##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

|              |  |                                                                                                                                                
|------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------
|(Mark One)   
|             
|             
|             
|             
|(X BOX)       |  | Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Quarterly Period Ended:                        
|             
|             
|             
|             
|              |  |                                                                                                                                                
|             
|             
|             
|             
|JUNE 30, 2002
|             
|             
|             
|             
|OR           
|             
|             
|             
|             
|              |  |                                                                                                                                                
|             
|             
|             
|             
|(BOX)         |  | Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Transition Period from _________ to _________.

Commission File Number 33-83740

---

DIAMOND CABLE COMMUNICATIONS LIMITED
(Exact name of registrant as specified in its charter)



---

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|England and Wales                                              |  | N/A                                 
|                                                              
|                                                              
|                                                              
|                                                              
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)

|                                                         |  |                                                                                  
|-------------------------------------------------------- |  | ---------------------------------------------------------------------------------
|Diamond Plaza, Daleside Road
Nottingham NG2 3GG, England |  | Secretary
NTL Incorporated
110 East 59th Street
New York, NY 10022
(212) 906-8440
|                                                        
|                                                        
|                                                        
|                                                        
|(Address of Registrants principal executive offices)    |  | (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 BOX) |  | No (BOX)



---

As of June 30, 2001, 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                           
|RISK FACTORS                                        
|                                                     | PART II. OTHER INFORMATION                                                                   
|                                                     | ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                                      
|                                                     | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                                          
|EX-99.1: CERTIFICATION OF CEO AND CFO               



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##### Table of Contents



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

TABLE OF CONTENTS

|             |  |                       |  |                                                                                                                       |    |        |    | 
|------------ |  | --------------------- |  | --------------------------------------------------------------------------------------------------------------------- | -- | ------ | -- | 
|             |  |                       |  |                                                                                                                       |    | Page  
|             |  |                       |  |                                                                                                                       |    | Number
|             |  |                       |  |                                                                                                                       |    |       
|PART I.      |  | FINANCIAL INFORMATION |  |                                                                                                                       |    |       
|            
|            
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|             |  |                       |  |                                                                                                                       |    |        |    | 
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|             |  | Item 1.               |  | Financial Statements                                                                                                  |    |        |    | 
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|            
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|             |  |                       |  |                                                                                                                       |    |        |    | 
|            
|            
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|             |  |                       |  | Condensed Consolidated Balance Sheets as of
June 30, 2002 (Unaudited) and December 31, 2001                           |    |        | 2  | 
|            
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|            
|             |  |                       |  |                                                                                                                       |    |        |    | 
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|             |  |                       |  | Condensed Consolidated Statements of Operations
for the Six and Three Months Ended June 30, 2002 and
2001 (Unaudited) |    |        | 3  | 
|            
|            
|            
|            
|             |  |                       |  |                                                                                                                       |    |        |    | 
|            
|            
|            
|            
|             |  |                       |  | Condensed Consolidated Statement of Shareholders Deficiency
for the Six Months Ended June 30, 2002 (Unaudited)       |    |        | 4  | 
|            
|            
|            
|            
|             |  |                       |  |                                                                                                                       |    |        |    | 
|            
|            
|            
|            
|             |  |                       |  | Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 2002 and 2001 (Unaudited)           |    |        | 5  | 
|            
|            
|            
|            
|             |  |                       |  |                                                                                                                       |    |        |    | 
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|             |  |                       |  | Notes to the Condensed Consolidated Financial Statements
(Unaudited)                                                  |    |        | 6  | 
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|            
|             |  |                       |  |                                                                                                                       |    |        |    | 
|            
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|             |  | Item 2.               |  | Managements Discussion and Analysis of
Financial Condition and Results of Operations                                 |    |        | 25 | 
|            
|            
|            
|            
|             |  |                       |  |                                                                                                                       |    |        |    | 
|            
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|             |  | Item 3.               |  | Quantitative and Qualitative Disclosures About Market Risk                                                            |    |        | 44 | 
|            
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|             |  |                       |  |                                                                                                                       |    |        |    | 
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|RISK FACTORS |  |                       |  |                                                                                                                       | 46 |       
|            
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|             |  |                       |  |                                                                                                                       |    |        |    | 
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|PART II.     |  | OTHER INFORMATION     |  |                                                                                                                       |    |       
|            
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|             |  |                       |  |                                                                                                                       |    |        |    | 
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|             |  | Item 3.               |  | Defaults Upon Senior Securities                                                                                       |    |        | 53 | 
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|             |  |                       |  |                                                                                                                       |    |        |    | 
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|             |  | Item 6.               |  | Exhibits and Reports on Form 8-K                                                                                      |    |        | 54 | 
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|             |  |                       |  |                                                                                                                       |    |        |    | 
|            
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|            
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|             |  | SIGNATURES            |  |                                                                                                                       | 55 |       





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##### Table of Contents



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




PART I FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS




CONDENSED CONSOLIDATED BALANCE SHEETS

|                                                                                                |                                                                                             |  |                                |          |             |          |              |           |   |           |  
|----------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------- |  | ------------------------------ | -------- | ----------- | -------- | ------------ | --------- | - | --------- | -
|                                                                                                |                                                                                             |  |                                |          | June 30,    |          | December 31,
|                                                                                                |                                                                                             |  |                                |          | 2002        |          | 2001        
|                                                                                                |                                                                                             |  |                                |          |             |          |             
|                                                                                                |                                                                                             |  |                                |          | (Unaudited) |          | (See Note)  
|                                                                                                |                                                                                             |  |                                |          | (in
£000s)
|Assets                                                                                          |                                                                                             |  |                                |          |             |          |              |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Current assets                                                                                  |                                                                                             |  |                                |          |             |          |              |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Cash and cash equivalents                                                                   |  |                                | £10,950  |             |          |              | £4,535    |  
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Trade receivables  less allowance for doubtful accounts
of £4,315 (2002) and £8,373 (2001) |  |                                | 16,583   |             |          |              | 20,049    |  
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Other                                                                                       |  |                                | 888      |             |          |              | 212       |  
|                                                                                                |                                                                                             |  |                                |          |             |          |              |          
|                                                                                                |                                                                                             |  | Total current assets           |          |             | 28,421   |              |           |   | 24,796    |  
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Property and equipment  net                                                                    |                                                                                             |  | 507,229                        |          |             |          | 530,215      |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Deferred financing costs  net of accumulated amortization of
£14,065 (2002) and £12,667 (2001) |                                                                                             |  | 11,087                         |          |             |          | 12,485       |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Goodwill                                                                                        |                                                                                             |  | 66,647                         |          |             |          | 66,647       |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Franchise costs                                                                                 |                                                                                             |  | 316                            |          |             |          | 316          |          
|                                                                                                |                                                                                             |  |                                |          |             |          |              |          
|Total assets                                                                                    |                                                                                             |  | £613,700                       |          |             |          | £634,459     |          
|                                                                                                |                                                                                             |  |                                |          |             |          |              |          
|Liabilities and shareholders deficiency                                                        |                                                                                             |  |                                |          |             |          |              |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Liabilities not subject to compromise                                                           |                                                                                             |  |                                |          |             |          |              |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Current liabilities                                                                             |                                                                                             |  |                                |          |             |          |              |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Accounts payable and accrued expenses                                                       |  |                                | £21,158  |             |          |              | £30,767   |  
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Deferred revenue                                                                            |  |                                | 5,083    |             |          |              | 4,017     |  
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Due to affiliates                                                                           |  |                                | 16,640   |             |          |              | 2,971     |  
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Interest payable                                                                            |  |                                |         |             |          |              | 16,788    |  
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Current portion of long-term debt                                                           |  |                                | 2,480    |             |          |              | 1,059,662 |  
|                                                                                                |                                                                                             |  |                                |          |             |          |              |          
|                                                                                                |                                                                                             |  | Total current liabilities      |          |             | 45,361   |              |           |   | 1,114,205 |  
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Long-term
debt                                                                                  |                                                                                             |  |                               |          |             |          |             |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Commitments
and contingent liabilities                                                          |                                                                                             |  |                                |          |             |          |              |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Liabilities subject to compromise                                                               |                                                                                             |  | 1,066,709                      |          |             |          |             |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Shareholders deficiency:                                                                       |                                                                                             |  |                                |          |             |          |              |          
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Ordinary shares: 150,000,060 authorized; 59,138,851 issued and outstanding                  |  |                                | 1,478    |             |          |              | 1,478     |  
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Additional paid-in-capital                                                                  |  |                                | 317,366  |             |          |              | 317,366   |  
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Accumulated deficit                                                                         |  |                                | (817,214 | )           |          |              | (798,590  | )
|                                                                                                |                                                                                             |  |                                |          |             |          |              |          
|                                                                                                |                                                                                             |  | Total shareholders deficiency |          |             | (498,370 | )            |           |   | (479,746  | )
|                                                                                                |                                                                                             |  |                                |          |             |          |              |          
|Total liabilities and shareholders deficiency                                                  |                                                                                             |  | £613,700                       |          |             |          | £634,459     |          
|                                                                                                |                                                                                             |  |                                |          |             |          |              |          

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

See accompanying notes.

2



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##### Table of Contents






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

|                                            |                   |                                                                                                          |          |                  |         |                    |           |      |         |      |         |     |         |   |          |   |         |  
|------------------------------------------- | ----------------- | -------------------------------------------------------------------------------------------------------- | -------- | ---------------- | ------- | ------------------ | --------- | ---- | ------- | ---- | ------- | --- | ------- | - | -------- | - | ------- | -
|                                            |                   |                                                                                                          |          | Six Months Ended |         | Three Months Ended
|                                            |                   |                                                                                                          |          | June 30,         |         | June 30,          
|                                            |                   |                                                                                                          |          |                  |         |                   
|                                            |                   |                                                                                                          |          | 2002             |         | 2001               |           | 2002 |         | 2001
|                                            |                   |                                                                                                          |          |                  |         |                    |           |      |         |     
|                                            |                   |                                                                                                          |          | (in
£000s)     
|Revenue                                     |                   |                                                                                                          | £90,196  |                  |         |                    | £87,848   |      |         |      | £43,666 |     |         |   | £45,491  |  
|                                            |                   |                                                                                                          |          |                  |         |                    |           |      |         |      |         |     |         |   |          |  
|Costs and expenses                          |                   |                                                                                                          |          |                  |         |                    |           |      |         |      |         |     |         |   |          |  
|                                           
|                                           
|                                           
|                                           
|                                            |                   | Operating
(exclusive of depreciation shown separately below)                                             |          |                  | 44,936  |                    |           |      | 50,493  |      |         |     | 22,203  |   |          |   | 29,532  |  
|                                           
|                                           
|                                           
|                                           
|                                            |                   | Selling, general and administrative                                                                      |          |                  | 28,389  |                    |           |      | 37,179  |      |         |     | 13,566  |   |          |   | 13,192  |  
|                                           
|                                           
|                                           
|                                           
|                                            |                   | Depreciation                                                                                             |          |                  | 31,065  |                    |           |      | 26,652  |      |         |     | 15,385  |   |          |   | 15,456  |  
|                                           
|                                           
|                                           
|                                           
|                                            |                   | Amortization                                                                                             |          |                  |        |                    |           |      | 2,438   |      |         |     |        |   |          |   | 2,438   |  
|                                            |                   |                                                                                                          |          |                  |         |                    |           |      |         |      |         |     |         |   |          |  
|                                            |                   |                                                                                                          | 104,390  |                  |         |                    | 116,762   |      |         |      | 51,154  |     |         |   | 60,618   |  
|                                            |                   |                                                                                                          |          |                  |         |                    |           |      |         |      |         |     |         |   |          |  
|Operating loss                              |                   |                                                                                                          | (14,194  | )                |         |                    | (28,914   | )    |         |      | (7,488  | )   |         |   | (15,127  | )
|                                           
|                                           
|                                           
|                                           
|Other income (expense)                      |                   |                                                                                                          |          |                  |         |                    |           |      |         |      |         |     |         |   |          |  
|                                           
|                                           
|                                           
|                                           
|                                            |                   | Interest income                                                                                          |          |                  | 181     |                    |           |      |        |      |         |     | 86      |   |          |   |        |  
|                                           
|                                           
|                                           
|                                           
|                                            |                   | Interest
expense (contractual interest of £62,590 (2002)) and amortization of
debt discount and expenses |          |                  | (47,978 | )                  |           |      | (60,815 | )    |         |     | (16,681 | ) |          |   | (30,643 | )
|                                           
|                                           
|                                           
|                                           
|                                            |                   | Foreign exchange gains (losses), net                                                                     |          |                  | 43,397  |                    |           |      | (55,448 | )    |         |     | 64,336  |   |          |   | (7,854  | )
|                                            |                   |                                                                                                          |          |                  |         |                    |           |      |         |      |         |     |         |   |          |  
|(Loss)
income before recapitalization items |                   |                                                                                                          | (18,594  | )                |         |                    | (145,177  | )    |         |      | 40,253  |     |         |   | (53,624  | )
|                                           
|                                           
|                                           
|                                           
|Recapitalization item                       |                   |                                                                                                          |          |                  |         |                    |           |      |         |      |         |     |         |   |          |  
|                                           
|                                           
|                                           
|                                           
|                                            | Professional fees |                                                                                                          |          | (30              | )       |                    |           |     |         |      |         | (23 | )       |   |          |  |        
|                                            |                   |                                                                                                          |          |                  |         |                    |           |      |         |      |         |     |         |   |          |  
|Net
(loss) income                           |                   |                                                                                                          | £(18,624 | )                |         |                    | £(145,177 | )    |         |      | £40,230 |     |         |   | £(53,624 | )
|                                            |                   |                                                                                                          |          |                  |         |                    |           |      |         |      |         |     |         |   |          |  

See accompanying notes.

3



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##### Table of Contents






DIAMOND CABLE COMMUNICATIONS LIMITED
(DEBTOR IN POSSESSION)
FORM 10-Q
QUARTER ENDED JUNE 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 | )
|                            
|                            
|                            
|                            
|Net loss                     |  |                 |           |          |  |             |       |               |  |            |         |  |  |  | (18,624   | )     |  |  | (18,624   | )
|                             |  |                 |            |          |  |             |        |               |  |            |          |  |  |  |           |       |  |  |           |  
|Balance at June 30, 2002     |  |                 | 59,138,851 |          |  |             | £1,478 |               |  |            | £317,366 |  |  |  | £(817,214 | )     |  |  | £(498,370 | )
|                             |  |                 |            |          |  |             |        |               |  |            |          |  |  |  |           |       |  |  |           |  

See accompanying notes.

