Balance Sheets                                 |  |                               |          |          |  |             |           |                |  |                |          |                 |  |               |           |   |  |              |           |   |  |   |            |   |  |   |           |  
|                                              
|                                              
|                                              
|                                              
|Current assets                                 |  | £                             | 313      |          |  | £           | 270       |                |  | £              |         |                 |  | £             | 583       |   |  | £            | 29,465    |   |  | £ |           |   |  | £ | 30,048    |  
|                                              
|                                              
|                                              
|                                              
|Investments in and
advances to
subsidiaries    |  |                               | 333,754  |          |  |             | (448,878  | )              |  |                | 663,302  |                 |  |               | 548,178   |   |  |              |          |   |  |   | (548,178   | ) |  |   |          |  
|                                              
|                                              
|                                              
|                                              
|Fixed and non current
assets                   |  |                               | 6,698    |          |  |             | 3,689     |                |  |                |         |                 |  |               | 10,387    |   |  |              | 564,771   |   |  |   |           |   |  |   | 575,158   |  
|                                               |  |                               |          |          |  |             |           |                |  |                |          |                 |  |               |           |   |  |              |           |   |  |   |            |   |  |   |           |  
|Total assets                                   |  |                               | £340,765 |          |  |             | £(444,919 | )              |  |                | £663,302 |                 |  |               | £559,148  |   |  |              | £594,236  |   |  |   | £(548,178  | ) |  |   | £605,206  |  
|                                               |  |                               |          |          |  |             |           |                |  |                |          |                 |  |               |           |   |  |              |           |   |  |   |            |   |  |   |           |  
|Current liabilities                            |  | £                             |         |          |  | £           |          |                |  | £              |         |                 |  | £             |          |   |  | £            | 47,177    |   |  | £ |           |   |  | £ | 47,177    |  
|                                              
|                                              
|                                              
|                                              
|Liabilities subject
to compromise              |  |                               | 827,278  |          |  |             | 218,383   |                |  |                |         |                 |  |               | 1,045,661 |   |  |              |          |   |  |   |           |   |  |   | 1,045,661 |  
|                                              
|                                              
|                                              
|                                              
|Due to affiliates                              |  |                               |         |          |  |             |          |                |  |                |         |                 |  |               |          |   |  |              | 1,201,959 |   |  |   | (1,201,959 | ) |  |   |          |  
|                                              
|                                              
|                                              
|                                              
|Shareholders deficiency                       |  |                               | (486,513 | )        |  |             | (663,302  | )              |  |                | 663,302  |                 |  |               | (486,513  | ) |  |              | (654,900  | ) |  |   | 653,781    |   |  |   | (487,632  | )
|                                               |  |                               |          |          |  |             |           |                |  |                |          |                 |  |               |           |   |  |              |           |   |  |   |            |   |  |   |           |  
|Total liabilities and
shareholders
deficiency |  | £                             | 340,765  |          |  | £           | (444,919  | )              |  | £              | 663,302  |                 |  | £             | 559,148   |   |  | £            | 594,236   |   |  | £ | (548,178   | ) |  | £ | 605,206   |  
|                                               |  |                               |          |          |  |             |           |                |  |                |          |                 |  |               |           |   |  |              |           |   |  |   |            |   |  |   |           |  

|                                               |  |                   |          |          |  |             |          |                |  |                |         |                 |  |               |           |   |  |              |           |   |  |   |            |   |  |   |           |  
|---------------------------------------------- |  | ----------------- | -------- | -------- |  | ----------- | -------- | -------------- |  | -------------- | ------- | --------------- |  | ------------- | --------- | - |  | ------------ | --------- | - |  | - | ---------- | - |  | - | --------- | -
|                                               |  | December 31, 2001
|                                               |  | (in £000s)      
|                                               |  |                  
|                                               |  | Diamond           |          | Diamond  |  |             |          |                |  | Entities in    |         | Entities not in |  |               |           |   |  | Consolidated
|                                               |  | Cable             |          | Holdings |  | Adjustments |          | Reorganisation |  | Reorganisation |         | Adjustments     |  | Diamond Cable
|                                               |  |                   |          |          |  |             |          |                |  |                |         |                 |  |              
|Balance Sheets                                 |  |                   |          |          |  |             |          |                |  |                |         |                 |  |               |           |   |  |              |           |   |  |   |            |   |  |   |           |  
|                                              
|                                              
|                                              
|                                              
|Current assets                                 |  | £                 |         |          |  | £           |         |                |  | £              |        |                 |  | £             |          |   |  | £            | 24,796    |   |  | £ |           |   |  | £ | 24,796    |  
|                                              
|                                              
|                                              
|                                              
|Investments in and
advances to
subsidiaries    |  |                   | 366,823  |          |  |             | (399,755 | )              |  |                | 614,634 |                 |  |               | 581,702   |   |  |              |          |   |  |   | (581,702   | ) |  |   |          |  
|                                              
|                                              
|                                              
|                                              
|Fixed and non
current assets                   |  |                   | 8,278    |          |  |             | 4,207    |                |  |                |        |                 |  |               | 12,485    |   |  |              | 597,178   |   |  |   |           |   |  |   | 609,663   |  
|                                               |  |                   |          |          |  |             |          |                |  |                |         |                 |  |               |           |   |  |              |           |   |  |   |            |   |  |   |           |  
|Total assets                                   |  | £                 | 375,101  |          |  | £           | (395,548 | )              |  | £              | 614,634 |                 |  | £             | 594,187   |   |  | £            | 621,974   |   |  | £ | (581,702   | ) |  |   | £ 634,459 |  
|                                               |  |                   |          |          |  |             |          |                |  |                |         |                 |  |               |           |   |  |              |           |   |  |   |            |   |  |   |           |  
|Current liabilities                            |  | £                 | 854,847  |          |  | £           | 219,086  |                |  | £              |        |                 |  | £             | 1,073,933 |   |  | £            | 40,272    |   |  | £ |           |   |  | £ | 1,114,205 |  
|                                              
|                                              
|                                              
|                                              
|Due to affiliates                              |  |                   |         |          |  |             |         |                |  |                |        |                 |  |               |          |   |  |              | 1,187,130 |   |  |   | (1,187,130 | ) |  |   |          |  
|                                              
|                                              
|                                              
|                                              
|Shareholders
deficiency                       |  |                   | (479,746 | )        |  |             | (614,634 | )              |  |                | 614,634 |                 |  |               | (479,746  | ) |  |              | (605,428  | ) |  |   | 605,428    |   |  |   | (479,746  | )
|                                               |  |                   |          |          |  |             |          |                |  |                |         |                 |  |               |           |   |  |              |           |   |  |   |            |   |  |   |           |  
|Total liabilities
and
shareholders
deficiency |  | £                 | 375,101  |          |  | £           | (395,548 | )              |  | £              | 614,634 |                 |  | £             | 594,187   |   |  | £            | 621,974   |   |  | £ | (581,702   | ) |  | £ | 634,459   |  
|                                               |  |                   |          |          |  |             |          |                |  |                |         |                 |  |               |           |   |  |              |           |   |  |   |            |   |  |   |           |  

25



---



##### Table of Contents



|                                                    |  |                                                 |         |          |  |             |         |                |  |                |     |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|--------------------------------------------------- |  | ----------------------------------------------- | ------- | -------- |  | ----------- | ------- | -------------- |  | -------------- | --- | --------------- |  | ------------- | ------- | - |  | ------------ | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                                    |  | Nine
months ended September 30, 2002(unaudited)
|                                                    |  | (in £000s)                                    
|                                                    |  |                                                
|                                                    |  | Diamond                                         |         | Diamond  |  |             |         |                |  | Entities in    |     | Entities not in |  |               |         |   |  | Consolidated
|                                                    |  | Cable                                           |         | Holdings |  | Adjustments |         | Reorganisation |  | Reorganisation |     | Adjustments     |  | Diamond Cable
|                                                    |  |                                                 |         |          |  |             |         |                |  |                |     |                 |  |              
|Statement of Cashflows                              |  |                                                 |         |          |  |             |         |                |  |                |     |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|                                                   
|                                                   
|                                                   
|                                                   
|Net cash (used in)
provided by operating
activities |  | £                                               | (13,246 | )        |  | £           | (10,568 | )              |  | £              |    |                 |  | £             | (23,814 | ) |  | £            | 25,937  |   |  | £ | 10,853  |   |  | £ | 12,976  |  
|                                                   
|                                                   
|                                                   
|                                                   
|Investing activities                                |  |                                                 |         |          |  |             |         |                |  |                |     |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|                                                   
|                                                   
|                                                   
|                                                   
|(Advances to) repayments
from subsidiaries, net     |  |                                                 | 215     |          |  |             | 10,568  |                |  |                | 70  |                 |  |               | 10,853  |   |  |              |        |   |  |   | (10,853 | ) |  |   |        |  
|                                                   
|                                                   
|                                                   
|                                                   
|Purchase of property and
equipment                  |  |                                                 |        |          |  |             |        |                |  |                |    |                 |  |               |        |   |  |              | (16,717 | ) |  |   |        |   |  |   | (16,717 | )
|                                                   
|                                                   
|                                                   
|                                                   
|Proceeds from disposition
of property and equipment |  |                                                 |        |          |  |             |        |                |  |                |    |                 |  |               |        |   |  |              | 31      |   |  |   |        |   |  |   | 31      |  
|                                                    |  |                                                 |         |          |  |             |         |                |  |                |     |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|                                                   
|                                                   
|                                                   
|                                                   
|Net cash provided by
(used in) investing
activities |  |                                                 | 215     |          |  |             | 10,568  |                |  |                | 70  |                 |  |               | 10,853  |   |  |              | (16,686 | ) |  |   | (10,853 | ) |  |   | (16,686 | )
|                                                    |  |                                                 |         |          |  |             |         |                |  |                |     |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|Financing activities                                |  |                                                 |         |          |  |             |         |                |  |                |     |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|                                                   
|                                                   
|                                                   
|                                                   
|Principal payments                                  |  |                                                 |        |          |  |             |        |                |  |                |    |                 |  |               |        |   |  |              | (694    | ) |  |   |        |   |  |   | (694    | )
|                                                   
|                                                   
|                                                   
|                                                   
|Loan notes payable
to NTL Communications Corp.      |  |                                                 | 12,961  |          |  |             |        |                |  |                |    |                 |  |               | 12,961  |   |  |              |        |   |  |   |        |   |  |   | 12,961  |  
|                                                   
|                                                   
|                                                   
|                                                   
|Contributions
from NTL Communications Corp.         |  |                                                 | 140     |          |  |             | 70      |                |  |                | (70 | )               |  |               | 140     |   |  |              |        |   |  |   |        |   |  |   | 140     |  
|                                                    |  |                                                 |         |          |  |             |         |                |  |                |     |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|Net cash provided by
(used in) financing
activities |  |                                                 | 13,101  |          |  |             | 70      |                |  |                | (70 | )               |  |               | 13,101  |   |  |              | (694    | ) |  |   |        |   |  |   | 12,407  |  
|                                                    |  |                                                 |         |          |  |             |         |                |  |                |     |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|Increase in cash and cash
equivalents               |  |                                                 | 70      |          |  |             | 70      |                |  |                |    |                 |  |               | 140     |   |  |              | 8,557   |   |  |   |        |   |  |   | 8,697   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Cash and cash equivalents
at beginning of period    |  |                                                 |        |          |  |             |        |                |  |                |    |                 |  |               |        |   |  |              | 4,535   |   |  |   |        |   |  |   | 4,535   |  
|                                                    |  |                                                 |         |          |  |             |         |                |  |                |     |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|Cash and cash equivalents
at end of period          |  | £                                               | 70      |          |  | £           | 70      |                |  | £              |    |                 |  | £             | 140     |   |  | £            | 13,092  |   |  | £ |        |   |  | £ | 13,232  |  
|                                                    |  |                                                 |         |          |  |             |         |                |  |                |     |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  