4



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##### Table of Contents






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

|                                                 |                                                |                                           |         |                  |         |      |         |         |         |  
|------------------------------------------------ | ---------------------------------------------- | ----------------------------------------- | ------- | ---------------- | ------- | ---- | ------- | ------- | ------- | -
|                                                 |                                                |                                           |         | Six Months Ended
|                                                 |                                                |                                           |         | June 30,        
|                                                 |                                                |                                           |         |                 
|                                                 |                                                |                                           |         | 2002             |         | 2001
|                                                 |                                                |                                           |         |                  |         |     
|                                                 |                                                |                                           |         | (in £000's)     
|Net cash provided by operating activities        |                                                |                                           | £3,955  |                  |         |      | £18,641 |        
|                                                 |                                                |                                           |         |                  |         |      |         |        
|Investing activities                             |                                                |                                           |         |                  |         |      |         |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Purchase of property and equipment             |                                           |         | (10,317          | )       |      |         | (38,701 | )      
|                                                 |                                                |                                           |         |                  |         |      |         |        
|                                                 |                                                | Net cash used in investing activities     |         |                  | (10,317 | )    |         |         | (38,701 | )
|                                                 |                                                |                                           |         |                  |         |      |         |        
|Financing activities                             |                                                |                                           |         |                  |         |      |         |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Principal payments                             |                                           |         | (184             | )       |      |         | (728    | )      
|                                                
|                                                
|                                                
|                                                
|                                                 | Loan
notes payable to NTL Communications Corp. |                                           |         | 12,961           |         |      |         |        |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Contributions from NTL Communications Corp.    |                                           |         |                 |         |      |         | 22,273  |        
|                                                 |                                                |                                           |         |                  |         |      |         |        
|                                                 |                                                | Net cash provided by financing activities |         |                  | 12,777  |      |         |         | 21,545  |  
|                                                 |                                                |                                           |         |                  |         |      |         |        
|Increase in cash and cash equivalents            |                                                |                                           | 6,415   |                  |         |      | 1,485   |        
|                                                
|                                                
|                                                
|                                                
|Cash and cash equivalents at beginning of period |                                                |                                           | 4,535   |                  |         |      | 8,166   |        
|                                                 |                                                |                                           |         |                  |         |      |         |        
|                                                
|                                                
|                                                
|                                                
|Cash and cash equivalents at end of period       |                                                |                                           | £10,950 |                  |         |      | £9,651  |        
|                                                 |                                                |                                           |         |                  |         |      |         |        
|Supplemental disclosure of cash flow information |                                                |                                           |         |                  |         |      |         |        
|                                                
|                                                
|                                                
|                                                
|                                                 | Cash paid during the period for interest       |                                           |         | £23,598          |         |      |         | £45,892 |        
|                                                 |                                                |                                           |         |                  |         |      |         |        

See accompanying notes.

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##### Table of Contents



DIAMOND CABLE COMMUNICATIONS LIMITED
(DEBTOR IN POSSESSION)
FORM 10-Q
QUARTER ENDED JUNE 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
petitions for relief under Chapter 11 of Title 11 of the United States Code
in the United States Bankruptcy Court for the Southern District of New York.
The Debtors filed jointly with NTL Incorporated, NTL (Delaware), Inc., NTL
Communications Corp 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 move the court for relief from the
stay.
|  
|   |  | The Debtors received approval from the Bankruptcy Court to pay or otherwise
honor certain of their 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.
Contractual interest on those obligations amounts to
£62.6 million, which is £14.6 million in excess
of reported interest expense. Diamond Cable Communications Limited
has discontinued accruing interest expense on its obligations.
Diamond Holdings Limited has continued to accrue interest on its
notes because it is probable that such interest will be paid upon
emergence from Chapter 11 proceedings.                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   |  | 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | Diamond Cable Communications Limited (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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   |  | Throughout this report, NTL Incorporated together with its consolidated
subsidiaries are referred to as NTL.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   |  | 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 six
months ended June 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 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

6



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##### Table of Contents



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

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
(Unaudited)



|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 United States Bankruptcy Code (referred to as
the proposed recapitalization plan). NTL Triangle and NTLs operating
subsidiaries were not included in the Chapter 11 filing. Toward the end of
2001, while NTL continued to have sufficient liquidity to meet its near term
obligations, it recognized the negative impact of the collapsing European
and U.S. telecommunications markets on its ability to service its debt.
Accordingly, NTL began to implement a strategy to preserve and maximize its
enterprise value. This strategy included the implementation of cost-cutting
measures and the commencement of discussions with certain third parties
regarding strategic alternatives for NTLs business.                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   |  | The Group historically incurred operating losses and negative operating
cash flow. In addition, the Group has required significant amounts of
capital to finance construction of its networks, connection of customers to
the networks, other capital expenditures and for working capital needs
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., a wholly-owned subsidiary of NTL Incorporated. 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 its 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, NTLs UK credit facilities are fully drawn. The revolving
tranche of the Cablecom credit facility has been capped at its utilized
amount of CHF 1,055.0 million although the availability may be increased
with the consent of the requisite majority of the lenders under that
facility. The term tranche of the Cablecom credit facility is fully drawn.
NTL has missed interest payments totaling $381.5 million
beginning on April 1, 2002 including interest payments of the
Company and Diamond Holdings of $69.3 million. Upon emerging
from Chapter 11 proceedings, NTL intends to make any required interest
payments on the notes of Diamond Holdings. In accordance with the proposed
recapitalization plan, NTL does not plan to make future interest payments on
its currently outstanding publicly traded notes except notes issued by NTL
Triangle and, upon emergence from Chapter 11 proceedings, Diamond Holdings
Limited.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   |  | As of June 30, 2002, the
Group had approximately £11.0 million in cash and
cash equivalents on hand. The Group may require additional cash in the
twelve months from July 1, 2002 to June 30, 2003. NTL Incorporated obtained
a Court approved $630 million DIP facility (described below) on July 15,
2002 to meet the potential cash requirements of its and its subsidiaries,
excluding Cablecom. NTL Incorporated expects that the DIP facility will be
replaced with an exit facility for NTL Communications Corp. and its
subsidiaries, including the Company and its subsidiaries, upon the
completion of the recapitalization process, in part because the DIP facility
will mature concurrently with the Debtors emergence from Chapter 11. The
Group estimates that its capital expenditures and debt service
requirements, net of cash from operations, will aggregate up to
approximately £4.5 million from July 1, 2002 to June 30, 2003. Management of
the Company believes that cash and cash equivalents on hand at June 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 July 1, 2002 to June 30, 2003.                                                                                                                                                                       

7



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##### Table of Contents



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

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
(Unaudited)



| |  | 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.                                                                                                                                                                                                                                                         
|
| |  | Liberty Media Corporation, one of such potential strategic investors, which
is also a significant shareholder in Telewest plc, another British cable and
telephone company, has discussed various transactions with NTL from time to
time over the past several years. In March 2002, Liberty and NTL amended a
previously existing confidentiality agreement between them to cover the
restructuring process and to include a standstill agreement which
prohibited various acquisitions of, or offers, for NTL debt or equity
securities by Liberty and its subsidiaries until June 30, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | On April 17, 2002, Liberty sent a proposal to NTLs board of directors,
which proposed a cash tender offer for 30% of the outstanding bonds of NTL
Communications Corp. at a small premium to the prevailing market price and
an agreement to vote such acquired bonds in favor of the proposed plan of
reorganization, as well as a participation with NTL in a cash infusion of
up to $500 million into Cablecom. After consultation with NTLs
board of directors and the steering committee of bondholders on April 18,
2002, NTL indicated to Liberty that it did not consider the Liberty proposal
to be in the best interests of NTL and that the best course of action for
NTL to maximize its enterprise value was to promptly consummate the proposed
plan of reorganization. By letter dated June 28, 2002, NTL received notice
that Liberty was ceasing all discussions with NTL concerning its proposals.                                                                                                          
|
| |  | Promptly upon obtaining the requisite waivers from the lenders under its
credit facilities, in March 2002, NTL commenced negotiations with the
steering committee of the unofficial committee of bondholders and its legal
and financial advisors. The negotiations continued during the latter part of
March and throughout April 2002, and also included France Telecom. On April
16, 2002, NTL 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. On May 2, 2002, a steering committee of the lending
banks under NTLs credit facilities gave their approval in principle (on a
non-legally binding basis) to NTLs proposed plan of reorganization.                                                                                                                                                                                                   
|
| |  | The reorganization plan, if implemented, 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 NTL UK and Ireland (one of two new entities
to be created under the plan). In addition, if 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
reorganization plan contemplates that the UK bank debt will remain in place
as part of the recapitalization. NTL would be split into
two companies, one tentatively called NTL UK and Ireland, holding its main
UK and Ireland assets, and one tentatively called NTL Euroco, holding
certain of its continental European and other assets.

8



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##### Table of Contents



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

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
(Unaudited)



| |  | To implement the proposed
recapitalization, on May 8, 2002, NTL Incorporated, NTL
(Delaware), Inc., NTL Communications Corp., Diamond Cable
Communications Limited, Diamond Holdings Limited and Communications
Cable Funding Corp. filed cases and a prearranged joint
reorganization plan under Chapter 11 of the United States
Bankruptcy Code. 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 ten 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.; MacKay Shields LLC; SAB
Capital Management, L.P.; and W.R. Huff Asset Management Co., LLC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | On May 24, 2002, NTL and
its debtor subsidiaries filed an amended joint reorganization plan and
disclosure statement. The Bankruptcy Court approved the disclosure statement
on July 12, 2002 as containing information of a kind and in sufficient
detail to enable the holders of claims against or interests in the debtors
to make an informed judgment with respect to the reorganization plan prior
to exercising their right to vote to accept or reject the reorganization
plan. At that time the Court set September 5, 2002 as the date for the
hearing to consider confirmation of the amended joint reorganization plan as
subsequently amended. On July 15, 2002, NTL Incorporated and its debtor
subsidiaries filed an amended disclosure statement and a second amended
joint reorganization plan. A copy of the second amended joint reorganization
plan and the related disclosure statement are included as exhibits to NTL
Incorporateds Current Report on Form 8-K filed on July 16, 2002.                                                                                                                                                                                                                                                                                                       
|
| |  | The filing of the petitions seeking relief filed under Chapter 11
constituted an event of default under the indentures of each of the entities
which filed Chapter 11 petitions 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 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, and a steering committee of those lenders has
agreed in principle (in a non-legally binding manner) to the proposed
recapitalization.                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | Recapitalization Expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Recapitalization items of
£30,000 were incurred in the six months ended June 30,
2002. NTL expects to incur approximately $50.0 million in
additional recapitalization costs until the completion of the process. The
proposed joint reorganization plan provides that recapitalization costs will
be allocated between NTL UK and Ireland and NTL Euroco.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | A subsidiary of NTL in the UK
has incurred recapitalization expenses of approximately
£23 million through June 30, 2002, including
approximately £13 million for employee retention related to
substantially all of NTLs UK employees and approximately
£10 million for financial advisor, legal, accounting and
consulting costs. The Company expects to be charged in the third
quarter of 2002 for its share of these expenses as well as expenses
incurred after June 30, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | DIP facility                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | In connection with the proposed joint reorganization plan, some members of
the official unsecured creditors committee of bondholders committed to
provide up to $500 million of new debt financing to NTL Incorporated and
some of its subsidiaries during the Chapter 11 process. The new financing
will ensure that NTLs business operations have access to sufficient liquidity
to continue ordinary operations. GE Capital, an affiliate of GE Capital
Structured Finance Group Limited, one of the lenders under the Senior Credit
Facility, and Wilmington Trust Company, the trustee under the Indentures
governing certain of the NTL Incorporated subordinated notes, filed
objections to the DIP facility. The Bankruptcy Court approved the 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) over such objections in an order issued
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.
|
| |  | In connection with the commitment, NTL Incorporated and its debtor
subsidiaries were to pay a commitment fee to the bondholder DIP lenders
equal to 2% of the $500 million commitment (i.e., $10 million). Accordingly,
on May                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

9



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##### Table of Contents



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

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
(Unaudited)



| |  | 6, 2002, and May 7, 2002, NTL delivered to its bank written
instructions to pay by wire transfer to each lender under the DIP facility
such lenders pro rata portion of the commitment fee. Due to administrative
difficulties, however, some of the lenders under the DIP facility did not
receive their pro rata portion of the commitment fee prior to the
commencement of the Chapter 11 cases. In total, as of May 8, 2002, $428,000
of the $10 million commitment fee had not been paid to the applicable
lenders under the DIP facility. Pursuant to an order of the court dated May
31, 2002, the remaining $428,000 of the commitment fee was paid to the
applicable lenders under the DIP facility.                                                                                                                                
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Each term loan under the DIP facility will bear 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.                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | NTL (Delaware), Inc. is also a lender under the DIP facility and will lend
up to $130 million. NTL (Delaware), Inc. has cash on hand and, because the
Chapter 11 cases are not substantively consolidated, NTL Incorporated and
its debtor subsidiaries and the steering committee of bondholders have
concluded that the cash at NTL (Delaware), Inc. is to be used to partially
fund the reorganization of all of the debtors. NTL (Delaware), Inc. will
receive interest and is entitled to the same protections as the other
bondholder DIP lenders.                                                                                                                                                                                                                                                                                      
|
| |  | Under the DIP facility agreement, Communications Cable Funding is the
borrower, and the other debtors (other than Diamond Cable and Diamond
Holdings) are guarantors, except that NTL Communications Corp. is also a
co-obligor of the loans from NTL (Delaware), Inc. Under the DIP facility
agreement, the cash (except for the DIP facility proceeds) of the borrower
and the guarantors will be 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.                                                                                                                 
|
| |  | 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 reorganization 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.                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | On July 17, 2002, NTL drew the first tranche available under the facility in
the amount of $229.0 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | A copy of the DIP facility agreement was attached as an exhibit to Form 8-K
filed by NTL Incorporated with the 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 NTLs
proposed plan, NTL will require the reorganized NTL to enter into an exit
financing facility. The exit financing or any alternative financing would
refinance (at least in part) the DIP facility and may be used as
consideration for the refinancing of a £90 million note payable to NTL
(Delaware), Inc. from NTL (UK) Group Inc. Because of the present market
conditions which are unfavorable to telecommunications companies generally,
there can be no assurance that NTL will successfully obtain an acceptable
exit facility, although NTL is presently in discussions with various parties
about alternatives.
|
| |  | NTL expects that the exit facility may be secured by various assets of the
reorganized NTL, including those which secure the DIP facility, would rank
senior to all current and future subordinated debt of the reorganized NTL.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | NTL also expects that the exit facility would impose operating and financial
restrictions on the reorganized NTL and its subsidiaries. These restrictions
would significantly limit or prohibit, among other things, the reorganized                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