|                                                 |  |                                                 |          |          |  |             |          |                |  |                |          |                 |  |               |         |   |  |              |         |   |  |   |          |   |  |   |          |  
|------------------------------------------------ |  | ----------------------------------------------- | -------- | -------- |  | ----------- | -------- | -------------- |  | -------------- | -------- | --------------- |  | ------------- | ------- | - |  | ------------ | ------- | - |  | - | -------- | - |  | - | -------- | -
|                                                 |  | Nine
Months ended September 30, 2001(unaudited)
|                                                 |  | (in £000s)                                    
|                                                 |  |                                                
|                                                 |  | Diamond                                         |          | Diamond  |  |             |          |                |  | Entities in    |          | Entities not in |  |               |         |   |  | Consolidated
|                                                 |  | Cable                                           |          | Holdings |  | Adjustments |          | Reorganisation |  | Reorganisation |          | Adjustments     |  | Diamond Cable
|                                                 |  |                                                 |          |          |  |             |          |                |  |                |          |                 |  |              
|Statement of Cashflows                           |  |                                                 |          |          |  |             |          |                |  |                |          |                 |  |               |         |   |  |              |         |   |  |   |          |   |  |   |          |  
|                                                
|                                                
|                                                
|                                                
|Net cash (used in)
operating activities          |  | £                                               | (41,120  | )        |  | £           | (20,584  | )              |  | £              |         |                 |  | £             | (61,704 | ) |  | £            | (73,433 | ) |  | £ | 27,827   |   |  | £ | (107,310 | )
|                                                
|                                                
|                                                
|                                                
|Investing activities                             |  |                                                 |          |          |  |             |          |                |  |                |          |                 |  |               |         |   |  |              |         |   |  |   |          |   |  |   |          |  
|                                                
|                                                
|                                                
|                                                
|(Advances to) repayments
from subsidiaries, net  |  |                                                 | (111,757 | )        |  |             | (101,934 | )              |  |                | 122,518  |                 |  |               | (91,173 | ) |  |              |        |   |  |   | 91,173   |   |  |   |         |  
|                                                
|                                                
|                                                
|                                                
|Purchase of property
and equipment               |  |                                                 |         |          |  |             |         |                |  |                |         |                 |  |               |        |   |  |              | (51,142 | ) |  |   |         |   |  |   | (51,142  | )
|                                                 |  |                                                 |          |          |  |             |          |                |  |                |          |                 |  |               |         |   |  |              |         |   |  |   |          |   |  |   |          |  
|Net cash (used in)
investing activities          |  |                                                 | (111,757 | )        |  |             | (101,934 | )              |  |                | 122,518  |                 |  |               | (91,173 | ) |  |              | (51,142 | ) |  |   | 91,173   |   |  |   | (51,142  | )
|                                                 |  |                                                 |          |          |  |             |          |                |  |                |          |                 |  |               |         |   |  |              |         |   |  |   |          |   |  |   |          |  
|Financing activities                             |  |                                                 |          |          |  |             |          |                |  |                |          |                 |  |               |         |   |  |              |         |   |  |   |          |   |  |   |          |  
|                                                
|                                                
|                                                
|                                                
|Principal payments                               |  |                                                 |         |          |  |             |         |                |  |                |         |                 |  |               |        |   |  |              | (1,097  | ) |  |   |         |   |  |   | (1,097   | )
|                                                
|                                                
|                                                
|                                                
|Contributions from
NTL Communications
Corp.      |  |                                                 | 157,612  |          |  |             | 122,518  |                |  |                | (122,518 | )               |  |               | 157,612 |   |  |              | 119,000 |   |  |   | (119,000 | ) |  |   | 157,612  |  
|                                                 |  |                                                 |          |          |  |             |          |                |  |                |          |                 |  |               |         |   |  |              |         |   |  |   |          |   |  |   |          |  
|Net cash provided by
financing activities        |  |                                                 | 157,612  |          |  |             | 122,518  |                |  |                | (122,518 | )               |  |               | 157,612 |   |  |              | 117,903 |   |  |   | (119,000 | ) |  |   | 156,515  |  
|                                                 |  |                                                 |          |          |  |             |          |                |  |                |          |                 |  |               |         |   |  |              |         |   |  |   |          |   |  |   |          |  
|Increase (decrease) in
cash and cash
equivalents |  |                                                 | 4,735    |          |  |             |         |                |  |                |         |                 |  |               | 4,735   |   |  |              | (6,672  | ) |  |   |         |   |  |   | (1,937   | )
|                                                
|                                                
|                                                
|                                                
|Cash and cash
equivalents at beginning
of period |  |                                                 |         |          |  |             |         |                |  |                |         |                 |  |               |        |   |  |              | 8,166   |   |  |   |         |   |  |   | 8,166    |  
|                                                 |  |                                                 |          |          |  |             |          |                |  |                |          |                 |  |               |         |   |  |              |         |   |  |   |          |   |  |   |          |  
|Cash and cash equivalents
at end of period       |  | £                                               | 4,735    |          |  | £           |         |                |  | £              |         |                 |  | £             | 4,735   |   |  | £            | 1,494   |   |  | £ |         |   |  | £ | 6,229    |  
|                                                 |  |                                                 |          |          |  |             |          |                |  |                |          |                 |  |               |         |   |  |              |         |   |  |   |          |   |  |   |          |  

26



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##### Table of Contents



DIAMOND CABLE COMMUNICATIONS LIMITED
(DEBTOR IN POSSESSION)
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2002




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

Overview

Diamond Cable Communications Limited (formerly Diamond Cable Communications
Plc) (the Company) is a holding company which holds all of the shares of
various companies which operate broadband communications networks for
telephone, cable television and Internet services in the United Kingdom (the
UK). The Company holds these shares through an intermediate holding company,
Diamond Holdings Limited (formerly Diamond Holdings Plc) (Diamond Holdings).
Except as the context may otherwise require, references to the Group refer to
the Company and its subsidiaries. The Company is an indirect, wholly-owned
subsidiary of NTL Incorporated. Throughout this report, NTL Incorporated
together with its consolidated subsidiaries are referred to as NTL.

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

Financial Condition



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

Recapitalization Plan



| |  | On May 8, 2002, NTL Incorporated and a number of its
subsidiaries, namely, NTL (Delaware), Inc., NTL Communications
Corp., Diamond Cable Communications Limited, Diamond Holdings
Limited and Communications Cable Funding Corp., filed a
pre-arranged joint reorganization plan under Chapter 11 of the
United States Bankruptcy Code.                                                                                                
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Under the Second Amended Joint Reorganization Plan of NTL
Incorporated and Certain Subsidiaries, dated July 15, 2002 (as
modified and confirmed on September 5, 2002) (the Plan), NTL
will be split into two separate companies, one holding
substantially all of NTLs UK and Ireland assets (New NTL),
and the other holding various continental European and other
assets (NTL Euroco).                                       
| 
| |  | Under the Plan, holders of notes of NTL Incorporated, NTL
(Delaware), Inc., NTL Communications Corp. and Diamond Cable
Communications will receive 100% of the initial common stock
of New NTL and approximately 86.5% of NTL Euroco.                                                                                                                                                                                                  
| 
| |  | Holders of notes of NTL (Delaware), Inc. will have the option
to reinvest all or a portion of the NTL (Delaware), Inc. cash
to which they are entitled under the Plan in additional shares
of common stock, pursuant to the exercise of the noteholder
election option, or to be distributed such cash upon
effectiveness of the Plan.                                                                                                 
| 
| |  | Common and preferred stockholders, including France Telecom,
will be distributed a package of equity rights and Series A
warrants entitling them to purchase primary common stock of
New NTL. In addition, current preferred stockholders, other
than France Telecom, will receive approximately 3.2% and
current common stockholders, other than France Telecom, will
receive approximately 10.3% of the primary equity of NTL
Euroco.

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##### Table of Contents





| |  | Concurrently with the equity rights offering, holders of the
subordinated notes of NTL Incorporated (other than France
Telecom), NTL (Delaware), Inc. (other than France Telecom),
and NTL Communications Corp. were given the option to apply
cash they will be entitled to receive upon effectiveness of
the Plan to purchase shares of New NTL common stock, plus any
shares (and accompanying Series A warrants) not subscribed for
in the equity rights offering (referred to as the noteholder
election option). The equity rights offering and the
noteholder election option expired on October 3, 2002. Since
that time, NTL has allowed electing holders to
revoke their exercises of equity rights and the noteholder election
option. As of November 12, 2002, there were a total of 2,654
exercises of equity rights and 1,861 exercises of the noteholder
election option which had not been revoked.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Under the Plan, NTL will convert approximately $10.9 billion
of debt to equity, thereby reducing New NTLs debt to
approximately $5.8 billion (pro forma net debt as of September
30, 2002) which will consist of mortgage notes, amounts owed
under the UK credit facilities and Diamond Holdings and NTL
Triangle notes and the projected exit facility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| 
| |  | Under the Plan, NTL Eurocos debt will consist of the Cablecom credit
facility of CHF 1,055.0 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| 
| |  | The Bankruptcy Court approved the proposed debtor in possession (referred to as DIP) financing in the principal amount of
$630 million by order dated July 3, 2002. The DIP facility was entered into on July 15, 2002. The DIP facility expires on
the earlier of December 1, 2002 and the consummation of the Plan (unless such maturity is extended by the DIP lenders), and
thus will need to be replaced by an exit facility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| 
| |  | At a hearing on July 12, 2002, the Bankruptcy Court approved the Companys amended disclosure statement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| 
| |  | On September 5, 2002, the Bankruptcy Court confirmed the Plan. Consummation of the Plan remains subject to the
satisfaction or waiver of the conditions set forth in the Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

Liquidity and Capital Resources

Recapitalization Process and Ability to Continue Operations

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

Also, on May 8, 2002, the Company and Diamond Holdings filed proceedings for
Administration in England. The principal purpose of the administration orders
of the Courts of England and Wales under Part II of the Insolvancy Act relating
to the Debtors is the survival of the Debtors and the whole or any part of
their undertakings as going concerns. The effect of the administration orders
is to provide moratorium protections similar to the effect of the automatic
stay of section 362 of the Bankruptcy code with respect to any creditor action
in the United Kingdom (referred to as the UK) pending confirmation and
consummation of the Debtors joint reorganization plan. Toward the end of
2001, while NTL continued to have sufficient liquidity to meet its near term
obligations, it recognized the negative impact of the collapsing European and
U.S. telecommunications markets on its ability to service its debt.
Accordingly, NTL began to implement a strategy to preserve and maximize its
enterprise value. This strategy included the implementation of cost-cutting
measures and the commencement of discussion with certain third parties
regarding strategic alternatives for NTLs business.

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The Group has historically incurred operating losses and negative operating
cash flow. In addition, the Group required and expects to continue to require
significant amounts of capital to finance construction of its networks,
connection of customers to the networks, other capital expenditures and for
working capital needs including debt service requirements. NTL historically met
these liquidity requirements through issuances of high-yield debt securities in
the capital markets and equity contributions and loans from NTL Communications
Corp. Both the equity and debt capital markets have experienced periods of
significant volatility, particularly for securities issued by
telecommunications and technology companies. The ability of telecommunications
companies to access those markets as well as their ability to obtain financing
provided by bank lenders and equipment suppliers has become more restricted and
financing costs have increased. During some recent periods, the capital markets
have been largely unavailable to new issues of securities by telecommunications
companies. NTL Incorporateds public equity is no longer trading on the New
York Stock Exchange, and NTLs debt securities are trading at or near all time
lows. These factors, together with NTLs substantial leverage, means NTL does
not currently have access to its historic sources of capital.

In addition, there are no further funds available under NTLs UK credit
facilities and NTLs Swiss subsidiaries are currently unable to draw the
remaining undrawn amounts under the Cablecom credit facility. NTL missed
interest payments totaling $495.5 million between April 1, 2002 and November
13, 2002, including interest payemnts of the Company and Diamond Holdings of
$99.2 million. Upon emerging from Chapter 11, NTL intends to make any required
interest payments on the notes of Diamond Holdings. In accordance with the
Plan, NTL will not make future interest payments on its currently outstanding
publicly traded notes except notes issued by NTL (Triangle) LLC and, upon
emergence from Chapter 11, Diamond Holdings Limited.

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

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

As of September 30, 2002, the Group had approximately £13.2 million in cash and
cash equivalents on hand. The Group may require additional cash in the twelve
months from October 1, 2002 to September 30, 2003. The Group estimates that its
capital expenditures and debt service requirements, net of cash from
operations, will aggregate up to approximately £10.0 million from October 1,
2002 to September 30, 2003. Management of the Company believes that cash and
cash equivalents on hand at September 30, 2002, and cash from NTL
Communications Corp. will be sufficient for its and its subsidiaries cash
requirements during the twelve months from October 1, 2002 to September 30,
2003.

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

During the recapitalization process, the Company has maintained normal and
regular trade terms with its suppliers and customers. There can be no assurance
that the Companys suppliers will continue to provide normal trade credit or
credit on acceptable terms, if at all, or

29



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##### Table of Contents



that customers will continue to do business or enter into new business with
NTL. See also Risk Factors for a summary of risks related to NTLs business
in general and the recapitalization process in particular.

Events Leading to the Proposed Recapitalization and Chapter 11 Filings

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

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

Promptly upon obtaining the requisite waivers from the lenders under its credit
facilities, in March 2002, NTL commenced negotiations with the steering
committee of the unofficial committee of bondholders and its legal and
financial advisors. On April 16, 2002, NTL announced that it had reached a
comprehensive agreement in principle with the unofficial committee and France
Telecom, a significant holder of NTL Incorporateds preferred stock, on
implementing a recapitalization plan.

To implement the proposed recapitalization, on May 8, 2002, the Debtors filed
cases and a pre-arranged joint reorganization plan under Chapter 11. NTLs
operating subsidiaries were not included in the Chapter 11 filing. On June 21,
2002, the United States Trustee appointed an official unsecured creditors
committee. The creditors committee is comprised of the three indenture
trustees for the debt securities of NTL and the members of the steering
committee of NTLs bondholders. The members of the creditors committee are:
The Bank of New York; Wilmington Trust Company; Wells Fargo Bank Minnesota,
National Association; Angelo Gordon & Co. LP; Capital Research & Management
Company; Franklin Mutual Advisers, LLC; Oaktree Capital Management LLC; Salomon
Brothers Asset Management; Appaloosa Management, LP; Fidelity Management &
Research Co.; SAB Capital Management, L.P.; and W.R. Huff Asset Management Co.,
LLC.

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

Assuming the Plan is consummated, the Plan will result in the cancellation of
all of NTL Incorporateds outstanding shares of common stock, preferred stock
and redeemable preferred stock, and the cancellation of all of the publicly
held notes of NTL Incorporated, NTL (Delaware), Inc. and NTL Communications
Corp. and the transfer of the publicly held notes of Diamond Cable
Communications Limited to New NTL. In addition, when the Plan is implemented,
NTL will be discharged from its obligation to pay dividends accruing on the
canceled preferred stock and interest accruing on the canceled notes. The Plan
contemplates that the UK bank debt and the notes issued by NTL (Triangle) LLC
and Diamond Holdings will remain in place. NTL will be split into New NTL and
NTL Euroco.

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

Recapitalization Expense

Recapitalization items of £2.4 million were incurred in the nine months ended
September 30, 2002. NTL expects to incur approximately $26.0 million in
additional recapitalization costs until the completion of the process. The
proposed joint reorganization plan provides that recapitalization costs will be
allocated between New NTL and NTL Euroco.

A subsidiary of NTL in the UK has incurred recapitalization expenses of
approximately £33 million through September 30, 2002, including approximately
£19 million for employee retention related to substantially all of NTLs UK
employees and approximately £14

30



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million for financial advisor, legal, accounting and consulting costs. The
recapitalization items incurred by the Company include its share of these expenses.

DIP Facility

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

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

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

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

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

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

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

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

Exit Facility

Because of the short maturity of the DIP facility and the longer term liquidity
needs of NTL, as well as the requirements under the Bankruptcy Code for
confirmation of and the conditions to consummation of the Plan, NTL requires an
exit financing facility for New NTL. The exit financing or any alternative
financing would refinance (at least in part) the DIP facility and be used as
consideration for the refinancing or repurchase of a £90 million note payable
to NTL (Delaware), Inc. from NTL (UK) Group Inc. NTL is currently finalizing
discussions with a group of lenders regarding the exit facility, although given
the unfavorable present market conditions for telecommunications companies
generally, there can be no assurance an agreement for an exit facility with
acceptable terms will be

31



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reached. If acceptable exit financing is not obtained, the Plan could not be
consummated and NTL could not emerge from Chapter 11 in accordance with the
Plan.

NTL expects that the exit facility will be secured by various assets of New
NTL, including those which secure the DIP facility, will rank senior to all
current and future subordinated debt of New NTL, and will be guaranteed by
certain subsidiaries of New NTL.

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

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

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

The Plan

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



| |  | Holders of notes of NTL Incorporated (other than France Telecom), NTL
(Delaware), Inc. (other than France Telecom), NTL Communications Corp.
and Diamond Cable Communications Limited will in the aggregate receive
100% of the initial common stock of New NTL (excluding shares
issuable in the rights offerings and upon the exercise of warrants
(discussed below) and upon the exercise of options which will be
granted to certain employees of New NTL).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Holders of notes of NTL Incorporated (other than France Telecom), NTL
(Delaware), Inc. (other than France Telecom) and NTL Communications
Corp. will in the aggregate receive (i) 100% of the preferred stock of
NTL Euroco and (ii) a certain amount of cash as specified in the Plan.
Holders of the subordinated notes of NTL Incorporated (other than
France Telecom), NTL (Delaware), Inc. (other than France Telecom) and
NTL Communications Corp. will in the aggregate receive 86.5% of the
initial common stock of NTL Euroco (excluding shares issuable upon the
exercise of options which will be granted to certain employees of NTL
Euroco).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| 
| |  | Holders of senior notes of NTL Communications Corp. will receive the
value of a specified number of shares of common stock of NTL Euroco
pursuant to the amended joint reorganization plan. Notes of NTL
Communications Corp.s subsidiaries Diamond Holdings Limited and NTL
(Triangle) LLC will remain outstanding and interest payments will be
made on the notes of NTL (Triangle) LLC and, upon emergence from
Chapter 11, the notes of Diamond Holdings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| 
| |  | In addition to the above, holders of several series of NTLs
outstanding convertible subordinated notes were granted an option to
elect to purchase additional shares of New NTL common stock (and
accompanying Series A Warrants) not subscribed for in the equity
rights offering as described below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| 
| |  | Current preferred and common stockholders of NTL Incorporated,
including France Telecom, will receive Series A warrants to purchase
common stock of New NTL and have received equity rights entitling them
to purchase common stock of New NTL. For each share of common stock
purchased upon exercise of equity rights, the person exercising such
equity rights will receive a Series A warrant to purchase one share of
common stock of New NTL. The Series A warrants will be exercisable for
a period of eight years at an exercise price of $77.47 per share. The
exercise price and the number of shares to be received upon exercise
of the Series A warrants is subject to customary adjustments for stock
splits, stock recapitalizations and distributions of property (other
than cash) to holders of New NTL common stock. The exercise price per
share of New NTL common stock under the equity rights offering and the
noteholder election option was $25.28, which NTL expects will
substantially exceed the likely initial market price for a share of
New NTL common stock upon consummation, and which is also subject to
adjustment consistent with the Series A warrants.

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| |  | The equity rights offering and the noteholder election option expired
on October 3, 2002. Since the expiration of the equity rights offering
and the noteholder election option, NTL has allowed equity holders who
have exercised equity rights and noteholders who have exercised their
noteholder election option to revoke such exercises. As of November
12, 2002, there were a total of 2,654 exercises of equity rights
(including oversubscriptions) and 1,861 exercises of the noteholder
election option which had not been revoked. Prior to consummation of
the Plan, NTL will continue to permit persons who have exercised
equity rights and the noteholder election option to revoke their
exercise so the final number of exercises may be lower.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Current preferred stockholders, other than France Telecom, will
receive approximately 3.2% and current common stockholders, other than
France Telecom, will receive approximately 10.3% of the primary equity
of NTL Euroco. France Telecom will also receive NTL Incorporateds
27% interest in Noos, pursuant to a pledge of such interest to France
Telecom given at the time of its acquisition.                                                                                                                                                                                                                                                                                                                                                             

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

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

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

Bank Waivers

Before NTL could commence negotiations with the unofficial committee of
bondholders, it was necessary to obtain waivers from the lenders under its UK
credit facilities and the credit facility utilized by Cablecom GmbH, the
principal trading subsidiary of its Swiss companies. Diamond does not have any
ownership interest in this group, although the condition of this group can
indirectly impact Diamond to the extent it impacts NTL Incorporated or NTL
(Delaware), Inc., both parent companies of Diamond, or otherwise impacts the
recapitalization process. Effective March 8, 2002, these lenders granted
waivers which, until March 29, 2002, provided that the commencement of
negotiations with bondholders with a view to rescheduling its debt would not
constitute an event of default under the credit facilities.

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



| |  | to provide the lenders under the UK credit facilities with a 13 week rolling
cash flow projection (updated every two weeks);                                                 
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | to keep the lenders informed of, and to provide documents in connection with,
negotiations with bondholders or strategic investors or concerning proposed
asset dispositions;
| 
| |  | not to repurchase NTL notes; and                                                                                                                                             
| 
| |  | not to make an exchange offer for NTL notes or enter into an agreement with
NTL bondholders, subject to                                                                      

33



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| |  | some exceptions, without the consent of the
lenders.
| |  | ----------------------------------------------------

Effective March 28, 2002, the lenders under the credit facilities agreed to
amend the initial waivers. The amendments to the initial waivers extended the
duration of the initial waivers to April 29, 2002 in the case of the UK credit
facilities or May 14, 2002 in the case of the Cablecom facility, unless the
missed interest payments on April 1, 2002 were remedied or a sufficient number
of bondholders agreed to forbear in respect of such non-payment, in which case,
the UK credit facilities waivers would be extended to May 14, 2002. As a
condition to the waivers continuing effectiveness, the UK lenders required NTL
(Delaware), Inc. to loan £90 million to NTL (UK) Group, Inc. following receipt
of the proceeds from the sale of NTL Australia. This loan is structurally
senior to the outstanding public notes issued by NTL but contractually
subordinated to the working capital facility. In connection with the amendments
to the waivers, NTL affirmed the provisions of the initial waivers and in
addition, NTL agreed, among other things, to:



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

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

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

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

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

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

34



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##### Table of Contents



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

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

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

Interest Payments on Public Notes

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

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

35



---



##### Table of Contents



|                                                    |  |                        |  |              
|--------------------------------------------------- |  | ---------------------- |  | -------------
|                                                   
|                                                   
|                                                   
|                                                   
|October 1, 2002                                     |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 9-1/2% notes due 2008  |  | $9.3 million 
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 11-1/2% notes due 2008 |  | $35.9 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 11-7/8% notes due 2010 |  | $29.7 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  | Total                  |  | $74.9 million
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|October 15, 2002                                    |  |                        |  |              
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Communications Corp.                            |  | 12-3/4% notes due 2005 |  | $17.7 million
|                                                   
|                                                   
|                                                   
|                                                   
|NTL Incorporated (NTL (Delaware), Inc., co-obligor) |  | 5-3/4% notes due 2011  |  | $2.5 million 
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  | Total                  |  | $20.2 million

Interest payments of $18.9 million were made, when due, on April 2, 2002 in
respect of the Diamond Cable Communications 13-1/4% senior discount notes due
2004. Upon emerging from Chapter 11, NTL intends to make any required interest
payments on the notes of Diamond Holdings Limited. In accordance with the Plan,
NTL will not make future interest payments on its currently outstanding
publicly traded notes except notes issued by NTL (Triangle) LLC (a non-debtor)
and, upon emergence from Chapter 11, Diamond Holdings Limited.