10



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

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
(Unaudited)



| |  | NTLs ability 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. The
exit facility also likely would require the reorganized NTL to satisfy
financial covenants on an ongoing basis. NTL cannot determine at this time
whether these financial covenants would have a material impact on the
reorganized NTLs ability to finance future operations or capital needs 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | Proposed Recapitalization Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Under the proposed recapitalization plan, NTL would be split into two
companies, one tentatively called NTL UK and Ireland and holding
substantially all of NTLs UK and Ireland assets, and one tentatively called
NTL Euroco and holding substantially all of NTLs continental European and
other assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Holders of notes of NTL Incorporated (other than France Telecom), NTL
(Delaware), Inc. (other than France Telecom), NTL Communications Corp. and
Diamond Cable Communications Limited would in the aggregate receive 100% of
the initial common stock of NTL UK and Ireland (excluding shares issuable in
the rights offerings and upon the exercise of warrants (discussed below) and
upon the exercise of options which will be granted to certain employees of
NTL UK and Ireland). Holders of notes of NTL Incorporated (other than France
Telecom), NTL (Delaware), Inc. (other than France Telecom) and NTL
Communications Corp. would in the aggregate receive (i) 100% of the
preferred stock of NTL Euroco and (ii) a certain amount of cash as specified
in the amended joint reorganization plan. Holders of the subordinated notes
of NTL Incorporated (other than France Telecom), NTL (Delaware), Inc. (other
than France Telecom) and NTL Communications Corp. would in the aggregate
receive 86.5% of the initial common stock of NTL Euroco (excluding shares
issuable upon the exercise of options which will be granted to certain
employees of NTL Euroco). Holders of senior notes of NTL Communications
Corp. would receive the value of a specified number of shares of common
stock of NTL Euroco pursuant to the amended joint reorganization plan. Notes
of Diamond Holdings Limited and NTL (Triangle) LLC would remain outstanding and interest payments
will be made.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | Current preferred and common stockholders of NTL Incorporated, including
France Telecom, would receive warrants to purchase common stock of NTL UK
and Ireland and rights entitling them to purchase common stock of NTL UK and
Ireland. For each share of common stock purchased upon exercise of rights,
the person exercising such rights will receive a warrant to purchase one
share of common stock of NTL UK and Ireland. The rights will be exercisable,
on an oversubscription basis, for the 20-business day period after the entry
of the confirmation order, as such period may be extended, and the warrants
will be exercisable for a period of eight years at an exercise price of
$77.47 per share. The number of shares to be received upon exercise of the
warrants is subject to customary adjustments for stock splits, stock
recapitalizations and distributions of property (other than cash) to holders
of NTL UK and Ireland Common Stock. If fully exercised, the rights and
warrants would entitle the current preferred stockholders of NTL
Incorporated to acquire approximately 23.6% and the current common
stockholders of NTL Incorporated to acquire approximately 8.9% of NTL UK and
Irelands primary common stock on the effective date of the
recapitalization. Holders of the subordinated notes of NTL Incorporated
(other than France Telecom), NTL (Delaware), Inc. (other than France
Telecom), and NTL Communications Corp. would have the right to purchase any
shares of NTL UK and Ireland common stock and warrants not subscribed for in
the rights offering by the preferred and common stockholders of NTL
Incorporated. It is expected that the warrants will be listed or quoted on
the same exchange or inter-dealer quotation system as the shares of common stock of the
reorganized NTL. NTL has had preliminary conversations with the New York
Stock Exchange regarding the listing of the common stock of NTL UK and
Ireland on the Exchange following the effective date of its plan of
reorganization. Based on these preliminary conversations there has been no
indication from the New York Stock Exchange that NTL UK and Ireland will
qualify for listing on the Exchange. There can be no assurance that shares
of NTL UK and Ireland common stock and/or Series A warrants will be listed
on an exchange or be eligible for trading on an inter-dealer

11



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##### Table of Contents



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

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
(Unaudited)



| |  | quotation
system on the effective date of the bankruptcy or at any time thereafter or
that an orderly trading market will develop for these securities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Current preferred stockholders, other than France Telecom, would receive
approximately 3.2% and current common stockholders, other than France
Telecom, would receive approximately 10.3% of the primary equity of NTL
Euroco. It is contemplated that, subject to the consummation of the
recapitalization, France Telecom would also receive NTL Incorporateds 27%
interest in Noos, pursuant to a pledge of such interest to France Telecom
given at the time of its acquisition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | During the recapitalization process, NTL has maintained normal and regular
trade terms with its suppliers and customers. There can be no assurance that
NTLs suppliers will continue to provide normal trade credit or credit on
acceptable terms, if at all, or that customers will continue to do business
or enter into new business with NTL. See also Risk Factors for a summary
of risks related to NTLs business in general and the recapitalization
process in particular.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Section 1129 of the United States Bankruptcy Code requires, among other
things, a showing that confirmation of the proposed recapitalization plan
will not be followed by liquidation or the need for further financial
reorganization of NTL Incorporated, NTL (Delaware), Inc., NTL Communications
Corp., Diamond Cable Communications Limited or Diamond Holdings Limited, and
that the value of distributions to dissenting holders of claims and
interests may not be less than the value such holders would receive in a
liquidation under Chapter 7 of the United States Bankruptcy Code. Although
NTL believes that the proposed recapitalization plan will meet these tests,
there can be no assurance that the Bankruptcy Court will reach the same
conclusion.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | The United States Bankruptcy Code also requires that a plan must provide the
same treatment for each claim or interest in a particular class, unless a
holder agrees to a less favorable treatment of its particular claim or
interest. NTL believes that the proposed recapitalization plan complies with
this requirement of the United States Bankruptcy Code. However, if a member
of a class objects to its treatment, or if the Bankruptcy Court finds that
the proposed recapitalization plan does not comply with the requirements of
the United States Bankruptcy Code, confirmation of the plan could be delayed
or prevented. In addition, each class of impaired claims and interests that
will (or may) be entitled to receive property under the plan will have the
opportunity to vote to accept or reject the plan. If an impaired class of
claims or interests rejects the plan, NTL may request confirmation
of the plan pursuant to the cramdown provisions of the United States
Bankruptcy Code. Even if the requirements for cramdown are met, the
Bankruptcy Court, which, as a court of equity may exercise substantial
discretion, may choose not to confirm the plan. These can be no assurance
that the proposed recapitalization plan will be confirmed.
|
| |  | Bank Waivers                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | Before NTL could commence negotiations with the unofficial committee of
bondholders, it was necessary to obtain waivers from the lenders under NTLs
credit facilities. Effective March 8, 2002, these lenders granted waivers
which, until March 29, 2002, provided that the commencement of negotiations
with bondholders with a view to rescheduling its debt would not constitute
an event of default under the credit facilities. Such initial waivers did
not permit NTL to make to any of its bondholders an exchange or similar
offer for NTLs outstanding public notes or to enter into a legally binding
agreement with the unofficial steering committee of bondholders, subject to
some exceptions, without the consent of the lenders under the credit
facilities. But for the initial waivers, the commencement of negotiations
with bondholders would have been an event of default under the credit
facilities.                                                                                                                                                                                                                                                                                                                                                       
|
| |  | Effective March 28, 2002, the lenders under the credit facilities agreed to
amend the initial waivers. The amendments to the initial waivers extended
the duration of the initial waivers to April 29, 2002 in the case of the UK
credit facilities or May 14, 2002 in the case of the Cablecom credit
facility, unless the interest payments missed by NTL Communications Corp. on
April 1, 2002 were remedied or a sufficient number of bondholders agreed to
forbear in respect of such non-payment, in which case, the UK credit
facilities waivers were to be extended to May 14, 2002. As a condition to
the amendment to the initial waivers, the UK lenders required NTL
(Delaware), Inc. to                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

12



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##### Table of Contents



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

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
(Unaudited)



| |  | loan £90 million to NTL (UK) Group, Inc. following
receipt of the proceeds from the sale of NTL Australia. Such loan was
actually made (with the approval of the lenders under the UK credit
facilities) to NTL (UK) Group, Inc. and then on-lent to certain subsidiaries
of NTL (UK) Group, Inc. This loan, which was made on April 5, 2002, is
structurally senior to the outstanding public notes issued by NTL
Communications Corp. and contractually senior to intra-group debt owed by
NTL (UK) Group, Inc. to NTL Communications Corp. but contractually
subordinated to the UK credit facilities. In connection with the amendments
to the waivers, NTL affirmed the provisions of the initial waivers and
agreed, among other things, not to commence voluntary dissolution
proceedings, including proceedings under Chapter 11 of the United States
Bankruptcy Code, without the consent of these lenders.                                                                                                                                                                                             
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | As of the date of this Form 10-Q, there are no current waivers from NTLs
secured lenders and NTL is therefore in default under its UK credit
facilities and the Cablecom credit facility. In connection with the proposed
recapitalization plan, it is intended that the existing events of default
under the credit facilities will be cured by amendment with effect from the
effective date of the recapitalization, if it is approved by creditors and
the Bankruptcy Court. On May 2, 2002, a memorandum was executed by NTL, a
steering committee of its lending banks and the unofficial committee of its
public bondholders indicating the parties agreement in principle (on a
non-legally binding basis) to the terms of the proposed recapitalization and
the terms on which the Companys UK credit facilities should be amended and
restated and with respect to certain matters relating to the sale of, or
investment in, Cablecom.                                                                                                                                                             
|
| |  | Cablecom GmbH, an indirect wholly-owned subsidiary of NTL (Delaware), Inc.,
is the principal trading company of NTLs Swiss group. The Company does not
have any ownership interest in this group, although the condition of this
group can indirectly impact the Group to the extent
it impacts NTL Incorporated or NTL (Delaware), Inc., both parent companies
of the Company. There were a number of technical defaults under the Swiss
credit facility made available to Cablecom and various of its subsidiaries.
In addition, as of December 31, 2001, Cablecoms and six of its direct and
indirect subsidiaries liabilities exceeded their respective assets. As a
consequence, under Swiss law, those entities were deemed to be
overindebted. This also constituted an event of default under the Cablecom
credit facility, which entitled the lenders to accelerate repayment. Such an
acceleration would have resulted in an event of default under NTL
Incorporateds and NTL (Delaware), Inc.s 5.75% convertible subordinated
notes due 2011 and 5.75% convertible subordinated notes due 2009.
|
| |  | Under Swiss law, the board of directors of an overindebted company is
generally obliged to notify a judge of overindebtedness so that the judge
may either institute insolvency proceedings or postpone such adjudication
and take appropriate measures to preserve the value of the assets. An
overindebted company is not required to notify a judge if the creditors of
the overindebted entity subordinate their claims in the amount of the
overindebtedness.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | The problem of 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 resolved in
those subsidiaries by way of subordination agreements which obviated any
requirement to institute insolvency proceedings in respect of these
companies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | At the end of April 2002 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. However, 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | 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 have become payable and have not been paid; (2)
NTL (Delaware), Inc. has commenced negotiations with its creditors with a
view to the general rescheduling of its indebtedness and has commenced
proceedings under Chapter 11 of the U.S. Bankruptcy Code pursuant to which
it intends to reorganize its debt; (3) NTL (Delaware), Inc. has liabilities
which exceed the value of its assets and is unable to pay its debts as they
fall due; (4) Cablecom was unable to satisfy the conditions to allow it to
rollover                                                                                                                                                                                                                                                                                                                                                                                                            

13



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##### Table of Contents



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

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
(Unaudited)



| |  | 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; (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 have yet to be fulfilled.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The outstanding defaults under the Cablecom finance documents entitle the
facility agent to demand repayment of the loan and enforce the security
granted to secure that loan. The facility agent has discretion to take those
steps and can be compelled to take those steps by a group of banks holding
at least 66-2/3% in aggregate of the loan.                                                                       
|
| |  | Future developments in Cablecoms business, as well as external factors,
could result in a reemergence of the over indebtedness issue under Swiss
law.                                                                                                                                                                                                                                                                     
|
| |  | 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



| |  | Interest payments of $18.9 million were made, when due, on April 2, 2002 in
respect of Diamond Cable Communications 13.25% senior discount notes due
2004. Upon emerging from Chapter 11 proceedings, NTL
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

14



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##### Table of Contents



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

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
(Unaudited)



| |  | intends to make any
required interest payments on the notes of Diamond Holdings Limited. In
accordance with the proposed recapitalization plan, NTL does not plan to
make future interest payments on its currently 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. 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 NTLs
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 NTLs voluntary filing under Chapter 11 of the United
States Bankruptcy Code on May 8, 2002, there is an event of default under
all of NTLs credit facilities and the indentures governing all
of NTLs
publicly traded debt, other than debt of NTL Triangle. As a result of the
Chapter 11 filings, all of NTLs publicly traded debt, other than the debt of
NTL Triangle, became immediately due and payable, pursuant to the terms of
the indentures governing such debt. The automatic stay of Section 362 of the
United States Bankruptcy Code prevents the holders of such debt from seeking
to enforce their collection rights under the indentures, except within the
context of the Chapter 11 cases, and even then only with the prior approval
of the Bankruptcy Court. However, NTL has received letters from the agents
for the lenders under the UK credit facilities reserving such lenders
rights to accelerate repayment of the facilities and to enforce the security
granted in respect of the facilities on account of the defaults thereunder,
actions which would not be prohibited by the automatic stay.
|
| |  | Credit Rating Downgrades                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | On April 3, 2002, credit rating agency Standard & Poors lowered the
long-term corporate credit rating on 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.
This determination was based upon, among other things, the selling price of
NTL Incorporateds common stock, which closed at $0.20 on March 26, 2002.
The continued listing standards of the NYSE, which were applicable to NTL
Incorporated, required maintenance of a minimum share price of $1.00 over a
30 trading day period and average global market capitalization of $100
million over a 30 trading day period. NTL Incorporateds common stock fell
below both of these continued listing standards. In addition, on May 9,
2002, Nasdaq Europe halted trading of the NTL Incorporateds common stock
pending receipt of information relating to the restructuring process because
of the filing of NTL Incorporateds Chapter 11 cases. NTL has complied with
this information request, although there can be no assurance that Nasdaq
Europe will (1) not make additional information requests, (2) remove the
trading halt on shares of NTL Incorporateds common stock or (3) not delist
shares of NTL Incorporateds common stock. NTL Incorporateds common stock
is currently quoted on the Over the Counter Bulletin Board under the symbol
NTLD.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