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

Credit Rating Downgrades

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

Delisting of NTL Incorporated Common Stock

On March 28, 2002, the New York Stock Exchange (NYSE) announced that it was
suspending NTL Incorporateds common stock from trading on the NYSE, which was
followed by the delisting of NTL Incorporateds common stock. NTL
Incorporateds common stock is currently quoted on the Over the Counter
Bulletin Board under the symbol NTLDQ.OB. Pursuant to the Plan, NTL
Incorporateds currently outstanding common stock will be cancelled upon
effectiveness of the Plan. The common stock and Series A warrants of New NTL
have been conditionally approved to trade on the Nasdaq National Market. The
common and preferred stock of NTL Euroco have not been approved to trade on any
exchange.

Sale of NTL Australia

On April 2, 2002, NTL announced that it had completed the previously announced
sale of its Australian broadcast business to Macquarie Communications
Infrastructure Holding Pty Limited for A$850 million (US$451.3 million). The
net proceeds from the sale were approximately A$575.3 million (US$304.5
million). At that time, the business bank debt outstanding totaled A$227.3
million (US$121.7 million). Diamond did not have any ownership interest in NTL
Australia.

36



---



##### Table of Contents



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

Potential Sale of, or Outside Investment in, Cablecom

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

Under an agreement made between the Cablecom lenders and NTL, if a sale of all
or a part of the Cablecom Group is consummated on or before August 31, 2003,
the Cablecom lenders will be entitled to receive additional interest equal to
20% of the net proceeds of such a sale after repayment of the amounts
outstanding under the Cablecom credit facility and related finance documents
and other expenses and taxes of the sale.

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

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

Investments in and Loans to Affiliates

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

Premium TV Limited, a wholly-owned subsidiary of NTL (Delaware), Inc., is
obliged to provide funding of up to approximately £19.0 million ($29.8 million)
to fund various of its joint venture interests. Of this amount, the payment of
approximately £4.0 million ($6.3 million) has been guaranteed by NTL
(Delaware), Inc. If Premium TV Limited fails to provide its committed funding
under the relevant shareholder arrangements relating to these joint ventures,
Premium TV Limited and, in respect of the guaranteed amounts, NTL (Delaware),
Inc., may be sued for non-payment. As a result of the recapitalization process,
the relevant joint venture partners may assert

37



---



##### Table of Contents



that they can compulsorily acquire Premium TV Limiteds interest in the
relevant joint venture at a third party appraisal valuation. Premium TV Limited
is currently in discussions with certain of these joint venture partners with a
view to restructuring the relevant joint ventures. In the event that these
discussions do not reach a resolution acceptable to Premium TV Limited, Premium
TV Limited may seek to discontinue these joint ventures and terminate their
activities. NTL believes, however, that it has various defenses and protections
under the Bankruptcy Code against such actions and intends to enforce
vigorously its rights and protections.

The Bankruptcy Court will adjudicate the
claims of B2 and the remaining shareholders and NTLs defenses thereto. Diamond
does not have any ownership interest in B2 or Premium TV Limited, although the condition of
B2 and/or Premium TV Limited could indirectly impact Diamond to the extent it impacts NTL
Incorporated or NTL (Delaware), Inc., both parent companies of Diamond, or
otherwise impacts the recapitalization process. Upon consummation of the Plan,
NTL Euroco will succeed to the rights and obligations of NTL
described in the two preceding paragraphs.

Relationships with Suppliers

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

Defaults under Indebtedness

Set forth below is a non-comprehensive description of defaults, as well as
whether such defaults have led to an event of default or acceleration of
indebtedness, with respect to NTLs bank facilities and NTLs outstanding
notes, each as of May 8, 2002, the date of the Chapter 11 filings of the
Debtors. As a consequence of the Chapter 11 filings on May 8, 2002, all amounts
outstanding under the indentures governing the high yield and convertible debt
of the entities having commenced Chapter 11 cases automatically became
immediately due and payable. However, the automatic stay of section 362 of the
Bankruptcy Code serves to prevent the holders of such debt from seeking to
enforce their collection rights under the indentures, except within the context
of the Chapter 11 cases, and even then only with the prior approval of the
Bankruptcy Court.

38



---



##### Table of Contents



Credit Facilities

|   |  |                          |  |                                            |  |                                                                                                                                                                |  |                                                                                     
|-- |  | ------------------------ |  | ------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------
|   |  |                          |  | Amount                                     |  |                                                                                                                                                                |  |                                                                                     
|   |  |                          |  | available/amount                           |  |                                                                                                                                                                |  | Event of default/                                                                   
|   |  |                          |  | outstanding (as of                         |  | Defaults                                                                                                                                                       |  | acceleration                                                                        
|   |  |                          |  | September 30, 2002)                        |  | (as of May 8, 2002)                                                                                                                                            |  | (as of May 8, 2002)                                                                 
|  
|   |  |                          |  |                                            |  |                                                                                                                                                                |  |                                                                                     
|  
|  
|  
|  
|   |  | NTLCL                    |  |                                            |  |                                                                                                                                                                |  |                                                                                     
|  
|  
|  
|  
|1. |  | Working Capital
Facility |  | Nil available
$641.0 million
outstanding   |  | Default
(negotiation with
bondholders with a
view to
rescheduling,
failure to pay
interest on
outstanding notes
after 30-day grace
period, Chapter 11
filings) |  | Event of default
with respect to
entire amount;
lenders can
accelerate entire
amount
|  
|  
|  
|  
|   |  |                          |  |                                            |  |                                                                                                                                                                |  |                                                                                     
|  
|  
|  
|  
|2. |  | Senior Credit Facility   |  | Nil available
$4,372.2 million
outstanding |  | Default
(negotiation with
bondholders with a
view to
rescheduling,
failure to pay
interest on
outstanding notes
after 30-day grace
period, Chapter 11
filings) |  | Event of default
with respect to
entire amount;
lenders can
accelerate entire
amount
|  
|  
|  
|  
|   |  |                          |  |                                            |  |                                                                                                                                                                |  |                                                                                     
|  
|  
|  
|  
|   |  | Cablecom                 |  |                                            |  |                                                                                                                                                                |  |                                                                                     
|  
|  
|  
|  
|3. |  | Term Loan Facility       |  | Nil available
$1,829.5 million
outstanding |  | Default
(negotiation with
bondholders with a
view to
rescheduling,
failure to pay
interest on
outstanding notes
after 30-day grace
period, Chapter 11
filings) |  | Event of default
with respect to
entire amount;
lenders can
accelerate entire       
|  
|  
|  
|  
|   |  |                          |  |                                            |  |                                                                                                                                                                |  |                                                                                     
|  
|  
|  
|  
|4. |  | Revolving Facility       |  | Nil available
$714.9 million
outstanding   |  | Default
(negotiation with
bondholders with a
view to
rescheduling,
failure to pay
interest on notes
after 30-day grace
period, Chapter 11
filings)             |  | Event of default
with respect to
entire amount;
lenders can
accelerate entire
amount

39



---



##### Table of Contents



Outstanding Public Notes

|   |  |                                                                  |  |                      |  |                                                                                                                        |  |                                               
|-- |  | ---------------------------------------------------------------- |  | -------------------- |  | ---------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------
|   |  |                                                                  |  | Amount outstanding   |  |                                                                                                                        |  | Event of default/                             
|   |  |                                                                  |  | (as of September 30, |  | Defaults                                                                                                               |  | acceleration                                  
|   |  |                                                                  |  | 2002)                |  | (as of May 8, 2002)                                                                                                    |  | (as of May 8, 2002)                           
|  
|   |  |                                                                  |  |                      |  |                                                                                                                        |  |                                               
|  
|  
|  
|  
|   |  | NTL Incorporated
(NTL (Delaware),
Inc.) co-obligor               |  |                      |  |                                                                                                                        |  |                                               
|  
|  
|  
|  
|1  |  | 5-3/4% Convertible
Subordinated Notes
due June 22, 2011          |  | $100.0 million       |  | Payment default of
$2.5 million of
interest due April
15, 2002; Chapter
11 filings  entire
amount outstanding         |  | Event of
default/acceleration
of entire amount
|  
|  
|  
|  
|   |  |                                                                  |  |                      |  |                                                                                                                        |  |                                               
|  
|  
|  
|  
|   |  | NTL (Delaware), Inc.                                             |  |                      |  |                                                                                                                        |  |                                               
|  
|  
|  
|  
|2. |  | 5-3/4% Convertible
Subordinated Notes
due December 15,
2009      |  | $1,200.0 million     |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|  
|  
|  
|  
|   |  |                                                                  |  |                      |  |                                                                                                                        |  |                                               
|  
|  
|  
|  
|   |  | NTL Communications Corp.                                         |  |                      |  |                                                                                                                        |  |                                               
|  
|  
|  
|  
|3. |  | 12-3/4% Senior
Deferred Coupon
Notes due 2005                    |  | $277.8 million       |  | Payment default of
$17.7 million of
interest due April
15, 2002; Chapter
11 filings  entire
amount outstanding        |  | Event of
default/acceleration
of entire amount
|  
|  
|  
|  
|   |  |                                                                  |  |                      |  |                                                                                                                        |  |                                               
|  
|  
|  
|  
|4. |  | 11-1/2% Senior
Deferred Coupon
Notes due 2006                    |  | $1,050.0 million     |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|  
|  
|  
|  
|   |  |                                                                  |  |                      |  |                                                                                                                        |  |                                               
|  
|  
|  
|  
|5. |  | 10% Senior Notes
due 2007                                        |  | $400.0 million       |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|  
|  
|  
|  
|   |  |                                                                  |  |                      |  |                                                                                                                        |  |                                               
|  
|  
|  
|  
|6. |  | 9-1/2% Senior
Sterling Notes due
2008, less
unamortized
discount |  | $195.8 million       |  | Payment default of
$8.6 million of
interest due April
1, 2002; Chapter 11
filings  entire
amount outstanding          |  | Event of
default/acceleration
of entire amount
|  
|  
|  
|  
|   |  |                                                                  |  |                      |  |                                                                                                                        |  |                                               
|  
|  
|  
|  
|7. |  | 10-3/4% Senior
Deferred Coupon
Sterling Notes due
2008           |  | $428.4 million       |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|  
|  
|  
|  
|   |  |                                                                  |  |                      |  |                                                                                                                        |  |                                               
|  
|  
|  
|  
|8. |  | 9-3/4% Senior
Deferred Coupon
Notes due 2008                     |  | $1,193.3 million     |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|  
|  
|  
|  
|   |  |                                                                  |  |                      |  |                                                                                                                        |  |                                               
|  
|  
|  
|  
|9. |  | 9-3/4% Senior
Deferred Coupon
Sterling Notes due
2009            |  | $430.8 million       |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount

40



---



##### Table of Contents



|    |  |                                                               |  |                  |  |                                                                                                                        |  |                                               
|--- |  | ------------------------------------------------------------- |  | ---------------- |  | ---------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------
|10. |  | 11-1/2% Senior
Notes due 2008                                 |  | $625.0 million   |  | Payment default of
$35.9 million of
interest due April
1, 2002; Chapter 11
filings  entire
amount outstanding         |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                               |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|11. |  | 12-3/8% Senior
Deferred Coupon
Notes due 2008                 |  | $380.6 million   |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                               |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|12. |  | 7% Convertible
Subordinated Notes
due 2008                    |  | $489.8 million   |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                               |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|13. |  | 9-1/4% Senior Euro
Notes due 2006                             |  | $247.0 million   |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                               |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|14. |  | 9-7/8% Senior Euro
Notes due 2009                             |  | $345.8 million   |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                               |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|15. |  | 11-1/2% Senior
Deferred Coupon
Euro Notes due 2009            |  | $156.5 million   |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                               |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|16. |  | 11-7/8% Senior
Notes due 2010,
less unamortized
discount      |  | $491.5 million   |  | Payment default of
$29.7 million of
interest due April
1, 2002; Chapter 11
filings  entire
amount outstanding         |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                               |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|17. |  | 12-3/8% Senior Euro
Notes due 2008,
plus unamortized
discount |  | $297.1 million   |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                               |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|18. |  | 6-3/4% Convertible
Senior Notes due
2008                      |  | $1,150.0 million |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                               |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|    |  | NTL Triangle                                                  |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|19. |  | 11.2% Senior
Discount Debentures
due November 15,
2007        |  | $517.3 million   |  | None                                                                                                                   |  | None                                          
|   
|   
|   
|   
|    |  |                                                               |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|    |  | Diamond                                                       |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|20. |  | 13-1/4% Senior
Discount Notes due
2004                        |  | $285.1 million   |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                               |  |                  |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|21. |  | 11-3/4% Senior
Discount Notes due
2005                        |  | $531.0 million   |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount

41



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|    |  |                                                                    |  |                |  |                                                                                                                        |  |                                               
|--- |  | ------------------------------------------------------------------ |  | -------------- |  | ---------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------
|   
|   
|   
|   
|22. |  | 10-3/4% Senior
Discount Notes due
2007                             |  | $420.5 million |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                                    |  |                |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|23. |  | 10% Senior Sterling
Notes due 2008,
issued by Diamond
Holdings plc |  | $211.9 million |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace amount  entire amount outstanding |  | Event of
default/acceleration
of entire amount
|   
|   
|   
|   
|    |  |                                                                    |  |                |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|24. |  | 9-1/8% Senior Notes
due 2008, issued by
Diamond Holdings
plc       |  | $110.0 million |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
period  entire
amount outstanding |  | Event of
default/acceleration
of entire amount

Description of Outstanding Public Notes

The following summarizes the terms of the significant notes issued by the
Company and Diamond Holdings as of September 30, 2002. The holders of the debt
have the right to accelerate re-payment, which has caused all of the Groups
long-term debt to be classified as current, except for the long term debt
included in liabilities subject to compromise. The automatic stay of Section
362 of the United States Bankruptcy Code prevents the holders of such debt from
seeking to enforce their collection rights under the indentures, except within
the context of the Chapter 11 cases, and even then only with the prior approval
of the Bankruptcy Court.

The Company issued senior discount notes in September 1994, December 1995 and
February 1997 (collectively, the Discount Notes). In February 1998, Diamond
Holdings issued two new series of notes (the 1998 Notes). The 1998 Notes are
guaranteed by the Company as to payment of principal, interest and any other
amounts due. In connection with the issuance of the 1998 Notes, the Group
terminated its existing bank facility.

Diamond Holdings has £135.0 million in principal amount of its 10% Senior Notes
due February 1, 2008 and $110.0 million in principal amount of its 9-1/8%
Senior Notes due February 1, 2008 outstanding. Interest on these notes is
payable semiannually on February 1 and August 1.

The Company has $285.1 million in principal amount at maturity of its 13-1/4%
Senior Discount Notes due September 30, 2004 (the 1994 Notes) outstanding.
Interest on the 1994 Notes is payable semiannually on March 31 and September
30.

The Company also has $531.0 million in principal amount at maturity of its
11-3/4% Senior Discount Notes due December 15, 2005 (the 1995 Notes)
outstanding. Interest on the 1995 Notes is payable semiannually on June 15 and
December 15.

Finally, the Company has $420.5 million in principal amount at maturity of its
10-3/4% Senior Discount Notes due February 15, 2007 (the 1997 Notes)
outstanding. Cash interest was not payable on the 1997 Notes prior to February
15, 2002. Thereafter, interest accrues on the 1997 Notes and is payable
semiannually, which commenced on August 15, 2002, at a rate of 10 3/4% per
annum.

Contractual Obligations and Commercial Commitments

The following table includes aggregate information about the Groups
contractual obligations as of September 30, 2002 and the periods in which
payments are due. The holders of the long-term debt have the right to
accelerate repayment, which has caused all of the Groups long-term debt to be
classified as current, except for the long-term debt included in liabilities
subject to compromise. The automatic stay of Section 362 of the United States
Bankruptcy Code prevents the holders of such debt from seeking to enforce their
collection rights under the indentures, except within the context of the
Chapter 11 cases, and even then only with the prior approval of the bankruptcy
court.

The Group has no significant commercial commitments as of September 30, 2002.

42



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##### Table of Contents



|                                   |  |                        |          |        |   |           |      |       |   |               |        |       |   |  |        |  |   |  |        | 
|---------------------------------- |  | ---------------------- | -------- | ------ | - | --------- | ---- | ----- | - | ------------- | ------ | ----- | - |  | ------ |  | - |  | ------ | 
|                                   |  | Payments Due by Period
|                                   |  |                       
|                                   |  |                        |          |        |   | Less than |      | 1-3   |   | 4-5           |        | After
|Contractual Obligations            |  | Total                  |          | 1 Year |   | Years     |      | Years |   | 5 Years      
|                                  
|                                   |  |                        |          |        |   |           |      |       |   | (in millions) |        |       |   |  |        |  |   | 
|Long-Term Debt(1)                  |  |                        | £1,005.0 |        |   |           | £   |       |   |               | £194.0 |       |   |  | £606.0 |  |   |  | £205.0 | 
|                                  
|                                  
|                                  
|                                  
|Mortgage Loan Obligations          |  |                        | 2.0      |        |   |           | 0.3  |       |   |               | 0.5    |       |   |  | 0.5    |  |   |  | 0.7    | 
|                                  
|                                  
|                                  
|                                  
|Operating Leases                   |  |                        |         |        |   |           |     |       |   |               |       |       |   |  |       |  |   |  |       | 
|                                  
|                                  
|                                  
|                                  
|Unconditional Purchase Obligations |  |                        | 3.1      |        |   |           | 3.1  |       |   |               |       |       |   |  |       |  |   |  |       | 
|                                  
|                                  
|                                  
|                                  
|Other Long-Term Obligations        |  | None                   |          |        |  |           |      |       |  |               |        |       |  |  |        |  |  | 
|                                   |  |                       
|Total Contractual Cash Obligations |  |                        | £1,010.1 |        |   |           | £3.4 |       |   |               | £194.5 |       |   |  | £606.5 |  |   |  | £205.7 | 
|                                   |  |                       

(1)  Includes note payable to NTL Communications Corp.

Condensed Consolidated Statements of Cash Flows

Net cash provided by/(used in) operating activities amounted to £13.0 million
and £(107.3) million for the nine months ended September 30, 2002 and 2001,
respectively. During the nine months ended September 30, 2002, net cash
provided by operating activities includes an increase of £16.0 million in due
to affiliates. During the nine months ended September 30, 2001, net cash used
in operating activities includes £32.3 million used for payments to affiliates
which was funded by additional equity. Net cash provided by operating
activities also reflects the reduction in cash paid during the period for
interest to £23.6 million from £69.1 million in the nine months ended September
30, 2002 and 2001, respectively.

Net cash used in investing activities amounted to £16.7 million and £51.1
million for the nine months ended September 30, 2002 and 2001, respectively,
primarily for continuing fixed asset purchases. The Group will continue to
minimize purchases of fixed assets in 2002 in an effort to conserve cash.

Net cash provided by financing activities amounted to £12.4 million and £156.5
million for the nine months ended September 30, 2002 and 2001, respectively.
Cash provided in 2002 includes loan notes of £13.0 million and capital
contributions of £0.1 million and cash provided in 2001 represents £157.6
million in additional equity, each from NTL Communications Corp.

Selected Operating Data

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

|                                       |  |               |         |  
|-------------------------------------- |  | ------------- | ------- | -
|                                       |  | September 30,
|                                       |  | 2002         
|                                       |  |              
|Homes
passed(1)                        |  |               | 794,000 |  
|                                      
|                                      
|                                      
|                                      
|Homes
marketed(2)                      |  |               | 712,600 |  
|                                      
|                                      
|                                      
|                                      
|Total customers                        |  |               | 330,442 |  
|                                      
|                                      
|                                      
|                                      
|Digital Subscribers                    |  |               | 107,755 |  
|                                      
|                                      
|                                      
|                                      
|Broadband Subscribers                  |  |               | 57,232  |  
|                                      
|                                      
|                                      
|                                      
|Telephone Subscribers                  |  |               | 308,469 |  
|                                      
|                                      
|                                      
|                                      
|Penetration
(Homes marketed)(3)        |  |               | 46.4    | %
|                                      
|                                      
|                                      
|                                      
|Average monthly revenue per unit(ARPU) |  |               | £35.23  |  
|                                      
|                                      
|                                      
|                                      
|Churn                                  |  |               | 16.2    | %



|1. |  | Homes passed is the number of homes that have had ducting buried outside.                                                                          
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Homes marketed is the number of homes activated for which the initial
marketing phase (including door to door direct marketing) has been
completed.
|  
|3. |  | Penentration rate is calculated by dividing the number of customers by
the number of homes.                                                        

43



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##### Table of Contents



Results of Operations

Consolidated financial information for the Group for the nine and three months
ended September 30, 2002 and 2001 is as follows: (in £000s, NM denotes
percentage not meaningful)

|                                                        |  |                   |           |                     |  |   |            |   |  |  |          |   |  |        |       |  
|------------------------------------------------------- |  | ----------------- | --------- | ------------------- |  | - | ---------- | - |  |  | -------- | - |  | ------ | ----- | -
|                                                        |  | Nine Months Ended |           |                     |  |   |            |   |  | 
|                                                        |  | September 30,     |           | Increase/(Decrease)
|                                                        |  |                  
|                                                        |  | 2002              |           | 2001                |  | £ |            | %
|                                                        |  |                  
|Revenues                                                |  |                   | £ 133,161 |                     |  |   | £ 132,482  |   |  |  | 679      |   |  |        | 0.5   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Operating, selling, general and
administrative expenses |  |                   | (108,377  | )                   |  |   | (134,088   | ) |  |  | (25,711  | ) |  |        | (19.2 | )
|                                                       
|                                                       
|                                                       
|                                                       
|Other charges                                           |  |                   | (577      | )                   |  |   |           |   |  |  | 577      |   |  | NM    
|                                                       
|                                                       
|                                                       
|                                                       
|Depreciation and amortization                           |  |                   | (45,938   | )                   |  |   | (43,104    | ) |  |  | 2,834    |   |  |        | 6.6   |  
|                                                        |  |                   |           |                     |  |   |            |   |  | 
|Operating loss                                          |  |                   | (21,731   | )                   |  |   | (44,710    | ) |  |  | (22,979  | ) |  |        | (51.4 | )
|                                                        |  |                   |           |                     |  |   |            |   |  | 
|Interest expense                                        |  |                   | (53,819   | )                   |  |   | (91,012    | ) |  |  | (37,193  | ) |  |        | (40.9 | )
|                                                       
|                                                       
|                                                       
|                                                       
|Interest income and other, net                          |  |                   | 345       |                     |  |   |           |   |  |  | 345      |   |  | NM    
|                                                       
|                                                       
|                                                       
|                                                       
|Exchange gains/(losses)                                 |  |                   | 69,558    |                     |  |   | (15,518    | ) |  |  | (85,076  | ) |  | (548.2 | )    
|                                                        |  |                   |           |                     |  |   |            |   |  | 
|Loss before recapitalization items                      |  |                   | (5,647    | )                   |  |   | (151,240   | ) |  |  | (145,593 | ) |  |        | (96.3 | )
|                                                       
|                                                       
|                                                       
|                                                       
|Recapitalization items                                  |  |                   | (2,379    | )                   |  |   |           |   |  |  | 2,379    |   |  | NM    
|                                                        |  |                   |           |                     |  |   |            |   |  | 
|                                                       
|                                                       
|                                                       
|                                                       
|Net loss                                                |  |                   | £ (8,026  | )                   |  |   | £ (151,240 | ) |  |  | (143,214 | ) |  |        | (94.7 | )
|                                                        |  |                   |           |                     |  |   |            |   |  | 

|                                                        |  |                    |          |                     |  |   |          |   |  |  |         |   |  |    |        |  
|------------------------------------------------------- |  | ------------------ | -------- | ------------------- |  | - | -------- | - |  |  | ------- | - |  | -- | ------ | -
|                                                        |  | Three Months Ended |          |                     |  |   |          |   |  | 
|                                                        |  | September 30,      |          | Increase/(Decrease)
|                                                        |  |                   
|                                                        |  | 2002               |          | 2001                |  | £ |          | %
|                                                        |  |                   
|Revenues                                                |  |                    | £ 42,965 |                     |  |   | £ 44,634 |   |  |  | (1,669  | ) |  |    | (3.7   | )
|                                                       
|                                                       
|                                                       
|                                                       
|Operating, selling, general and
administrative expenses |  |                    | (35,052  | )                   |  |   | (46,416  | ) |  |  | (11,364 | ) |  |    | (24.5  | )
|                                                       
|                                                       
|                                                       
|                                                       
|Other charges                                           |  |                    | (577     | )                   |  |   |         |   |  |  | 577     |   |  | NM
|                                                       
|                                                       
|                                                       
|                                                       
|Depreciation and amortization                           |  |                    | (14,873  | )                   |  |   | (14,014  | ) |  |  | 859     |   |  |    | 6.1    |  
|                                                        |  |                    |          |                     |  |   |          |   |  | 
|Operating loss                                          |  |                    | (7,537   | )                   |  |   | (15,796  | ) |  |  | (8,259  | ) |  |    | (52.3  | )
|                                                        |  |                    |          |                     |  |   |          |   |  | 
|Interest expense                                        |  |                    | (5,841   | )                   |  |   | (30,197  | ) |  |  | (24,356 | ) |  |    | (80.7  | )
|                                                       
|                                                       
|                                                       
|                                                       
|Interest  and other, net                                |  |                    | 164      |                     |  |   |         |   |  |  | 164     |   |  | NM
|                                                       
|                                                       
|                                                       
|                                                       
|Exchange gains                                          |  |                    | 26,161   |                     |  |   | 39,930   |   |  |  | (13,769 | ) |  |    | (34.5  | )
|                                                        |  |                    |          |                     |  |   |          |   |  | 
|Income (loss) before recapitalization
items             |  |                    | 12,947   |                     |  |   | (6,063   | ) |  |  | (19,010 | ) |  |    | (313.5 | )
|                                                       
|                                                       
|                                                       
|                                                       
|Recapitalization items                                  |  |                    | (2,349   | )                   |  |   |         |   |  |  | (2,379  | ) |  | NM
|                                                        |  |                    |          |                     |  |   |          |   |  | 
|                                                       
|                                                       
|                                                       
|                                                       
|Net
income/(loss)                                       |  |                    | £ 10,598 |                     |  |   | £ (6,063 | ) |  |  | (16,661 | ) |  |    | (274.8 | )
|                                                        |  |                    |          |                     |  |   |          |   |  | 

As expected, our growth in 2002 has been curtailed by funding constraints.
Although our current business plan includes a reduction in the number of new
customers and an increase in revenue from existing customers, our cash
constraints present many challenges to the successful execution of
the business plan. We
are conserving cash by minimizing capital expenditures including expenditures
to connect new customers to our network. In order to maintain revenues and cash
from operations while reducing the number of new customers, we must reduce and
limit customer churn. We continue to focus on improving our customer service
and increasing our service offering to customers in an effort to curtail and
reduce churn. NTL is in the process of integrating its various billing systems
and customer databases in an effort to improve one of the main tools it uses to
provide customer service. This effort is at an early stage although
four franchise areas
have been partially migrated through September 30, 2002. Although the new system does not
yet support NTLs full suite of services, NTL expects to substantially complete
the project by the fourth quarter of 2003. The total project cost is estimated
to be approximately £63.0 million, of which NTL has incurred approximately
£14.2 million

44



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##### Table of Contents



through September 30, 2002. NTL cannot be certain that this project will be successful.
If the full integration is not successful, NTL could experience an adverse
effect on customer service and on its costs of maintaining these systems going
forward.

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

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

Media speculation regarding our financial condition and potential outcomes of
the recapitalization process could have an adverse effect on parts of our
business. Similarly, negative press about the financial condition of
alternative telecom carriers in general may effect our reputation. One of the
key strategies in our business plan is to increase our penetration of higher
value small to medium size enterprises (or SMEs) and provide increased retail
services of bundled voice, data and Internet services for SMEs. However, due to
the negative publicity surrounding our financial condition and the effect of
that publicity on our brand name, we have found it difficult to
increase market share. We believe our recapitalization process and the
general unfavorable climate for alternative telecom carriers effected our
revenues through the first three quarters of 2002 as prospective customers began deferring orders beginning in
the fourth quarter of 2001. Even if we successfully complete the
recapitalization process, there is no assurance that the negative publicity
will not adversely impact our results of operations or have a long-term
negative effect on our brand.

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

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

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

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

As a result of capital constraints
imposed on its business, New NTL has been engaged in a process of
reducing its expenditures in a variety of areas, including those
related to expanding its customer base, and those related to service
arrangements with third parties that provide capital improvements as
part of their services. These measures, as well as the significant
restructuring of New NTLs business in 2002 in terms of
headcount reduction and departmental reorganization, have caused New
NTL to reassess whether for some 2002 expenditures, assumptions and
estimates relating to the allocation of those costs between capital
and operating expense need to be revised. This study is not
sufficiently complete to book any changes, but is expected to be
completed in the fourth quarter of 2002, and could result in up to an
approximate £45 million increase in New NTLs expense (and the resulting
equivalent reduction in EBITDA and fixed assets) for the twelve
months ending December 31, 2002.

Revenue for the nine and three months ended September 30, 2002 and 2001 was
£133.2 million, £132.5 million, £43.0 million and £44.6 million, respectively,
representing an increase of 0.5% and a decrease of 3.7%. The increase in the
nine months ended September 30, 2002 was owing to price increases and upselling
new services to customers. The decrease in the three months ended September 30,
2002 was a result of a reduction in the customer base owing to disconnects,
lower telephony usage and fewer premium package television customers.

Operating costs (including network expenses) for the nine and three months
ended September 30, 2002 and 2001 were £66.3 million,

45



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£73.8 million, £21.4 million and £23.3 million, respectively, representing
decreases of 10.2% and 8.2%. The reduction in costs has resulted from
efficiencies gained in the network and negotiated reductions in the costs of
interconnection and television programming. Operating costs include certain
costs which are charged by a subsidiary of NTL for the provision of network
services and support, the use of NTLs national backbone telephony network for
carriage of the Groups telephony traffic, as well as the provision of
technical infrastructure and network capacity by NTL for the Groups
subscription free Internet service, Broadband internet service and Digital
packages. In the nine and three months ended September 30, 2002 and 2001 these
charges were £28.4 million, £26.5 million,
£8.7 million and £4.1 million,
respectively.

Selling, general and administrative expenses for the nine and three months
ended September 30, 2002 and 2001 were £42.1 million, £60.3 million, £13.7
million and £23.1 million, respectively, representing decreases of 30.2% and
40.7%. The nine month period reduction results from the continued progress NTL
has made in improving efficiencies and reducing costs. Selling, general and
administrative expenses include certain costs which are charged by a subsidiary
of NTL for the provision of corporate services, including finance, legal, human
resources and facility services, and for the provision of IT services,
including the Groups use of the related IT equipment. In the nine and three
months ended September 30, 2002 and 2001 these charges were £42.1 million,
£40.0 million, £13.7 million and £13.0 million, respectively.

The charges represent the Groups portion of costs incurred by a subsidiary of
NTL for the benefit of all UK operations within NTL. These charges are made on
the basis of an allocation formula appropriate to each category of charge. It
is not practicable to determine the amount of these expenses that could have
been incurred had the Group operated as an unaffiliated entity. In the opinion
of the management of the Group, the allocation method is reasonable. These
charges have increased as a result of the continued integration of the Groups
entities into the UK operations of NTL. The charges include payments made to
third parties on behalf of the Group by a subsidiary of NTL. The Group has
reduced significantly direct transactions with third parties as a result of the
continued integration of the Group with NTL.

Other charges of £577,000 are the
Groups allocated share of UK restructuring costs. These charges are made on the basis of an
allocation formula appropriate to each category of charge that is based on
managements judgment of a reasonable methodology given the facts and
circumstances.

Depreciation expense for the nine and three months ended September 30,
2002 and 2001 were £45.9 million, £39.9 million, £14.9 million and £13.2
million, respectively, representing increases of 15.0% and 12.9%. The increase
in 2002 as compared with 2001 is owing to the capital additions to
telecommunications and cable television equipment.

Amortization expense for the nine and three months ended September 30, 2002 and
2001 was zero, £3.3 million, zero and £0.8 million, respectively. The Group
adopted SFAS No. 142 on January 1, 2002, which ended the amortization of
goodwill and other indefinite lived intangible assets. Amortization expense in
the nine and three months ended September 30, 2001, after deducting the
amortization of goodwill and other indefinite lived intangible assets of £3.2
million and £0.8 million, would have been zero and zero, respectively.

Interest expense and amortization of debt discount and expenses for the nine
and three months ended September 30, 2002 and 2001 was £53.8 million, £91.0
million, £5.8 million, and £30.2 million, respectively. For the nine and three
months ended September 30, 2002, interest expense includes the accretion of the
discount on the Discount Notes of £3.7 million and zero, interest on the Notes
of £47.8 million and £4.9 million and amortization of debt financing costs of
£2.3 million and £0.7 million. For the nine and three months ended September
30, 2001, interest expense includes the accretion of the discount on the
Discount Notes of £21.3 million and £7.1 million, interest on the 1994, 1995
and 1998 Notes of £67.6 million and £22.4 million and amortization of debt
financing costs of £2.1 million and £0.7 million. Interest expense decreased as
a result of our application of AICPA Statement of Position 90-7, Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code (SOP 90-7).
Pursuant to SOP 90-7, interest expense is included in the results of operations
only to the extent that it will be paid during the proceeding or that it is
probable that it will be an allowed priority, secured or unsecured claim. In
accordance with the  Plan, beginning May 8, 2002, the
Company has discontinued accruing
interest expense on its obligations. Diamond Holdings has continued to accrue
interest on its notes because it is probable that such interest will be paid
upon emergence from Chapter 11 proceedings. Contractual interest for the nine
and three months ended September 30, 2002 was £92.6 million and £30.0 million,
respectively, which includes interest on the Companys obligations from May 8,
2002 to September 30, 2002 of £38.8 million.