15



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##### Table of Contents



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

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
(Unaudited)



| |  | Sale of NTL Australia                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | On April 2, 2002, NTL announced that it had completed the previously
announced sale of its Australian broadcast business to Macquarie
Communications Infrastructure Holding Pty Limited for A$850 million
(US$451.3 million). The net proceeds from the sale were approximately
A$575.3 million (US$304.5 million). At that time, the business bank debt
outstanding totaled A$227.3 million (US$121.7 million). The Company did not
have an 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. The
remaining proceeds of the sale of NTL Australia remain at NTL (Delaware),
Inc., and the proposed plan of reorganization anticipates that such proceeds
will form a portion of the consideration to be offered to bondholders of NTL
(Delaware), Inc. and NTL Incorporated in satisfaction of their claims
against those companies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | Potential Sale of, or Outside Investment in, Cablecom                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | It has been agreed to engage UBS Warburg LLC by August 31, 2002 to advise in
connection with an outside investment in, or sale of all or part of,
Cablecom. As part of this process, NTL (Delaware), Inc. and certain of its
subsidiaries have agreed to approve any such outside investment or sale,
which is acceptable to the lenders under the Cablecom credit facility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | It has also been agreed that if such a sale of all or part of Cablecom is
consummated on or before August 31, 2003, the lenders under the Cablecom
credit facility will be entitled to receive additional interest equal to 20%
of the net proceeds of such a sale after repayment of the amounts
outstanding under the Cablecom credit facility and other expenses and taxes
of the sale. There can be no assurance that any outside investment in, or
sale of all or part of, Cablecom pursuant to the Cablecom credit facility
will be on terms that are favorable to NTL and such investment or sale could
have a material adverse effect on NTLs finances and business.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | In particular, in the current environment, NTLs shareholding in Cablecom
may have little or no value, which may result in NTL receiving little or no
consideration for its equity interest in Cablecom. Further, if a third party
makes an investment in Cablecom there can be no assurance that NTL will be
able to maintain its ability to direct the management of Cablecom.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Investments in and Loans to Affiliates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | On April 15, 2002, a funding request for $20 million was received by NTL
under the terms of the investment agreement relating to NTLs investment in
B2 in Sweden, a company which is deploying fiber directly to the home
throughout Scandinavia. The Company does not have any ownership interest in
B2 although the condition of B2 can indirectly impact the Group to the
extent it impacts NTL Incorporated or NTL (Delaware), Inc., both parent
companies of the Company. NTL has informed B2 and the other principal
investors that it is not in a position to comply with this request for
funding at this time. The B2 investment agreement provides that if NTL fails
to provide such funding, it may be sued for non-payment and arguably could
lose certain rights under the B2 shareholders arrangements. Pursuant to the
applicable documents, if this occurs the majority remaining shareholders may
also elect to terminate the shareholder arrangements 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 elected to
exercise these rights, NTL could be forced to sell its stake in B2 at a
loss. On June 25, 2002, B2 and its remaining shareholders filed a motion in
the Bankruptcy Court requesting relief from the automatic stay provisions of
section 362 of the Bankruptcy Code to exercise their rights under the
relevant agreements. Notwithstanding the arguments raised in the motion, NTL
believes that the Bankruptcy Code provides various defenses and protections
of and for NTLs rights under the B2 investment agreement and in respect of
its equity interest in B2 and intends to enforce vigorously its rights and
protections.

16



---



##### Table of Contents



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

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
(Unaudited)



|   |  | Premium TV Limited, a wholly-owned subsidiary of NTL (Delaware), Inc., is
obliged to provide funding of up to approximately £62.0 million ($94.5
million) to fund various of its joint venture interests. Of this amount, the
payment of approximately £50.0 million ($76.2 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, which may also result in a cessation of
substantially all of Premium TV Limiteds activities. As a result of the
restructuring 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. 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 Company does
not have an ownership interest in Premium TV Limited, although the condition
of Premium TV Limited can indirectly impact the Group to the extent it
impacts NTL Incorporated or NTL (Delaware), Inc., both parent companies of
the Company.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|   |  | In August 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   |  | 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, unless there are new indicators of
impairment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | 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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

|                       |                 |  |                           |   |      |  |           |       | 
|---------------------- | --------------- |  | ------------------------- | - | ---- |  | --------- | ----- | 
|                       |                 |  | Six Months Ended June 30,
|                       |                 |  |                          
|                       |                 |  | 2002                      |   | 2001
|                       |                 |  |                           |   |     
|Net loss  as reported |                 |  | £(18,624                  | ) |      |  | £(145,177 | )    
|                      
|                      
|                      
|                      
|Amortization of:       |                 |  |                           |   |      |  |           |      
|                      
|                      
|                      
|                      
|                       | Goodwill        |  |                           |  |      |  |           | 2,425 | 
|                      
|                      
|                      
|                      
|                       | Franchise costs |  |                           |  |      |  |           | 13    | 
|                       |                 |  |                           |   |      |  |           |      
|                       |                 |  |                          |   |      |  | 2,438     |      
|                       |                 |  |                           |   |      |  |           |      
|Net loss  as adjusted |                 |  | £(18,624                  | ) |      |  | £(142,739 | )    
|                       |                 |  |                           |   |      |  |           |      

17



---



##### Table of Contents



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

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
(Unaudited)



|5. |  | Comprehensive Loss                                                                                                                                                                                                                                                                 
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Consolidated comprehensive
loss for the six months ended June 30, 2002 and 2001
was £18.6 million and £145.2 million,
respectively. Consolidated comprehensive income
(loss) for the three months ended June 30, 2002 and 2001
was £40.2
million and (£53.6) million, respectively.
|  
|6. |  | Property and Equipment                                                                                                                                                                                                                                                             
|  
|   |  | Property and equipment consists of (in £000s):                                                                                                                                                                                                                                    

|                                    |                           |               |             |  |          |  |              |         |          |  |          |         | 
|----------------------------------- | ------------------------- | ------------- | ----------- |  | -------- |  | ------------ | ------- | -------- |  | -------- | ------- | 
|                                    |                           |               | Estimated   |  | June 30, |  | December 31,
|                                    |                           |               | Useful Life |  | 2002     |  | 2001        
|                                    |                           |               |             |  |          |  |             
|                                    |                           |               | (Unaudited)
|Set-top boxes and materials         |                           | 3 Years       |             |  | £162,483 |  |              |         | £161,527 | 
|                                   
|                                   
|                                   
|                                   
|Head-ends, switches and electronics |                           | 15 Years      |             |  | 278,385  |  |              |         | 275,921  | 
|                                   
|                                   
|                                   
|                                   
|Civil work                          |                           | 40 Years      |             |  | 318,268  |  |              |         | 311,849  | 
|                                    |                           |               |             |  |          |  |              |         |          |  |          |        
|                                    | Total Operating Equipment |               |             |  |          |  |              | 759,136 |          |  |          | 749,297 | 
|                                    |                           |               |             |  |          |  |              |         |          |  |          |        
|Land and Buildings                  |                           | 50 Years      |             |  | 5,872    |  |              |         | 5,872    | 
|                                   
|                                   
|                                   
|                                   
|Leasehold Buildings                 |                           | 25 Years      |             |  | 2,440    |  |              |         | 2,440    | 
|                                   
|                                   
|                                   
|                                   
|Computer Equipment                  |                           | 3 to 5 Years  |             |  | 12,354   |  |              |         | 12,354   | 
|                                   
|                                   
|                                   
|                                   
|Vehicles, furniture and other       |                           | 3 to 15 Years |             |  | 3,721    |  |              |         | 3,720    | 
|                                    |                           |               |             |  |          |  |              |         |          |  |          |        
|                                    | Total Other Equipment     |               |             |  |          |  |              | 24,387  |          |  |          | 24,386  | 
|                                    |                           |               |             |  |          |  |              |         |          |  |          |        
|Construction in progress            |                           |               |             |  |          |  | 8,976        |         |          |  | 10,738   |        
|                                    |                           |               |             |  |          |  |              |         |          |  |          |        
|                                    |                           |               |             |  |          |  | 792,499      |         |          |  | 784,421  |        
|                                   
|                                   
|                                   
|                                   
|Accumulated depreciation            |                           |               |             |  |          |  | (285,270     | )       |          |  | (254,206 | )      
|                                    |                           |               |             |  |          |  |              |         |          |  |          |        
|                                    |                           |               |             |  |          |  | £507,229     |         |          |  | £530,215 |        
|                                    |                           |               |             |  |          |  |              |         |          |  |          |        



|7. |  | Liabilities subject to compromise                        
|-- |  | ---------------------------------------------------------
|  
|   |  | Liabilities subject to compromise consist of (in £000s):

|                                                                                     |  |             |           
|------------------------------------------------------------------------------------ |  | ----------- | ----------
|                                                                                     |  | June 30,   
|                                                                                     |  | 2002       
|                                                                                     |  |            
|                                                                                     |  | (Unaudited) |           
|Accrued interest                                                                     |  |             | £35,737   
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|13 1/4% Senior Discount Notes                                                        |  |             | 187,013   
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|11 3/4% Senior Discount Notes                                                        |  |             | 348,280   
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|10 3/4% Senior Discount Notes                                                        |  |             | 275,828   
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|10% Senior Sterling Notes                                                            |  |             | 135,000   
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|9 1/8% Senior Notes                                                                  |  |             | 72,089    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|30%
Loan Note payable to NTL Communications Corp. including accrued
interest of £372 |  |             | 12,762    
|                                                                                     |  |             |           
|                                                                                     |  |             | £1,066,709
|                                                                                     |  |             |           



| |  |                                                                                                                                                                                                
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.

18



---



##### Table of Contents



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

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
(Unaudited)



|8. |  | Long  Term Debt                                                                      
|-- |  | --------------------------------------------------------------------------------------
|  
|   |  | Long  term debt, exclusive of amounts subject to compromise, consists of
(in £000s):

|                              |  |             |       |              |  |   |           | 
|----------------------------- |  | ----------- | ----- | ------------ |  | - | --------- | 
|                              |  | June 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                 |  |             | 2,031 |              |  |   | 2,098     | 
|                             
|                             
|                             
|                             
|Capital leases                |  |             | 449   |              |  |   | 417       | 
|                              |  |             |       |              |  |   |           | 
|                              |  |             | 2,480 |              |  |   | 1,059,662 | 
|                             
|                             
|                             
|                             
|Less current portion          |  |             | 2,480 |              |  |   | 1,059,662 | 
|                              |  |             |       |              |  |   |           | 
|                              |  | £           |      |              |  | £ |          | 
|                              |  |             |       |              |  |   |           | 



|9. |  | 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 £12.4 million plus accrued interest of
£372,000 (total of £12.8 million) at June 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 £48.1 million and £45.1 million for the six months ended June 30,
2002 and 2001, respectively. For 2002, £19.7 million was included in
operating costs and £28.4 million was included in selling, general and
administrative expense. For 2001, £18.0 million was included in operating
costs and £27.1 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 June 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.                                                                                                                                                                                                                                                                

19



---



##### Table of Contents



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

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
(Unaudited)



|10. |  | 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, 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|11. |  | 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
June 30, 2002 and December 31, 2001 and for the three and six months ended June
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 June 30,
2002 and for the three and six months ended June 30, 2002 and 2001 is being provided
pursuant to Article 3-10(c) of Regulation S-X.

20



---



##### Table of Contents



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

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
(Unaudited)

NOTE 11(CONTINUED)

|                                                                |  |                                            |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|--------------------------------------------------------------- |  | ------------------------------------------ | ------- | -------- |  | ----------- | ------- | -------------- |  | -------------- | ------ | --------------- |  | ------------- | ------- | - |  | ------------ | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                                                |  | Six
months ended June 30, 2002
(in £000s)
|                                                                |  |                                           
|                                                                |  | Diamond                                    |         | Diamond  |  |             |         |                |  | Entities in    |        | Entities not in |  |               |         |   |  | Consolidated
|                                                                |  | Cable                                      |         | Holdings |  | Adjustments |         | Reorganisation |  | Reorganisation |        | Adjustments     |  | Diamond Cable
|                                                                |  |                                            |         |          |  |             |         |                |  |                |        |                 |  |              
|Statements of Operations                                        |  |                                            |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|                                                               
|                                                               
|                                                               
|                                                               
|Revenue                                                         |  | £                                          |        |          |  | £           |        |                |  | £              |       |                 |  | £             |        |   |  | £            | 90,196  |   |  | £ |        |   |  | £ | 90,196  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Costs and expenses                                              |  |                                            |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|                                                               
|                                                               
|                                                               
|                                                               
|Operating                                                       |  |                                            |        |          |  |             |        |                |  |                |       |                 |  |               |        |   |  |              | 44,936  |   |  |   |         |   |  |   | 44,936  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Selling, general and
administrative                             |  |                                            |        |          |  |             |        |                |  |                |       |                 |  |               |        |   |  |              | 28,389  |   |  |   |        |   |  |   | 28,389  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Depreciation                                                    |  |                                            |        |          |  |             |        |                |  |                |       |                 |  |               |        |   |  |              | 31,065  |   |  |   |        |   |  |   | 31,065  |  
|                                                                |  |                                            |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|                                                                |  |                                            |        |          |  |             |        |                |  |                |       |                 |  |               |        |   |  |              | 104,390 |   |  |   |        |   |  |   | 104,390 |  
|                                                                |  |                                            |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|Operating loss                                                  |  |                                            |        |          |  |             |        |                |  |                |       |                 |  |               |        |   |  |              | (14,194 | ) |  |   |        |   |  |   | (14,194 | )
|                                                               
|                                                               
|                                                               
|                                                               
|Other income (expense)                                          |  |                                            |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|                                                               
|                                                               
|                                                               
|                                                               
|Interest income                                                 |  |                                            | 58,959  |          |  |             | 9,523   |                |  |                |       |                 |  |               | 68,482  |   |  |              | 181     |   |  |   | (68,482 | ) |  |   | 181     |  
|                                                               
|                                                               
|                                                               
|                                                               
|Interest expense and
amortization of
debt discount and
expenses |  |                                            | (37,330 | )        |  |             | (10,557 | )              |  |                |       |                 |  |               | (47,887 | ) |  |              | (68,573 | ) |  |   | 68,482  |   |  |   | (47,978 | )
|                                                               
|                                                               
|                                                               
|                                                               
|Foreign exchange losses,
net                                    |  |                                            | (3,339  | )        |  |             | (3      | )              |  |                |       |                 |  |               | (3,342  | ) |  |              | 46,739  |   |  |   |        |   |  |   | 43,397  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Equity in net loss of
subsidiary                                |  |                                            | (36,899 | )        |  |             | (35,847 | )              |  |                | 36,899 |                 |  |               | (35,847 | ) |  |              |        |   |  |   | 35,847  |   |  |   |        |  
|                                                                |  |                                            |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|Earnings before
Recapitalization items                          |  |                                            | (18,609 | )        |  |             | (36,884 | )              |  |                | 36,899 |                 |  |               | (18,594 | ) |  |              | (35,847 | ) |  |   | 35,847  |   |  |   | (18,594 | )
|                                                               
|                                                               
|                                                               
|                                                               
|Recapitalization items                                          |  |                                            | (15     | )        |  |             | (15     | )              |  |                |       |                 |  |               | (30     | ) |  |              |        |   |  |   |        |   |  |   | (30     | )
|                                                                |  |                                            |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|Net (loss) income                                               |  | £                                          | (18,624 | )        |  | £           | (36,899 | )              |  | £              | 36,899 |                 |  | £             | (18,624 | ) |  | £            | (35,847 | ) |  | £ | 35,847  |   |  | £ | (18,624 | )
|                                                                |  |                                            |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  

|                                                                |  |                                            |          |          |  |             |          |                |  |                |         |                 |  |               |          |   |  |              |          |   |  |   |         |   |  |   |          |  
|--------------------------------------------------------------- |  | ------------------------------------------ | -------- | -------- |  | ----------- | -------- | -------------- |  | -------------- | ------- | --------------- |  | ------------- | -------- | - |  | ------------ | -------- | - |  | - | ------- | - |  | - | -------- | -
|                                                                |  | Six
months ended June 30, 2001
(in £000s)
|                                                                |  |                                           
|                                                                |  | Diamond                                    |          | Diamond  |  |             |          |                |  | Entities in    |         | Entities not in |  |               |          |   |  | Consolidated
|                                                                |  | Cable                                      |          | Holdings |  | Adjustments |          | Reorganisation |  | Reorganisation |         | Adjustments     |  | Diamond Cable
|                                                                |  |                                            |          |          |  |             |          |                |  |                |         |                 |  |              
|Statements of Operations                                        |  |                                            |          |          |  |             |          |                |  |                |         |                 |  |               |          |   |  |              |          |   |  |   |         |   |  |   |          |  
|                                                               
|                                                               
|                                                               
|                                                               
|Revenue                                                         |  | £                                          |         |          |  | £           |         |                |  | £              |        |                 |  | £             |         |   |  | £            | 87,848   |   |  | £ |        |   |  | £ | 87,848   |  
|                                                               
|                                                               
|                                                               
|                                                               
|Costs and expenses                                              |  |                                            |          |          |  |             |          |                |  |                |         |                 |  |               |          |   |  |              |          |   |  |   |         |   |  |   |          |  
|                                                               
|                                                               
|                                                               
|                                                               
|Operating                                                       |  |                                            |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              | 50,493   |   |  |   |        |   |  |   | 50,493   |  
|                                                               
|                                                               
|                                                               
|                                                               
|Selling, general and
administrative                             |  |                                            | 4        |          |  |             |         |                |  |                |        |                 |  |               | 4        |   |  |              | 37,175   |   |  |   |        |   |  |   | 37,179   |  
|                                                               
|                                                               
|                                                               
|                                                               
|Depreciation and
amortization                                   |  |                                            |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              | 29,090   |   |  |   |        |   |  |   | 29,090   |  
|                                                                |  |                                            |          |          |  |             |          |                |  |                |         |                 |  |               |          |   |  |              |          |   |  |   |         |   |  |   |          |  
|                                                                |  |                                            | 4        |          |  |             |         |                |  |                |        |                 |  |               | 4        |   |  |              | 116,758  |   |  |   |        |   |  |   | 116,762  |  
|                                                                |  |                                            |          |          |  |             |          |                |  |                |         |                 |  |               |          |   |  |              |          |   |  |   |         |   |  |   |          |  
|Operating loss                                                  |  |                                            | (4       | )        |  |             |         |                |  |                |        |                 |  |               | (4       | ) |  |              | (28,910  | ) |  |   |        |   |  |   | (28,914  | )
|                                                               
|                                                               
|                                                               
|                                                               
|Other income (expense)                                          |  |                                            |          |          |  |             |          |                |  |                |         |                 |  |               |          |   |  |              |          |   |  |   |         |   |  |   |          |  
|                                                               
|                                                               
|                                                               
|                                                               
|Interest income                                                 |  |                                            | 55,976   |          |  |             | 9,602    |                |  |                |        |                 |  |               | 65,578   |   |  |              |         |   |  |   | (65,578 | ) |  |   |         |  
|                                                               
|                                                               
|                                                               
|                                                               
|Interest expense and
amortization of
debt discount and
expenses |  |                                            | (50,217  | )        |  |             | (10,598  | )              |  |                |        |                 |  |               | (60,815  | ) |  |              | (65,578  | ) |  |   | 65,578  |   |  |   | (60,815  | )
|                                                               
|                                                               
|                                                               
|                                                               
|Foreign exchange losses,
net                                    |  |                                            | (1,532   | )        |  |             | (408     | )              |  |                |        |                 |  |               | (1,940   | ) |  |              | (53,508  | ) |  |   |        |   |  |   | (55,448  | )
|                                                               
|                                                               
|                                                               
|                                                               
|Equity in net loss of
subsidiary                                |  |                                            | (149,400 | )        |  |             | (147,996 | )              |  |                | 149,400 |                 |  |               | (147,996 | ) |  |              |         |   |  |   | 147,996 |   |  |   |         |  
|                                                                |  |                                            |          |          |  |             |          |                |  |                |         |                 |  |               |          |   |  |              |          |   |  |   |         |   |  |   |          |  
|Net (loss) income                                               |  | £                                          | (145,177 | )        |  | £           | (149,400 | )              |  | £              | 149,400 |                 |  | £             | (145,177 | ) |  | £            | (147,996 | ) |  | £ | 147,996 |   |  | £ | (145,177 | )
|                                                                |  |                                            |          |          |  |             |          |                |  |                |         |                 |  |               |          |   |  |              |          |   |  |   |         |   |  |   |          |  

21



---



##### Table of Contents



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

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
(Unaudited)

NOTE 11(CONTINUED)

|                                                                |  |                                              |         |          |  |             |        |                |  |                |         |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|--------------------------------------------------------------- |  | -------------------------------------------- | ------- | -------- |  | ----------- | ------ | -------------- |  | -------------- | ------- | --------------- |  | ------------- | ------- | - |  | ------------ | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                                                |  | Three months
ended June 30, 2002
(in £000s)
|                                                                |  |                                             
|                                                                |  | Diamond                                      |         | Diamond  |  |             |        |                |  | Entities in    |         | Entities not in |  |               |         |   |  | Consolidated
|                                                                |  | Cable                                        |         | Holdings |  | Adjustments |        | Reorganisation |  | Reorganisation |         | Adjustments     |  | Diamond Cable
|                                                                |  |                                              |         |          |  |             |        |                |  |                |         |                 |  |              
|Statements of Operations                                        |  |                                              |         |          |  |             |        |                |  |                |         |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|                                                               
|                                                               
|                                                               
|                                                               
|Revenue                                                         |  | £                                            |        |          |  | £           |       |                |  | £              |        |                 |  | £             |        |   |  | £            | 43,666  |   |  | £ |        |   |  | £ | 43,666  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Costs and expenses                                              |  |                                              |         |          |  |             |        |                |  |                |         |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|                                                               
|                                                               
|                                                               
|                                                               
|Operating                                                       |  |                                              |        |          |  |             |       |                |  |                |        |                 |  |               |        |   |  |              | 22,203  |   |  |   |        |   |  |   | 22,203  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Selling, general and
administrative                             |  |                                              | (3      | )        |  |             | (4     | )              |  |                |        |                 |  |               | (7      | ) |  |              | 13,573  |   |  |   |        |   |  |   | 13,566  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Depreciation                                                    |  |                                              |        |          |  |             |       |                |  |                |        |                 |  |               |        |   |  |              | 15,385  |   |  |   |        |   |  |   | 15,385  |  
|                                                                |  |                                              |         |          |  |             |        |                |  |                |         |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|                                                                |  |                                              | (3      | )        |  |             | (4     | )              |  |                |        |                 |  |               | (7      | ) |  |              | 51,161  |   |  |   |        |   |  |   | 51,154  |  
|                                                                |  |                                              |         |          |  |             |        |                |  |                |         |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|Operating income (loss)                                         |  |                                              | 3       |          |  |             | 4      |                |  |                |        |                 |  |               | 7       |   |  |              | (7,495  | ) |  |   |        |   |  |   | (7,488  | )
|                                                               
|                                                               
|                                                               
|                                                               
|Other income (expense)                                          |  |                                              |         |          |  |             |        |                |  |                |         |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|                                                               
|                                                               
|                                                               
|                                                               
|Interest income                                                 |  |                                              | 28,859  |          |  |             | 4,694  |                |  |                |        |                 |  |               | 33,553  |   |  |              | 86      |   |  |   | (33,553 | ) |  |   | 86      |  
|                                                               
|                                                               
|                                                               
|                                                               
|Interest expense and
amortization of
debt discount and
expenses |  |                                              | (10,454 | )        |  |             | (5,240 | )              |  |                |        |                 |  |               | (15,694 | ) |  |              | (34,540 | ) |  |   | 33,553  |   |  |   | (16,681 | )
|                                                               
|                                                               
|                                                               
|                                                               
|Foreign exchange gains
(losses), net                            |  |                                              | (2,036  | )        |  |             | 123    |                |  |                |        |                 |  |               | (1,913  | ) |  |              | 66,249  |   |  |   |        |   |  |   | 64,336  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Equity in net loss of
subsidiary                                |  |                                              | 23,866  |          |  |             | 24,300 |                |  |                | (23,866 | )               |  |               | 24,300  |   |  |              |        |   |  |   | (24,300 | ) |  |   |        |  
|                                                                |  |                                              |         |          |  |             |        |                |  |                |         |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|Earnings before
Recapitalization items                          |  |                                              | 40,238  |          |  |             | 23,881 |                |  |                | (23,866 | )               |  |               | 40,253  |   |  |              | 24,300  |   |  |   | (24,300 | ) |  |   | 40,253  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Recapitalization items                                          |  |                                              | (8      | )        |  |             | (15    | )              |  |                |        |                 |  |               | (23     | ) |  |              |        |   |  |   |        |   |  |   | (23     | )
|                                                                |  |                                              |         |          |  |             |        |                |  |                |         |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|Net income (loss)                                               |  | £                                            | 40,230  |          |  | £           | 23,866 |                |  | £              | (23,866 | )               |  | £             | 40,230  |   |  | £            | 24,300  |   |  | £ | (24,300 | ) |  | £ | 40,230  |  
|                                                                |  |                                              |         |          |  |             |        |                |  |                |         |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  

|                                                                |  |                                              |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|--------------------------------------------------------------- |  | -------------------------------------------- | ------- | -------- |  | ----------- | ------- | -------------- |  | -------------- | ------ | --------------- |  | ------------- | ------- | - |  | ------------ | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                                                |  | Three months
ended June 30, 2001
(in £000s)
|                                                                |  |                                             
|                                                                |  | Diamond                                      |         | Diamond  |  |             |         |                |  | Entities in    |        | Entities not in |  |               |         |   |  | Consolidated
|                                                                |  | Cable                                        |         | Holdings |  | Adjustments |         | Reorganisation |  | Reorganisation |        | Adjustments     |  | Diamond Cable
|                                                                |  |                                              |         |          |  |             |         |                |  |                |        |                 |  |              
|Statements of Operations                                        |  |                                              |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|                                                               
|                                                               
|                                                               
|                                                               
|Revenue                                                         |  | £                                            |        |          |  | £           |        |                |  | £              |       |                 |  | £             |        |   |  | £            | 45,491  |   |  | £ |        |   |  | £ | 45,491  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Costs and expenses                                              |  |                                              |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|                                                               
|                                                               
|                                                               
|                                                               
|Operating                                                       |  |                                              |        |          |  |             |        |                |  |                |       |                 |  |               |        |   |  |              | 29,532  |   |  |   |        |   |  |   | 29,532  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Selling, general and
administrative                             |  |                                              | 3       |          |  |             |        |                |  |                |       |                 |  |               | 3       |   |  |              | 13,189  |   |  |   |        |   |  |   | 13,192  |  
|                                                               
|                                                               
|                                                               
|                                                               
|Depreciation and
amortization                                   |  |                                              |        |          |  |             |        |                |  |                |       |                 |  |               |        |   |  |              | 17,894  |   |  |   |        |   |  |   | 17,894  |  
|                                                                |  |                                              |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|                                                                |  |                                              | 3       |          |  |             |        |                |  |                |       |                 |  |               | 3       |   |  |              | 60,615  |   |  |   |        |   |  |   | 60,618  |  
|                                                                |  |                                              |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|Operating income (loss)                                         |  |                                              | (3      | )        |  |             |        |                |  |                |       |                 |  |               | (3      | ) |  |              | (15,124 | ) |  |   |        |   |  |   | (15,127 | )
|                                                               
|                                                               
|                                                               
|                                                               
|Other income (expense)                                          |  |                                              |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|                                                               
|                                                               
|                                                               
|                                                               
|Interest income                                                 |  |                                              | 28,334  |          |  |             | 4,727   |                |  |                |       |                 |  |               | 33,061  |   |  |              |        |   |  |   | (33,061 | ) |  |   |        |  
|                                                               
|                                                               
|                                                               
|                                                               
|Interest expense and
amortization of
debt discount and
expenses |  |                                              | (25,331 | )        |  |             | (5,312  | )              |  |                |       |                 |  |               | (30,643 | ) |  |              | (33,061 | ) |  |   | 33,061  |   |  |   | (30,643 | )
|                                                               
|                                                               
|                                                               
|                                                               
|Foreign exchange gains
(losses), net                            |  |                                              | (618    | )        |  |             | (82     | )              |  |                |       |                 |  |               | (700    | ) |  |              | (7,154  | ) |  |   |        |   |  |   | (7,854  | )
|                                                               
|                                                               
|                                                               
|                                                               
|Equity in net loss of
subsidiary                                |  |                                              | (56,006 | )        |  |             | (55,339 | )              |  |                | 56,006 |                 |  |               | (55,339 | ) |  |              |        |   |  |   | 55,339  |   |  |   |        |  
|                                                                |  |                                              |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|Net income (loss)                                               |  | £                                            | (53,624 | )        |  | £           | (56,006 | )              |  | £              | 56,006 |                 |  | £             | (53,624 | ) |  | £            | (55,339 | ) |  | £ | 55,339  |   |  | £ | (53,624 | )
|                                                                |  |                                              |         |          |  |             |         |                |  |                |        |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  

22



---



##### Table of Contents



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

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
(Unaudited)