A substantial portion of the Groups existing debt obligations are denominated
in U.S. dollars, while the Groups revenues and expenses are generated and
stated in UK pounds sterling. During the nine and three months ended September
30, 2002 and 2001, the Group recorded net foreign exchange gains (losses) of
£69.6 million, £(15.5) million, £26.2 million and £39.9 million, respectively,
primarily

46



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due to the unrealized gains or losses on translation of its Discount Notes and 1998
Notes. Changes in foreign currency exchange rates may affect the Groups
ability to satisfy its obligations under these debt instruments as they become
due.

Recapitalization items in the nine and three months ended September 30, 2002 of £2.4 million and
£2.3 million, respectively were for employee retention. A subsidiary
of NTL in the UK has incurred recapitalization expenses of approximately £33
million through September 30, 2002, including approximately £19 million for
employee retention related to substantially all of NTLs UK employees and
approximately £14 million for financial advisor, legal, accounting and
consulting costs. The charges incurred by the Company are its share of these
expenses.

Net (loss) income in the nine and three months ended September 30, 2002 and
2001 was £(8.0) million, £(151.2) million, £10.6 million and £(6.1) million,
respectively. The decrease in the net loss in the nine month period of £143.2
million and the decrease in the net loss in the three month period of £16.7
million were primarily due to the changes in unrealized foreign exchange gains
(losses) and the decrease in interest expense as a result of the application of
SOP 90-7.

Recent Accounting Pronouncements

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

In April 2002, the FASB issued SFAS No. 145, Recission of FASB Statements No.
4, 44 and 54, Amendment of FASB Statement No. 13, and Technical Corrections,
which is effective for the Company on January 1, 2003. The adoption of SFAS
No. 145 will require a gain or loss recognized on the extinguishment of debt to
be classified as income or loss from continuing operations. Prior to SFAS No.
145, gain or loss from the extinguishment of debt was classified as an
extraordinary item.

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

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

In June 2001, the FASB issued SFAS No. 141, Business Combinations, and No.
142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that the
purchase method of accounting be used for all business combinations initiated
after June 30, 2001. Use of the pooling-of-interests method is no longer
permitted. SFAS No. 141 also includes guidance on the initial recognition and
measurement of goodwill and other intangible assets acquired in a business
combination that is completed after June 30, 2001. SFAS No. 142 ends the amortization of goodwill and indefinite-lived intangible
assets. Instead, these assets must be reviewed annually (or more frequently
under certain conditions) for impairment in accordance with this statement.
This impairment test uses a fair value approach rather than the undiscounted
cash flow approach previously required by SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.
The Company adopted SFAS No. 142 on January 1, 2002. The adoption of this new
standard did not have a significant effect on the results of operations,
financial condition or cash flows of the Company.

Upon the adoption of SFAS No. 142, the Company performed an analysis of its
intangible assets acquired before July 1, 2001 to determine whether they should
be classified and accounted for as part of or separate from goodwill. The
Company determined that franchise costs should continue to be classified
separate from goodwill, and that these costs would no longer be subject to
amortization since they are deemed to have an indefinite useful life. Effective
January 1, 2002, the Group has no amortization expense.

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

The following table shows the Groups net loss as adjusted for the adoption of
SFAS No. 142, had SFAS No. 142 been in effect on January 1, 2001 (unaudited)
(in £000s).

|                                |                 |  |                    |   |                   |  |         |     |      |  |         |   |  |  |           |       | 
|------------------------------- | --------------- |  | ------------------ | - | ----------------- |  | ------- | --- | ---- |  | ------- | - |  |  | --------- | ----- | 
|                                |                 |  | Three Months Ended |   | Nine Months Ended
|                                |                 |  | September 30,      |   | September 30,    
|                                |                 |  |                   
|                                |                 |  | 2002               |   | 2001              |  | 2002    |     | 2001
|                                |                 | 
|Net income (loss)  as reported |                 |  | £10,598            |   |                   |  | £(6,063 | )   |      |  | £(8,026 | ) |  |  | £(151,240 | )    
|                               
|                               
|                               
|                               
|Amortization of:                |                 |  |                    |   |                   |  |         |     |      |  |         |   |  |  |           |      
|                               
|                               
|                               
|                               
|                                | Goodwill        |  |                    |  |                   |  |         | 806 |      |  |         |  |  |  |           | 3,231 | 
|                               
|                               
|                               
|                               
|                                | Franchise costs |  |                    |  |                   |  |         | 7   |      |  |         |  |  |  |           | 20    | 
|                                |                 | 
|                                |                 |  |                   |   |                   |  | 813     |     |      |  |        |   |  |  | 3,251     |      
|                                |                 | 
|Net income (loss)  as adjusted |                 |  | £10,598            |   |                   |  | £(5,250 | )   |      |  | £(8,026 | ) |  |  | £(147,989 | )    
|                                |                 | 

Safe Harbor Statement Under the Private Securities Litigation Reform Act of
1995

Certain statements contained herein constitute forward-looking statements as
that term is defined under the Private Securities Litigation Reform Act of
1995. When used herein, the words, believe, anticipate, should, intend,
plan, will, expects, estimates, projects, positioned, strategy,
and similar expressions identify such forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Group, or industry results, to be materially different from those
contemplated, projected, forecasted, estimated or budgeted, whether expressed
or implied, by such forward-looking statements. Such factors include, among
others, those set forth under the caption Risk Factors in this Form 10-Q as
well as: the ability of the Group to continue as a going concern; the ability
of the Group to obtain trade credit and shipments and terms with vendors and
service providers for current orders; the Groups ability to maintain contracts
that are critical to its operations; potential adverse developments with
respect to the Groups liquidity or results of operations; the ability to fund
and execute its business plan; the ability to attract, retain and compensate
key executives and associates; the ability of the Group to attract and retain
customers; general economic and business conditions, technological
developments, the Groups ability to continue to design networks, install
facilities, obtain and maintain any required governmental licenses or approvals
and finance construction and development, all in a timely manner at reasonable
costs and on satisfactory terms and conditions, as well as assumptions about
customer acceptance, churn rates, overall market penetration and competition
from providers of alternative services, the impact of restructuring and
integration actions, the impact of new business opportunities requiring
significant up-front investment and interest rate and currency exchange rate
fluctuations. The Company assumes no obligation to update the forward-looking
statements contained herein to reflect actual results, changes in assumptions
or changes in factors affecting such statements




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

The Group is 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, such as foreign
currency exchange and interest rates. Since 1998, the Group has not entered
into derivative financial instruments.

Foreign Exchange Risk

The principal form of market risk to which the Group is exposed is foreign
exchange rate risk. The Companys Discount Notes and Diamond Holdings 1998
Notes, which together constitute a substantial portion of the Groups existing
debt obligations, are denominated in U.S. dollars, while the Groups revenues
are generated and stated in UK pounds sterling. In the future, the Group may
from time to time enter into foreign currency contracts based on its assessment
of foreign currency market conditions and its effect on the Groups operations
and financial condition. Changes in currency exchange rates may have a material
effect on the results of operations of the Group and the Groups ability to
satisfy its obligations, including obligations under outstanding debt
instruments, as they become due.

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Interest Rate Risk

The Group is exposed to interest rate risk on the fair market value of its
long-term fixed interest rate debt. Generally, the fair market value of fixed
interest rate debt will increase as interest rates fall and decrease as
interest rates rise. In the following table, fair values were determined from
quoted market prices.

DIAMOND CABLE COMMUNICATIONS LIMITED

|                                         |                               |  |          |   |          |  |          |   |          |  |          |       |          |  |            |       |       |  |          |   |  |  |       |       |   |  |        |       |   |  |        |         |  |  |        |       | 
|---------------------------------------- | ----------------------------- |  | -------- | - | -------- |  | -------- | - | -------- |  | -------- | ----- | -------- |  | ---------- | ----- | ----- |  | -------- | - |  |  | ----- | ----- | - |  | ------ | ----- | - |  | ------ | ------- |  |  | ------ | ----- | 
|                                         |                               |  | Three    |   |          |  |          |   |          |  |          |       |          |  |            |       |       |  |          |   |  |  |       |       |   |  |        |       |   |  |        |         |  |  |       
|                                         |                               |  | Months   |   | Year     |  | Year     |   | Year     |  | Year     |       | Year     |  |            |       |       |  |          |   |  |  | Fair 
|                                         |                               |  | Ending   |   | Ending   |  | Ending   |   | Ending   |  | Ending   |       | Ending   |  |            |       |       |  |          |   |  |  | Value
|                                         |                               |  | 12/31/02 |   | 12/31/03 |  | 12/31/04 |   | 12/31/05 |  | 12/31/06 |       | 12/31/07 |  | Thereafter |       | Total |  | 09/30/02
|                                         |                               |  |          |   |          |  |          |   |          |  |          |       |          |  |            |       |       |  |         
|Long-term Debt Including Current Portion |                               |  |          |   |          |  |          |   |          |  |          |       |          |  |            |       |       |  |          |   |  |  |       |       |   |  |        |       |   |  |        |         |  |  |        |      
|                                        
|                                        
|                                        
|                                        
|U.S. Dollars                             |                               |  |          |   |          |  |          |   |          |  |          |       |          |  |            |       |       |  |          |   |  |  |       |       |   |  |        |       |   |  |        |         |  |  |        |      
|                                        
|                                        
|                                        
|                                        
|                                         | Fixed Rate                    |  |          |  |          |  |          |  |          |  | $        | 285.1 |          |  | $          | 531.0 |       |  |          |  |  |  | $     | 420.5 |   |  | $      | 110.0 |   |  | $      | 1,346.6 |  |  | $      | 254.3 | 
|                                        
|                                        
|                                        
|                                        
|                                         | Average Interest Rate         |  |          |   |          |  |          |   |          |  |          | 13.25 | %        |  |            | 11.75 | %     |  |          |   |  |  |       | 10.75 | % |  |        | 9.13  | % |  |        |         |  |  |        |       | 
|                                        
|                                        
|                                        
|                                        
|                                         | Average Forward
Exchange Rate |  |          |   |          |  |          |   |          |  |          | .7011 |          |  |            | .7020 |       |  |          |   |  |  |       | .6989 |   |  |        | .6959 |   |  |        |         |  |  |        |       | 
|                                        
|                                        
|                                        
|                                        
|U.K. Pound                               |                               |  |          |   |          |  |         
|                                        
|                                        
|                                        
|                                        
|                                         | Fixed Rate                    |  |         |   |          |  |         |   |          |  |         |       |          |  |           |       |       |  |         |   |  |  |      |       |   |  | £135.0 |       |   |  | £135.0 |         |  |  | £108.0 |      
|                                        
|                                        
|                                        
|                                        
|                                         | Average Interest Rate         |  |          |   |          |  |          |   |          |  |          |       |          |  |            |       |       |  |          |   |  |  |       |       |   |  |        | 10.0  | % |  |        |         |  |  |        |       | 




ITEM 4. CONTROLS AND PROCEDURES



| | (a) |  | Evaluation of Disclosure Controls and Procedures. The Companys
management, including the Companys Directors* who also serve as the
Chief Executive Officer and Chief Financial Officer of the Companys
indirect parent, NTL Incorporated, have conducted an evaluation of the
effectiveness of the Companys disclosure controls and procedures (as
such term is defined in Rule 13a-14(c) and Rule 15d-14(c) under the
Securities Exchange Act of 1934, as amended (the Exchange Act)) as
of a date within 90 days prior to the filing date of this quarterly
report (the Evaluation Date). Based on that evaluation, the
Directors have concluded that, as of the Evaluation Date, the
Companys disclosure controls and procedures are effective in
alerting them on a timely basis to material information relating to
the Company (and its consolidated subsidiaries) required to be
included in the Companys reports filed or submitted under the
Exchange Act.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Changes in Internal Controls. Since the Evaluation Date, there
have not been any significant changes in the Companys internal
controls, or in other factors that could significantly affect such
internal controls.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |     |  | *The Company has no Chief Executive Officer or Chief Financial Officer.
Barclay Knapp and John F. Gregg are Directors of the Company and are the
Chief Executive Officer and Chief Financial Officer, respectively, of
NTL Incorporated, the indirect parent of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 




RISK FACTORS

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

Diamond Cable Communications and Diamond Holdings Limited (our wholly owned
direct subsidiary) (which we collectively refer to as the Diamond Companies)
are intermediate holding companies with no independent operations or
significant assets other than investments in and advances to their respective
subsidiaries. We have not generated sufficient cash flow from our operations to
fund our

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operational expenses and interest
payments in the past. We have historically met our cash
requirements through debt or equity from NTL Incorporated and/or other NTL
Incorporated subsidiaries. Given NTLs liquidity constraints,
unless its Plan
is consummated, it is likely that NTL will not
be able to provide us with cash at least for the short-term.