NOTE 11(CONTINUED)

|                                              |  |               |          |          |  |             |          |                |  |                |         |                 |  |               |           |   |  |              |           |   |  |   |            |   |  |   |           |  
|--------------------------------------------- |  | ------------- | -------- | -------- |  | ----------- | -------- | -------------- |  | -------------- | ------- | --------------- |  | ------------- | --------- | - |  | ------------ | --------- | - |  | - | ---------- | - |  | - | --------- | -
|                                              |  | June 30, 2002
|                                              |  | (in
£000s)  
|                                              |  |              
|                                              |  | Diamond       |          | Diamond  |  |             |          |                |  | Entities in    |         | Entities not in |  |               |           |   |  | Consolidated
|                                              |  | Cable         |          | Holdings |  | Adjustments |          | Reorganisation |  | Reorganisation |         | Adjustments     |  | Diamond Cable
|                                              |  |               |          |          |  |             |          |                |  |                |         |                 |  |              
|Balance Sheets                                |  |               |          |          |  |             |          |                |  |                |         |                 |  |               |           |   |  |              |           |   |  |   |            |   |  |   |           |  
|                                             
|                                             
|                                             
|                                             
|Current Assets                                |  | £             | 304      |          |  | £           | 305      |                |  | £              |        |                 |  | £             | 609       |   |  | £            | 27,812    |   |  | £ |           |   |  | £ | 28,421    |  
|                                             
|                                             
|                                             
|                                             
|Investments in and advances to
Subsidiaries   |  |               | 345,272  |          |  |             | (440,047 | )              |  |                | 651,546 |                 |  |               | 556,771   |   |  |              |          |   |  |   | (556,771   | ) |  |   |          |  
|                                             
|                                             
|                                             
|                                             
|Fixed and non current assets                  |  |               | 7,225    |          |  |             | 3,862    |                |  |                |        |                 |  |               | 11,087    |   |  |              | 574,192   |   |  |   |           |   |  |   | 585,279   |  
|                                              |  |               |          |          |  |             |          |                |  |                |         |                 |  |               |           |   |  |              |           |   |  |   |            |   |  |   |           |  
|Total Assets                                  |  | £             | 352,801  |          |  | £           | (435,880 | )              |  | £              | 651,546 |                 |  | £             | 568,467   |   |  | £            | 602,004   |   |  | £ | (556,771   | ) |  | £ | 613,700   |  
|                                              |  |               |          |          |  |             |          |                |  |                |         |                 |  |               |           |   |  |              |           |   |  |   |            |   |  |   |           |  
|Current Liabilities                           |  | £             | 42       |          |  | £           | 100      |                |  | £              |        |                 |  | £             | 142       |   |  | £            | 45,219    |   |  | £ |           |   |  | £ | 45,361    |  
|                                             
|                                             
|                                             
|                                             
|Liabilities subject to compromise             |  |               | 851,143  |          |  |             | 215,566  |                |  |                |        |                 |  |               | 1,066,709 |   |  |              |          |   |  |   |           |   |  |   | 1,066,709 |  
|                                             
|                                             
|                                             
|                                             
|Due to affiliates                             |  |               |         |          |  |             |         |                |  |                |        |                 |  |               |          |   |  |              | 1,198,057 |   |  |   | (1,198,057 | ) |  |   |          |  
|                                             
|                                             
|                                             
|                                             
|Shareholders deficiency                       |  |               | (498,384 | )        |  |             | (651,546 | )              |  |                | 651,546 |                 |  |               | (498,384  | ) |  |              | (641,272  | ) |  |   | 641,286    |   |  |   | (498,370  | )
|                                              |  |               |          |          |  |             |          |                |  |                |         |                 |  |               |           |   |  |              |           |   |  |   |            |   |  |   |           |  
|Total liabilities and
shareholders deficiency |  | £             | 352,801  |          |  | £           | (435,880 | )              |  | £              | 651,546 |                 |  | £             | 568,467   |   |  | £            | 602,004   |   |  | £ | (556,771   | ) |  | £ | 613,700   |  
|                                              |  |               |          |          |  |             |          |                |  |                |         |                 |  |               |           |   |  |              |           |   |  |   |            |   |  |   |           |  

|                                              |  |                   |          |          |  |             |          |                |  |                |         |                 |  |               |           |   |  |              |           |   |  |   |            |   |  |   |           |  
|--------------------------------------------- |  | ----------------- | -------- | -------- |  | ----------- | -------- | -------------- |  | -------------- | ------- | --------------- |  | ------------- | --------- | - |  | ------------ | --------- | - |  | - | ---------- | - |  | - | --------- | -
|                                              |  | 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 | ) |  |   |          |  
|                                             
|                                             
|                                             
|                                             
|Shareholders deficiency                       |  |                   | (479,746 | )        |  |             | (614,634 | )              |  |                | 614,634 |                 |  |               | (479,746  | ) |  |              | (605,428  | ) |  |   | 605,428    |   |  |   | (479,746  | )
|                                              |  |                   |          |          |  |             |          |                |  |                |         |                 |  |               |           |   |  |              |           |   |  |   |            |   |  |   |           |  
|Total liabilities and
shareholders deficiency |  | £                 | 375,101  |          |  | £           | (395,548 | )              |  | £              | 614,634 |                 |  | £             | 594,187   |   |  | £            | 621,974   |   |  | £ | (581,702   | ) |  | £ | 634,459   |  
|                                              |  |                   |          |          |  |             |          |                |  |                |         |                 |  |               |           |   |  |              |           |   |  |   |            |   |  |   |           |  

23



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##### Table of Contents



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

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
(Unaudited)

NOTE 11(CONTINUED)

|                                                    |  |                                            |         |          |  |             |         |                |  |                |   |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|--------------------------------------------------- |  | ------------------------------------------ | ------- | -------- |  | ----------- | ------- | -------------- |  | -------------- | - | --------------- |  | ------------- | ------- | - |  | ------------ | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                                    |  | Six
months ended June 30, 2002
(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  |  | £                                          | (12,222 | )        |  | £           | (10,498 | )              |  | £              |  |                 |  | £             | (22,720 | ) |  | £            | 15,857  |   |  | £ | 10,818  |   |  | £ | 3,955   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Investing activities                                |  |                                            |         |          |  |             |         |                |  |                |   |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|                                                   
|                                                   
|                                                   
|                                                   
|(Advances to) repayments
from subsidiaries, net     |  |                                            | 250     |          |  |             | 10,568  |                |  |                |  |                 |  |               | 10,818  |   |  |              |        |   |  |   | (10,818 | ) |  |   |        |  
|                                                   
|                                                   
|                                                   
|                                                   
|Purchase of property and
equipment                  |  |                                            |        |          |  |             |        |                |  |                |  |                 |  |               |        |   |  |              | (10,317 | ) |  |   |        |   |  |   | (10,317 | )
|                                                    |  |                                            |         |          |  |             |         |                |  |                |   |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|Net cash provided by (used
in) investing activities |  |                                            | 250     |          |  |             | 10,568  |                |  |                |  |                 |  |               | 10,818  |   |  |              | (10,317 | ) |  |   | (10,818 | ) |  |   | (10,317 | )
|                                                    |  |                                            |         |          |  |             |         |                |  |                |   |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|Financing activities                                |  |                                            |         |          |  |             |         |                |  |                |   |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|                                                   
|                                                   
|                                                   
|                                                   
|Principal payments                                  |  |                                            |        |          |  |             |        |                |  |                |  |                 |  |               |        |   |  |              | (184    | ) |  |   |        |   |  |   | (184    | )
|                                                   
|                                                   
|                                                   
|                                                   
|Loan
notes payable to NTL
Communications Corp.      |  |                                            | 12,961  |          |  |             |        |                |  |                |  |                 |  |               | 12,961  |   |  |              |        |   |  |   |        |   |  |   | 12,961  |  
|                                                    |  |                                            |         |          |  |             |         |                |  |                |   |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|Net cash provided by (used
in) financing activities |  |                                            | 12,961  |          |  |             |        |                |  |                |  |                 |  |               | 12,961  |   |  |              | (184    | ) |  |   |        |   |  |   | 12,777  |  
|                                                    |  |                                            |         |          |  |             |         |                |  |                |   |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|Increase in cash and cash
equivalents               |  |                                            | 989     |          |  |             | 70      |                |  |                |  |                 |  |               | 1,059   |   |  |              | 5,356   |   |  |   |        |   |  |   | 6,415   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Cash and cash equivalents at
beginning of period    |  |                                            |        |          |  |             |        |                |  |                |  |                 |  |               |        |   |  |              | 4,535   |   |  |   |        |   |  |   | 4,535   |  
|                                                    |  |                                            |         |          |  |             |         |                |  |                |   |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|Cash and cash equivalents at
end of period          |  | £                                          | 989     |          |  | £           | 70      |                |  | £              |  |                 |  | £             | 1,059   |   |  | £            | 9,891   |   |  | £ |        |   |  | £ | 10,950  |  
|                                                    |  |                                            |         |          |  |             |         |                |  |                |   |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  

|                                                    |  |                                            |         |          |  |             |         |                |  |                |   |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|--------------------------------------------------- |  | ------------------------------------------ | ------- | -------- |  | ----------- | ------- | -------------- |  | -------------- | - | --------------- |  | ------------- | ------- | - |  | ------------ | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                                    |  | Six
Months ended June 30, 2001
(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  |  | £                                          | (33,030 | )        |  | £           | (10,309 | )              |  | £              |  |                 |  | £             | (43,339 | ) |  | £            | 40,914  |   |  | £ | 21,066  |   |  | £ | 18,641  |  
|                                                   
|                                                   
|                                                   
|                                                   
|Investing activities                                |  |                                            |         |          |  |             |         |                |  |                |   |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|                                                   
|                                                   
|                                                   
|                                                   
|(Advances to) repayments
from subsidiaries, net     |  |                                            | 10,757  |          |  |             | 10,309  |                |  |                |  |                 |  |               | 21,066  |   |  |              |        |   |  |   | (21,066 | ) |  |   |        |  
|                                                   
|                                                   
|                                                   
|                                                   
|Purchase of property and
equipment                  |  |                                            |        |          |  |             |        |                |  |                |  |                 |  |               |        |   |  |              | (38,701 | ) |  |   |        |   |  |   | (38,701 | )
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    |  |                                            |         |          |  |             |         |                |  |                |   |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|Net cash provided by (used
in) investing activities |  |                                            | 10,757  |          |  |             | 10,309  |                |  |                |  |                 |  |               | 21,066  |   |  |              | (38,701 | ) |  |   | (21,066 | ) |  |   | (38,701 | )
|                                                    |  |                                            |         |          |  |             |         |                |  |                |   |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|Financing activities                                |  |                                            |         |          |  |             |         |                |  |                |   |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|                                                   
|                                                   
|                                                   
|                                                   
|Principal payments                                  |  |                                            |        |          |  |             |        |                |  |                |  |                 |  |               |        |   |  |              | (728    | ) |  |   |        |   |  |   | (728    | )
|                                                   
|                                                   
|                                                   
|                                                   
|Contributions from NTL
Communications Corp.         |  |                                            | 22,273  |          |  |             |        |                |  |                |  |                 |  |               | 22,273  |   |  |              |        |   |  |   |        |   |  |   | 22,273  |  
|                                                    |  |                                            |         |          |  |             |         |                |  |                |   |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|Net cash provided by (used
in) financing activities |  |                                            | 22,273  |          |  |             |        |                |  |                |  |                 |  |               | 22,273  |   |  |              | (728    | ) |  |   |        |   |  |   | 21,545  |  
|                                                    |  |                                            |         |          |  |             |         |                |  |                |   |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|Increase in cash and cash
equivalents               |  |                                            |        |          |  |             |        |                |  |                |  |                 |  |               |        |   |  |              | 1,485   |   |  |   |        |   |  |   | 1,485   |  
|                                                   
|                                                   
|                                                   
|                                                   
|Cash and cash equivalents at
beginning of period    |  |                                            |        |          |  |             |        |                |  |                |  |                 |  |               |        |   |  |              | 8,166   |   |  |   |        |   |  |   | 8,166   |  
|                                                    |  |                                            |         |          |  |             |         |                |  |                |   |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  
|Cash and cash equivalents at
end of
period          |  | £                                          |        |          |  | £           |        |                |  | £              |  |                 |  | £             |        |   |  | £            | 9,651   |   |  | £ |        |   |  | £ | 9,651   |  
|                                                    |  |                                            |         |          |  |             |         |                |  |                |   |                 |  |               |         |   |  |              |         |   |  |   |         |   |  |   |         |  

24



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##### Table of Contents



DIAMOND CABLE COMMUNICATIONS LIMITED
(DEBTOR IN POSSESSION)
FORM 10-Q
QUARTER ENDED JUNE 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.
| 
| |  | NTL has missed interest
payments totaling $381.5 million beginning on April 1, 2002 including
interest payments of the Company and Diamond Holdings of $69.3 million.                                                 

25



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##### Table of Contents



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



| |  | In accordance with the proposed recapitalization plan, NTL does not plan to make future interest payments on its
currently outstanding publicly traded notes except notes issued by NTL Triangle and, upon emergence from Chapter 11
proceedings, Diamond Holdings Limited.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | 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.                                                                                              

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 proposed reorganization plan, NTL will be split into two companies, one holding all of its main UK and
Ireland assets (tentatively referred to as NTL UK and Ireland), and the other holding various continental European
and other assets (tentatively referred to as NTL Euroco).                                                                                                                                                                                                                                                                                                                                                                                                                    
| 
| |  | Holders of notes of NTL Incorporated, NTL (Delaware), Inc., NTL Communications Corp. and Diamond Cable
Communications would receive 100% of the initial common stock of NTL UK and Ireland and approximately 86.5% of NTL
Euroco.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| 
| |  | Holders of notes of NTL (Delaware), Inc. would have the option to reinvest all or a portion of NTL (Delaware), Inc.
cash in additional shares of common stock or to receive such cash in the recapitalization.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| 
| |  | Common and preferred stockholders, including France Telecom, would participate in a package of rights (to be priced
at a $10.5 billion enterprise value) and warrants entitling them to purchase primary common stock of NTL UK and
Ireland. If fully exercised, those rights and warrants would entitle the current preferred stockholders to acquire
approximately 23.6% and the current common stockholders to acquire approximately 8.9% of NTL UK and Irelands
common stock. Current preferred stockholders, other than France Telecom, would receive approximately 3.2% and
current common stockholders, other than France Telecom, would receive approximately 10.3% of the primary equity of
NTL Euroco.
| 
| |  | Under the reorganization plan,
NTL will convert approximately $10.9 billion of debt to equity, thereby reducing NTL UK and
Irelands debt to approximately $5.8 billion (projected pro forma net debt as of September 1, 2002 as per the
amended disclosure statement filed on July 15, 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 reorganization 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 financing in the principal amount of $630 million
in an order dated July 3, 2002. The DIP facility was entered into on July 15, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| 
| |  | At a hearing on July 12, 2002, the Bankruptcy Court approved the Debtors amended disclosure statement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| 
| |  | The confirmation hearing in respect of the Debtors second amended joint reorganization plan, filed with the
Bankruptcy Court on July 15, 2002, has been scheduled for September 5, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

26



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##### Table of Contents



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

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 United States Bankruptcy Code (referred to as the
proposed recapitalization plan). NTL Triangle and NTLs operating subsidiaries
were not included in the Chapter 11 filing.

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 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. Toward the end of 2001, while NTL
continued to have sufficient liquidity to meet its near term obligations, it
recognized the negative impact of the collapsing European and U.S.
telecommunications markets on its ability to service its debt. Accordingly, NTL
began to implement a strategy to preserve and maximize its enterprise value.
This strategy included the implementation of cost-cutting measures and the
commencement of discussions with certain third parties regarding strategic
alternatives for NTLs business.

The Group historically incurred operating losses and negative operating cash
flow. In addition, the Group has required significant amounts of capital to
finance construction of its networks, connection of customers to the networks,
other capital expenditures and for working capital needs 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., a wholly-owned
subsidiary of NTL Incorporated. 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 its 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, NTLs UK credit facilities are fully drawn. The revolving tranche
of the Cablecom credit facility has been capped at its utilized amount of CHF
1,055.0 million although the availability may be increased with the consent of
the requisite majority of the lenders under that facility. The term tranche of
the Cablecom credit facility is fully drawn. NTL has missed interest
payments totaling $381.5 million beginning on April 1, 2002
including interest payments of the Company and Diamond Holdings of
$69.3 million. Upon emerging from Chapter 11 proceedings, NTL intends
to make any required interest payments on the notes of Diamond Holdings. In
accordance with the proposed recapitalization plan, NTL does not plan to make
future interest payments on its currently outstanding publicly traded notes
except notes issued by NTL Triangle and, upon emergence from Chapter 11
proceedings, Diamond Holdings Limited.

As of June 30, 2002, the Group had approximately £11.0 million in cash and
cash equivalents on hand. The Group may require additional cash in the twelve
months from July 1, 2002 to June 30, 2003. NTL Incorporated obtained a Court
approved $630 million DIP facility (described below) on July 15, 2002 to meet
the potential cash requirements of its and its subsidiaries, excluding
Cablecom. NTL Incorporated expects that the DIP facility will be replaced with
an exit facility for NTL Communications Corp. and its subsidiaries, including
the Company and its subsidiaries, upon the completion of the recapitalization
process, in part because the DIP facility will mature concurrently with the
Debtors emergence from Chapter 11. The Group estimates that its capital
expenditures and debt service requirements, net of cash from operations, will
aggregate up to approximately £4.5 million from July 1, 2002 to June 30, 2003.
Management of the Company believes that cash and cash equivalents on hand at
June 30, 2002, and the cash available from the DIP

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

facility and subsequently the planned exit facility will be sufficient for its
and its subsidiaries cash requirements during the twelve months from July 1,
2002 to June 30, 2003.

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.

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

On April 17, 2002, Liberty sent a proposal to NTLs board of directors, which
proposed a cash tender offer for 30% of the outstanding bonds of NTL
Communications Corp. at a small premium to the prevailing market price and an
agreement to vote such acquired bonds in favor of the proposed plan of
reorganization, as well as a participation with NTL in a cash infusion of up
to $500 million into Cablecom. After consultation with NTLs board of
directors and the steering committee of bondholders on April 18, 2002, NTL
indicated to Liberty that it did not consider the Liberty proposal to be in the
best interests of NTL and that the best course of action for NTL to maximize
its enterprise value was to promptly consummate the proposed plan of
reorganization. By letter dated June 28, 2002, NTL received notice that Liberty
was ceasing all discussions with NTL concerning its proposals.

Promptly upon obtaining the requisite waivers from the lenders under its credit
facilities, in March 2002, NTL commenced negotiations with the steering
committee of the unofficial committee of bondholders and its legal and
financial advisors. The negotiations continued during the latter part of March
and throughout April 2002, and also included France Telecom. On April 16, 2002,
NTL 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. On May
2, 2002, a steering committee of the lending banks under NTLs credit
facilities gave their approval in principle (on a non-legally binding basis) to
NTLs proposed plan of reorganization.

The reorganization plan, if implemented, 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 NTL UK and Ireland (one of two new entities to be created under the
plan). In addition, if 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 reorganization plan contemplates
that the UK bank debt will remain in place as part of the recapitalization. NTL
would be split into two companies, one tentatively called NTL UK and Ireland,
holding its main UK and Ireland assets, and one tentatively called NTL Euroco,
holding certain of its continental European and other assets.

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

To implement the proposed recapitalization, on May 8, 2002, NTL Incorporated,
NTL (Delaware), Inc., NTL Communications Corp., Diamond Cable Communications
Limited, Diamond Holdings Limited and Communications Cable Funding Corp. filed
cases and a pre-arranged joint reorganization plan under Chapter 11 of the
United States Bankruptcy Code. NTLs operating subsidiaries were not included
in the Chapter 11 filing.

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 ten 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.; MacKay Shields LLC; SAB Capital Management, L.P.;
and W.R. Huff Asset Management Co., LLC.

On May 24, 2002, NTL and its debtor
subsidiaries filed an amended joint reorganization plan and
disclosure statement. The bankruptcy court approved the disclosure statement on
July 12, 2002 as containing information of a kind and in sufficient detail to
enable the holders of claims against or interests in the debtors to make an
informed judgment with respect to the reorganization plan prior to exercising
their right to vote to accept or reject the reorganization plan. At that time
the Court set September 5, 2002 as the date for the hearing to consider
confirmation of the amended joint reorganization plan as subsequently amended.
On July 15, 2002, NTL Incorporated and its debtor subsidiaries filed an amended
disclosure statement and a second amended joint reorganization plan. A copy of
the second amended joint reorganization plan and the related disclosure
statement are included as exhibits to NTL Incorporateds Current Report on Form
8-K filed on July 16, 2002.

The filing of the petitions seeking relief filed under Chapter 11 constituted
an event of default under the indentures of each of the entities which filed
Chapter 11 petitions 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 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, and a steering committee
of those lenders has agreed in principle (in a non-legally binding manner) to
the proposed recapitalization.

Recapitalization Expense

Recapitalization items of £30,000 were incurred in the six months ended June 30, 2002. NTL expects to incur approximately $50.0 million in additional
recapitalization costs until the completion of the process. The proposed joint
reorganization plan provides that recapitalization costs will be allocated
between NTL UK and Ireland and NTL Euroco.

A subsidiary of NTL in the UK has incurred recapitalization expenses of
approximately £23 million through June 30, 2002, including approximately £13
million for employee retention related to substantially all of NTLs UK
employees and approximately £10 million for financial advisor, legal,
accounting and consulting costs. The Company expects to be charged in the
third quarter of 2002 for its share of these expenses as well as expenses
incurred after June 30, 2002.

DIP facility

In connection with the proposed joint reorganization plan, some members of the
official unsecured creditors committee of bondholders committed to provide up
to $500 million of new debt financing to NTL Incorporated and some of its
subsidiaries during the Chapter 11 process. The new financing
will ensure that
NTLs business operations have access to sufficient liquidity to continue
ordinary operations. GE Capital, an affiliate of GE Capital Structured Finance
Group Limited, one of the lenders under the Senior Credit Facility, and
Wilmington Trust Company, the trustee under the Indentures governing certain of
the NTL Incorporated subordinated notes, filed objections to the DIP facility.
The Bankruptcy Court approved the 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) over such
objections in an order issued 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.

In connection with the commitment, NTL Incorporated and its debtor subsidiaries
were to pay a commitment fee to the bondholder DIP lenders equal to 2% of the
$500 million commitment (i.e., $10 million). Accordingly, on May 6, 2002, and
May 7, 2002, NTL delivered to its bank written instructions to pay by wire
transfer to each lender under the DIP

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

facility such lenders pro rata portion of the commitment fee. Due to
administrative difficulties, however, some of the lenders under the DIP
facility did not receive their pro rata portion of the commitment fee prior to
the commencement of the Chapter 11 cases. In total, as of May 8, 2002, $428,000
of the $10 million commitment fee had not been paid to the applicable lenders
under the DIP facility. Pursuant to an order of the court dated May 31, 2002,
the remaining $428,000 of the commitment fee was paid to the applicable lenders
under the DIP facility.

Each term loan under the DIP facility will bear 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.

NTL (Delaware), Inc. is also a lender under the DIP facility and will lend up
to $130 million. NTL (Delaware), Inc. has cash on hand and, because the Chapter
11 cases are not substantively consolidated, NTL Incorporated and its debtor
subsidiaries and the steering committee of bondholders have concluded that the
cash at NTL (Delaware), Inc. is to be used to partially fund the reorganization
of all of the debtors. NTL (Delaware), Inc. will receive interest and is
entitled to the same protections as the other bondholder DIP lenders.

Under the DIP facility agreement, Communications Cable Funding is the borrower,
and the other debtors (other than Diamond Cable and Diamond Holdings) are
guarantors, except that NTL Communications Corp. is also a co-obligor of the
loans from NTL (Delaware), Inc. Under the DIP facility agreement, the cash
(except for the DIP facility proceeds) of the borrower and the guarantors will
be 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.

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 reorganization 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.

On July 17, 2002, NTL drew the first tranche available under the facility in
the amount of $229.0 million.

A copy of the DIP facility agreement was attached as an exhibit to Form 8-K
filed by NTL Incorporated with the 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 NTLs proposed plan, NTL
will require the reorganized NTL to enter into an exit financing facility. The
exit financing or any alternative financing would refinance (at least in part)
the DIP facility and may be used as consideration for the refinancing of a £90
million note payable to NTL (Delaware), Inc. from NTL (UK) Group Inc. Because
of the present market conditions which are unfavorable to telecommunications
companies generally, there can be no assurance that NTL will successfully
obtain an acceptable exit facility, although NTL is presently in discussions
with various parties about alternatives.

NTL expects that the exit facility may be secured by various assets of the
reorganized NTL, including those which secure the DIP facility, would rank
senior to all current and future subordinated debt of the reorganized NTL.

NTL also expects that the exit facility would impose operating and financial
restrictions on the reorganized NTL and its subsidiaries. These restrictions
would significantly limit or prohibit, among other things, the reorganized
NTLs ability 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

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

related persons, sell assets, or consolidate, merge, or sell all or
substantially all of their assets. The exit facility also likely would require
the reorganized NTL to satisfy financial covenants on an ongoing basis. NTL
cannot determine at this time whether these financial covenants would have a
material impact on the reorganized NTLs ability to finance future operations
or capital needs 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.

Proposed Recapitalization Plan

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

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

Current preferred and common stockholders of NTL Incorporated, including France
Telecom, would receive warrants to purchase common stock of NTL UK and Ireland
and rights entitling them to purchase common stock of NTL UK and Ireland. For
each share of common stock purchased upon exercise of rights, the person
exercising such rights will receive a warrant to purchase one share of common
stock of NTL UK and Ireland. The rights will be exercisable, on an
oversubscription basis, for the 20-business day period after the entry of the
confirmation order, as such period may be extended, and the warrants will be
exercisable for a period of eight years at an exercise price of $77.47 per
share. The number of shares to be received upon exercise of the warrants is
subject to customary adjustments for stock splits, stock recapitalizations and
distributions of property (other than cash) to holders of NTL UK and Ireland
Common Stock. If fully exercised, the rights and warrants would entitle the
current preferred stockholders of NTL Incorporated to acquire approximately
23.6% and the current common stockholders of NTL Incorporated to acquire
approximately 8.9% of NTL UK and Irelands primary common stock on the
effective date of the recapitalization. Holders of the subordinated notes of
NTL Incorporated (other than France Telecom), NTL (Delaware), Inc. (other than
France Telecom), and NTL Communications Corp. would have the right to purchase
any shares of NTL UK and Ireland common stock and warrants not subscribed for
in the rights offering by the preferred and common stockholders of NTL
Incorporated. It is expected that the warrants will be listed or quoted on the
same exchange or inter-dealer quotation system as the shares of common stock of
the reorganized NTL. NTL has had preliminary conversations with the New York
Stock Exchange regarding the listing of the common stock of NTL UK and Ireland
on the Exchange following the effective date of its plan of reorganization.
Based on these preliminary conversations there has been no indication from the
New York Stock Exchange that NTL UK and Ireland will qualify for listing on the
Exchange. There can be no assurance that shares of NTL UK and Ireland common
stock and/or Series A warrants will be listed on an exchange or be eligible for
trading on an inter-dealer quotation system on the effective date of the
bankruptcy or at any time thereafter or that an orderly trading market will
develop for these securities.

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

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

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

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

The United States Bankruptcy Code also requires that a plan must provide the
same treatment for each claim or interest in a particular class, unless a
holder agrees to a less favorable treatment of its particular claim or
interest. NTL believes that the proposed recapitalization plan complies with
this requirement of the United States Bankruptcy Code. However, if a member of
a class objects to its treatment, or if the Bankruptcy Court finds that the
proposed recapitalization plan does not comply with the requirements of the
United States Bankruptcy Code, confirmation of the plan could be delayed or
prevented. In addition, each class of impaired claims and interests that will
(or may) be entitled to receive property under the plan will have the
opportunity to vote to accept or reject the plan. If an impaired class of
claims or interests rejects the plan, NTL may request confirmation of
the plan pursuant to the cramdown provisions of the United States Bankruptcy
Code. Even if the requirements for cramdown are met, the Bankruptcy Court,
which, as a court of equity may exercise substantial discretion, may choose not
to confirm the plan. These can be no assurance that the proposed
recapitalization plan will be confirmed.

Bank Waivers

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

Effective March 28, 2002, the lenders under the credit facilities agreed to
amend the initial waivers. The amendments to the initial waivers extended the
duration of the initial waivers to April 29, 2002 in the case of the UK credit
facilities or May 14, 2002 in the case of the Cablecom credit facility, unless
the interest payments missed by NTL Communications Corp. on April 1, 2002 were
remedied or a sufficient number of bondholders agreed to forbear in respect of
such non-payment, in which case, the UK credit facilities waivers were to be
extended to May 14, 2002. As a condition to the amendment to the initial
waivers, the UK lenders required NTL (Delaware), Inc. to loan £90 million to
NTL (UK) Group, Inc. following receipt of the proceeds from the sale of NTL
Australia. Such loan was actually made (with the approval of the lenders under
the UK credit facilities) to NTL (UK) Group, Inc. and then on-lent to certain
subsidiaries of NTL (UK) Group, Inc. This loan, which was made on April 5,
2002, is structurally senior to the

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

outstanding public notes issued by
NTL Communications Corp. and contractually senior to intra-group debt owed by
NTL (UK) Group, Inc. to NTL Communications Corp. but contractually subordinated
to the UK credit facilities. In connection with the amendments to the waivers,
NTL affirmed the provisions of the initial waivers and agreed, among other
things, not to commence voluntary dissolution proceedings, including
proceedings under Chapter 11 of the United States Bankruptcy Code, without the
consent of these lenders.

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

Cablecom GmbH, an indirect wholly-owned subsidiary of NTL (Delaware), Inc., is
the principal trading company of NTLs Swiss group. The Company does not have
any ownership interest in this group, although the condition of this group can
indirectly impact the Group to the extent it impacts
NTL Incorporated or NTL (Delaware), Inc., both parent companies of the
Company. There were a number of technical defaults under the Swiss credit
facility made available to Cablecom and various of its subsidiaries. In
addition, as of December 31, 2001, Cablecoms and six of its direct and
indirect subsidiaries liabilities exceeded their respective assets. As a
consequence, under Swiss law, those entities were deemed to be overindebted.
This also constituted an event of default under the Cablecom credit facility,
which entitled the lenders to accelerate repayment. Such an acceleration would
have resulted in an event of default under NTL Incorporateds and NTL
(Delaware), Inc.s 5.75% convertible subordinated notes due 2011 and 5.75%
convertible subordinated notes due 2009.