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

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

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

NTL is in default under its credit facilities.

There are continuing events of default under NTLs UK credit facilities and the
Cablecom credit facility. These events of default entitle the lenders
under NTLs
credit facilities to accelerate repayment. NTL does not have sufficient cash
resources to repay its outstanding indebtedness if it is declared immediately
due and payable. In addition, the lenders could also seek to take control over
the assets over which they hold security, although the assets owned by the
Diamond Companies are not included in such security.

NTL did not pay interest due on some of its outstanding notes and does not plan
to make future interest payments on most of its outstanding notes.

NTL Incorporated, NTL (Delaware),
Inc., NTL Communications Corp. and the Diamond Companies did not
make scheduled interest payments and payments of related fees beginning on
April 1, 2002. Upon emerging from Chapter 11, NTL intends to make any required
interest payments on the notes of Diamond Holdings Limited. In accordance with
the Plan, NTL does not plan to make future interest payments on its currently
outstanding publicly traded notes except notes issued by NTL (Triangle) LLC
and, upon emergence from Chapter 11, Diamond Holdings Limited.

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

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

NTL has no current ability to borrow
under its existing UK credit facilities,
as it has borrowed the full amounts available. With respect to the Cablecom
credit facility, the term tranche is fully drawn and the revolving tranche has
been capped at its utilized amount of CHF 1,055.0 million although the
availability may be increased with the consent of the requisite percentage of
lenders under the facility. The Cablecom credit facility is due to be repaid on
April 30, 2003. Without substantial investment from a third party or further
borrowing, Cablecom will be unable to repay the facility which will have a
material adverse effect on its business.

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

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

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

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

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

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

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

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

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

NTLs growth has been curtailed by funding constraints.

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

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

We have experienced rapid growth and development in a relatively short period,
either through acquisitions or connecting customers to our network. One of our
biggest challenges as we have grown has been to limit our customer churn and
the successful implementation of our business plan depends upon a reduction in
the percentage of our customers that stop using our services. Factors
contributing to increase of

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churn during 2001 included the continued integration of our acquisition of the
UK consumer cable television business from Cable and Wireless plc, the
existence of multiple billing systems, the introduction of digital television
and our decision to disconnect some of our poor paying customers.

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

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

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

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

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

We are dependent upon a small number of key personnel.

A small number of key executive officers manage our businesses. The loss of one
or more of these executive officers could have a material adverse effect on us.
We believe that our future success will depend in large part on our continued
ability to attract and retain highly skilled and qualified personnel. We have
not entered into written employment contracts or non-compete agreements with,
nor have we obtained life insurance policies covering most of those key
executive officers. Following consummation of the Plan, New NTL and NTL Euroco
expect to enter into employment agreements with certain of their senior
officers which will include non-compete undertakings and severance payment
provisions.

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

NTLs principal business activities in the UK, the Republic of Ireland and
Switzerland and the activities of the companies in which NTL has investments in
Germany, France and Sweden are regulated and supervised by various governmental
bodies. Changes in laws, regulations or governmental policy or the
interpretations of those laws or regulations affecting our activities and those
of our competitors, such as licensing requirements, changes in price regulation
and deregulation of interconnection arrangements, could have a material adverse
effect on us.

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

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

The telecommunications industry is subject to rapid and significant changes in
technology and the effect of technological changes on our businesses cannot be
predicted. Our core offerings may become outdated due to technological
breakthroughs rendering our products out

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of date. In addition, our business plan contemplates the introduction of services
using new technologies. Cablecom and the operations in which we have an
interest in France, Germany and Sweden intend to introduce voice over Internet
protocol, or VoIP, voice telephony services across their networks. Customer
demand for this service is uncertain as customers may not readily switch from
their current telephony service, especially if the quality of the service is
not or is perceived not to be comparable to other telephony services.
Similarly, our investments in other new services such as those related to the
3G mobile network may prove premature and we may not realize anticipated
returns on these new products. The cost of implementation for emerging and
future technologies could be significant, and our ability to fund such
implementation may depend on our ability to obtain additional financing. We
cannot be certain that we would be successful in obtaining any additional
financing required.

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

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

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

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

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

The putative class action lawsuits filed against NTL Incorporated and certain
of its officers which were commenced by seven of its purported shareholders, on
behalf of certain purchasers of NTL Incorporateds securities, in addition to
another suit filed by a shareholder based on similar allegations, may have a
negative impact on its results of operations and business. Three of these
lawsuits have been voluntarily dismissed with respect to NTL Incorporated
because they were filed subsequent to the commencement of NTLs Chapter 11
cases. The Plan provides for the discharge under the discharge under
the Bankruptcy Code of all claims arising out of the remaining suits
against NTL Incorporated if the Plan is consummated. The
claims arising out of the suits against the individual officers remain and will
not be discharged under the Bankruptcy Code if the Plan is consummated. If the
claims against these officers are not resolved, defense of such suits may
divert the officers time and resources from managing the operations of NTLs
business. If these officers spend significant amounts of time defending these
lawsuits, there may be a negative impact on results of operations and business.

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PART II. OTHER INFORMATION




ITEM 1. LEGAL PROCEEDINGS

On May 8, 2002, NTL Incorporated,
NTL (Delaware), Inc., NTL Communications Corp., Diamond Cable
Communications Limited, Diamond Holdings Limited and Communications
Cable Funding Corp. filed a pre-arranged joint reorganization plan
under Chapter 11 of the United States Bankruptcy Code (the
Plan), NTLs operating subsidiaries were not
included in the Chapter 11 filing. On September 5, 2002,
the United States Bankruptcy Court for the Southern District of New
York confirmed the Plan. The consummation of the Plan is subject to
the satisfaction or waiver of certain conditions set forth in the
Plan. Also, on May 8, 2002, Diamond Cable Communications Limited
and Diamond Holdings Limited filed proceedings for Administration in
England.

The Company is involved in certain
other 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.




ITEM 2. CHANGES IN SECURITIES AND USE
OF PROCEEDS

The description of the Plan contained
in Managements Discussion and Analysis under the caption
The Plan sets forth the effect that consummation of the
Plan would have on NTLs outstanding securities.

The description in Managements
Discussion and Analysis under the caption Inability to Pay
Dividends On or Redeem Preferred Stock describes limitations on
NTL Incorporateds ability to pay dividends.




ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Payment Defaults

NTL Communications Corp. did not make scheduled interest payments due April 1,
2002 and April 15, 2002. In accordance with the proposed recapitalization plan,
NTL does not plan to make future interest payments on its outstanding publicly
traded notes except notes issued by NTL Triangle and, upon emergence from
Chapter 11 proceedings, Diamond Holdings Limited.

If the applicable issuer does not pay interest on these notes after a 30 day
grace period expires there is an event of default under the indenture in
respect of the notes on which the interest is due and unpaid. Therefore, there
was an event of default for failure to pay interest on May 1, 2002 under the
indentures relating to the missed interest payments due April 1, 2002 and on
May 16, 2002, under the indentures relating to the missed interest payments due
April 15, 2002. As a result, cross defaults occurred under the Companys and
Diamond Holdings indentures. In addition, the Company did not make scheduled
interest payments due June 15, 2002, August 15, 2002 and October 1, 2002.
Diamond Holdings did not make scheduled interest payments due August 1, 2002.

Chapter 11 Bankruptcy Filing

On May 8, 2002, NTL Incorporated, NTL (Delaware), Inc., NTL Communications
Corp., Diamond Cable Communications Limited, Diamond Holdings Limited and
Communications Cable Funding Corp. filed an arranged joint reorganization plan
under Chapter 11 of the United States Bankruptcy Code. The Chapter 11
bankruptcy filing constituted an event at default under the indentures of each
of the entities which made the Chapter 11 filing and amounts outstanding under
these indentures became immediately due and payable. The automatic stay of
Section 362 of the United States Bankruptcy Code prevents the holders of such
debt from seeking to enforce their collection rights under the indentures,
except within the context of the Chapter 11 cases, and even then only with the
prior approval of the bankruptcy court.

AGGREGATE AMOUNT OF DEFAULTS

Principal

As of September 30, 2002, Diamond Cable Communications and Diamond Holdings are
in default in respect of an aggregate of $1,558.4 million in principal amount
of debt. However, the automatic stay of Section 362 of the U.S. Bankruptcy Code
serves to prevent the holders of such debt from seeking to enforce their
collection rights under the indentures, except within the context of the
Chapter 11 cases, and even then only with the prior approval of the bankruptcy
court.




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



| | (a) |  | Exhibits:
| | --- |  | ---------



| | 99.1 |  | Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
| | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------



| | (b) |  | Reports on Form 8-K:                                                                                                                                                                                                                                                                                                                                                                
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | During the quarter ended September 30, 2002, the Company filed a Current
Report on Form 8-K dated September 6, 2002, reporting under Item 3,
Bankruptcy or Receivership, that the Bankruptcy court entered an order
confirming the Second Amended Joint Reorganization Plan of NTL Incorporated
and Certain Subsidiaries, filed on July 15, 2002 (as modified on September
5, 2002).
|
| |     |  | No financial statements were filed with this report.                                                                                                                                                                                                                                                                                                                                

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SIGNATURES

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

|                        |  |                                      |  |                       
|----------------------- |  | ------------------------------------ |  | ----------------------
|                        |  | DIAMOND CABLE COMMUNICATIONS LIMITED
|                       
|                       
|                       
|                       
|                        |  |                                      |  |                       
|                       
|                       
|                       
|                       
|Date: November 13, 2002 |  | By:                                  |  | /s/ Barclay Knapp     
|                        |  |                                      |  |                       
|                        |  |                                      |  | Barclay Knapp
Director
|                       
|                       
|                       
|                       
|                        |  |                                      |  |                       
|                       
|                       
|                       
|                       
|Date: November 13, 2002 |  | By:                                  |  | /s/ John F. Gregg     
|                        |  |                                      |  |                       
|                        |  |                                      |  | John F. Gregg
Director

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##### Table of Contents



FORM OF CERTIFICATION FOR
QUARTERLY REPORTS ON FORM 10-Q

I, Barclay Knapp, certify that:



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



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



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



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



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



|                        |  |                        | 
|----------------------- |  | ---------------------- | 
|Date: November 13, 2002 |  | /s/ J. Barclay Knapp  
|                        |  |                       
|                        |  | Barclay Knapp
Director

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##### Table of Contents



FORM OF CERTIFICATION FOR
QUARTERLY REPORTS ON FORM 10-Q

I, John F. Gregg, certify that:



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



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



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



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



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



|                        |  |                        | 
|----------------------- |  | ---------------------- | 
|Date: November 13, 2002 |  | /s/ John F. Gregg     
|                        |  |                       
|                        |  | John F. Gregg
Director

58