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

The problem of 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 resolved in
those subsidiaries by way of subordination agreements which obviated any
requirement to institute insolvency proceedings in respect of these companies.

At the end of April 2002 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. However, 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.

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 have become payable and have not been paid; (2) NTL
(Delaware), Inc. has commenced negotiations with its creditors with a view to
the general rescheduling of its indebtedness and has commenced proceedings
under Chapter 11 of the U.S. Bankruptcy Code pursuant to which it intends to
reorganize its debt; (3) NTL (Delaware), Inc. has liabilities which exceed the
value of its assets and is unable to pay its debts as they fall 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; (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 have
yet to be fulfilled.

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

The outstanding defaults under the Cablecom finance documents entitle the
facility agent to demand repayment of the loan and enforce the security granted
to secure that loan. The facility agent has discretion to take those steps and
can be compelled to take those steps by a group of banks holding at least
66-2/3% in aggregate of the loan.

Future developments in Cablecoms business, as well as external factors, could
result in a reemergence of the over indebtedness issue under Swiss law.

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
|                                                    |  |                         |  |              

Interest payments of $18.9 million were made, when due, on April 2, 2002 in
respect of Diamond Cable Communications 13.25% senior discount notes due 2004.
Upon emerging from Chapter 11 proceedings, NTL intends to make any required
interest payments on the notes of Diamond Holdings Limited. In accordance with
the proposed recapitalization plan, NTL does not plan to make future interest
payments on its currently outstanding publicly traded notes except notes issued
by NTL Triangle and, upon emergence from Chapter 11 proceedings, Diamond
Holdings Limited.

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

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 NTLs 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 NTLs voluntary filing under Chapter 11 of the United States Bankruptcy
Code on May 8, 2002, there is an event of default under all of NTLs credit
facilities and the indentures governing all of NTLs publicly traded debt, other
than debt of NTL Triangle. As a result of the Chapter 11 filings, all of NTLs
publicly traded debt, other than the debt of NTL Triangle, became immediately
due and payable, pursuant to the terms of the indentures governing such debt.
The automatic stay of Section 362 of the United States Bankruptcy Code prevents
the holders of such debt from seeking to enforce their collection rights under
the indentures, except within the context of the Chapter 11 cases, and even
then only with the prior approval of the Bankruptcy Court. However, NTL has
received letters from the agents for the lenders under the UK credit facilities
reserving such lenders rights to accelerate repayment of the facilities and to
enforce the security granted in respect of the facilities on account of the
defaults thereunder, actions which would not be prohibited by the automatic
stay.

Credit Rating Downgrades

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

Sale of NTL Australia

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

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

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. The remaining
proceeds of the sale of NTL Australia remain at NTL (Delaware), Inc., and the
proposed plan of reorganization anticipates that such proceeds will form a
portion of the consideration to be offered to bondholders of NTL (Delaware),
Inc. and NTL Incorporated in satisfaction of their claims against those
companies.

Potential Sale of, or Outside Investment in, Cablecom

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

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

In particular, in the current environment, NTLs shareholding in Cablecom may
have little or no value, which may result in NTL receiving little or no
consideration for its equity interest in Cablecom. Further, if a third party
makes an investment in Cablecom there can be no assurance that NTL will be able
to maintain its ability to direct the management of Cablecom.

Investments in and Loans to Affiliates

On April 15, 2002, a funding request for $20 million was received by NTL under
the terms of the investment agreement relating to NTLs investment in B2 in
Sweden, a company which is deploying fiber directly to the home throughout
Scandinavia. The Company does not have an ownership interest in B2 although
the condition of B2 can indirectly impact the Group to the extent it impacts
NTL Incorporated or NTL (Delaware), Inc., both parent companies of
the Company. NTL has informed B2 and the other principal investors that it is not in
a position to comply with this request for funding at this time. The B2
investment agreement provides that if NTL fails to provide such funding, it may
be sued for non-payment and arguably could lose certain rights under the B2
shareholders arrangements. Pursuant to the applicable documents, if this
occurs the majority remaining shareholders may also elect to terminate the
shareholder arrangements 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 elected to exercise these rights, NTL
could be forced to sell its stake in B2 at a loss. On June 25, 2002, B2 and its
remaining shareholders filed a motion in the Bankruptcy Court requesting relief
from the automatic stay provisions of section 362 of the Bankruptcy Code to
exercise their rights under the relevant agreements. Notwithstanding the
arguments raised in the motion, NTL believes that the Bankruptcy Code provides
various defenses and protections of and for NTLs rights under the B2
investment agreement and in respect of its equity interest in B2 and intends to
enforce vigorously its rights and protections.

Premium TV Limited, a wholly-owned subsidiary of NTL (Delaware), Inc., is
obliged to provide funding of up to approximately £62.0 million ($94.5 million)
to fund various of its joint venture interests. Of this amount, the payment of
approximately £50.0 million ($76.2 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

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

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, which may also result in a cessation of
substantially all of Premium TV Limiteds activities. As a result of the
restructuring 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. 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
Company does not have an ownership interest in Premium TV Limited, although the
condition of Premium TV Limited can indirectly impact the Group to the
extent it impacts NTL Incorporated or NTL (Delaware), Inc., both parent
companies of the Company.

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 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 NTL Incorporated and its
debtor subsidiaries. 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 United States 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.

Credit Facilities

|   |  |                          |  |                                            |  |                                                                                                                                                                |  |                                                                                     
|-- |  | ------------------------ |  | ------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------
|   |  |                          |  | Amount                                     |  |                                                                                                                                                                |  |                                                                                     
|   |  |                          |  | available/amount                           |  |                                                                                                                                                                |  |                                                                                     
|   |  |                          |  | outstanding                                |  |                                                                                                                                                                |  | Event of default/                                                                   
|   |  |                          |  | (as of June                                |  | Defaults                                                                                                                                                       |  | acceleration                                                                        
|   |  | NTLCL                    |  | 30, 2002)                                  |  | (as of May 8, 2002)                                                                                                                                            |  | (as of May 8, 2002)                                                                 
|   |  |                          |  |                                            |  |                                                                                                                                                                |  |                                                                                     
|1. |  | Working Capital Facility |  | Nil available
$622.4 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
$4,245.4 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
$1,809.5 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
$707.1 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

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

Outstanding Public Notes

|    |  |                                                                  |  |                    |  |                                                                                                                        |  |                                               
|--- |  | ---------------------------------------------------------------- |  | ------------------ |  | ---------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------
|    |  |                                                                  |  | Amount outstanding |  |                                                                                                                        |  | Event of default/                             
|    |  |                                                                  |  | (as of June 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 |  | $190.2 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           |  | $416.1 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
|   
|   
|   
|   
|    |  |                                                                  |  |                    |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|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            |  | $418.4 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
|   
|   
|   
|   
|    |  |                                                                  |  |                    |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|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                                |  | $246.4 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
|   
|   
|   
|   
|    |  |                                                                  |  |                    |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|14. |  | 9-7/8% Senior Euro
Notes due 2009                                |  | $345.0 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
|   
|   
|   
|   
|    |  |                                                                  |  |                    |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|15. |  | 11-1/2% Senior
Deferred Coupon
Euro Notes due 2009               |  | $156.1 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

38



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##### Table of Contents



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

|    |  |                                                                    |  |                    |  |                                                                                                                        |  |                                               
|--- |  | ------------------------------------------------------------------ |  | ------------------ |  | ---------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------
|    |  |                                                                    |  | Amount outstanding |  |                                                                                                                        |  | Event of default/                             
|    |  |                                                                    |  | (as of June 30,    |  | Defaults                                                                                                               |  | acceleration                                  
|    |  |                                                                    |  | 2002)              |  | (as of May 8, 2002)                                                                                                    |  | (as of May 8, 2002)                           
|    |  |                                                                    |  |                    |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|16. |  | 11-7/8% Senior
Notes due 2010,
less unamortized
discount           |  | $491.2 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      |  | $296.5 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
|   
|   
|   
|   
|    |  |                                                                    |  |                    |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|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
|   
|   
|   
|   
|    |  |                                                                    |  |                    |  |                                                                                                                        |  |                                               
|   
|   
|   
|   
|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 |  | $205.8 million     |  | Chapter 11 filings,
failure to pay
interest on
outstanding notes
after 30 day grace
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
June 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.

39



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##### Table of Contents



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

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 June 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.

40



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

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

|                                   |  |                        |         |        |   |           |     |       |   |         |       |       |   |   |       |  |   |   |       | 
|---------------------------------- |  | ---------------------- | ------- | ------ | - | --------- | --- | ----- | - | ------- | ----- | ----- | - | - | ----- |  | - | - | ----- | 
|                                   |  | 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)                  |  | £                      | 1,030.7 |        |   | £         |    |       |   | £       | 199.4 |       |   | £ | 348.3 |  |   | £ | 483.0 | 
|                                  
|                                  
|                                  
|                                  
|Capital Lease Obligations(2)       |  |                        | 0.4     |        |   |           | 0.4 |       |   |         |      |       |   |   |      |  |   |   |      | 
|                                  
|                                  
|                                  
|                                  
|Operating Leases                   |  |                        | 0.6     |        |   |           | 0.1 |       |   |         | 0.5   |       |   |   |      |  |   |   |      | 
|                                  
|                                  
|                                  
|                                  
|Unconditional Purchase Obligations |  |                        | 1.0     |        |   |           | 1.0 |       |   |         |      |       |   |   |      |  |   |   |      | 
|                                  
|                                  
|                                  
|                                  
|Other Long-Term Obligations        |  | None                   |         |        |  |           |     |       |  |         |       |       |  |   |       |  |  |  
|                                  
|                                  
|                                  
|                                  
|Total Contractual Cash Obligations |  | £                      | 1,032.7 |        |   | £         | 1.5 |       |   | £       | 199.9 |       |   | £ | 348.3 |  |   | £ | 483.0 | 



|(1) |  | Includes note payable to NTL
Communications Corp.                                                  
|--- |  | ---------------------------------------------------------------------------------------------------
|(2) |  | These amounts are as of December 31, 2001 which are not significantly
different from June 30, 2002.

Condensed Consolidated Statements of Cash
Flows

Net cash provided by operating activities amounted
to £4.0 million and £18.6
million for the six months ended June 30, 2002 and 2001, respectively. During
the six months ended June 30, 2002 and 2001, net cash provided by operating activities
includes £13.5 million and £72.4 million
increases in due to affiliates. Net cash provided by operating
activities also reflects the reduction in cash paid during the period
for interest to £23.6 million from £45.9 million
in the six months ended June 30, 2002 and 2001, respectively.

Net cash used in investing activities amounted to
£10.3 million and £38.7
million for the six months ended June 30, 2002 and 2001, respectively,
primarily for continuing fixed asset purchases. The Group expects to
further reduce purchases of fixed assets in 2002 in an effort to
conserve cash.

Net cash provided by financing activities amounted
to £12.8 million and £21.5
for the six months ended June 30, 2002 and 2001, respectively. Cash provided in
2002 represents loan notes of £13.0 million and cash
provided in 2001 represents £22.3 million in capital
contributions, both from NTL Communications Corp.

Results of Operations for the Six and Three Months Ended June 30, 2001 and 2000

As expected our growth in 2002 has been curtailed by funding constraints. Although
our current business plan includes a reduction in the number of new customers
and an increase in revenue from existing customers, our cash constraints
present many challenges to the successful execution of the plan. We are
conserving cash through a reduction in capital expenditures including
expenditures to connect new customers to our network. In order to maintain
revenues and cash from operations while reducing the number of new customers,
we must reduce and limit customer churn. We intend to continue to improve our
customer service and increase our service offering to customers in an effort to
curtail and reduce churn. 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.

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

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

41



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

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

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

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

Revenue for the six and three months ended June 30, 2002 and 2001 was £90.2
million, £87.8 million, £43.7 million and £45.5 million, respectively,
representing an increase of 2.7% and a decrease of 4.0%. The increase in the
six months ended June 30, 2002 was due to price increases and upselling new
services to customers. The decrease in the three months ended June 30, 2002
was a result of a reduction in the customer base due to disconnects,
lower telephony usage and fewer premium package television customers.

Operating costs (including network expenses) for the six and three months ended
June 30, 2002 and 2001 were £44.9 million, £50.5 million, £22.2 million and
£29.5 million, respectively, representing decreases of
11.0% and 24.8%. 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. In the six
and three months ended June 30, 2002 and 2001 these charges were £19.7 million,
£18.0 million, £10.1 million and £9.0 million, respectively.

Selling, general and administrative expenses for the six and three months ended
June 30, 2002 and 2001 were £28.4 million, £37.2 million, £13.6 million and
£13.2 million, respectively, representing a decrease of 23.6% and an increase
of 2.8%. The six 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 six and three
months ended June 30, 2002 and 2001 these charges were £28.4 million, £27.1
million, £13.6 million and £12.2 million, respectively.

Depreciation expense for the six and three months ended June
30, 2002 and 2001 were £31.1 million,
£26.7 million, £15.4 million and £15.5
million, respectively, representing an increase of 16.6% and a decrease of
0.5%. The increase in 2002 as compared to
2001 is due to an increase in depreciation of
telecommunications and cable television equipment.

Amortization expense for the six and three months ended June 30, 2002 and 2001
was zero, £2.4 million, zero and £2.4 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 six and three months ended June
30, 2001, after deducting the amortization of goodwill and other indefinite
lived intangible assets of £2.4 million and
£2.4 million, would have been zero
and zero, respectively.

Interest expense and amortization of debt discount and expenses for the six and
three months ended June 30, 2002 and 2001 was £48.0 million, £60.8 million,
£16.7 million, and £30.6 million, respectively. For the six and three months
ended June 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
£42.9 million and £16.0 million and amortization of debt financing costs of
£1.4 million and £0.7 million. For the six and three months ended June 30,
2001, interest expense includes the accretion of the

42



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

discount on the Discount Notes of £14.2 million and £7.2 million, interest on
the 1994, 1995 and 1998 Notes of £45.2 million and
£22.7 million and amortization of
debt financing costs of £1.4 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 proposed
recapitalization 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 six and three months ended June 30, 2002 was £62.6 million and £31.3
million, respectively, which includes interest on the Companys obligations
from May 8, 2002 to June 30, 2002 of £14.6 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 six and three months ended June 30,
2002 and 2001, the Group recorded net foreign exchange gains (losses) of
£43.4 million, £(55.4) million, £64.3 million and £(7.9) million, respectively,
primarily 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 item in the six and three months ended June 30, 2002 was
professional fees of £30,000 and £23,000, respectively. A subsidiary of NTL in
the UK has incurred recapitalization expenses of approximately £23 million
through June 30, 2002, including approximately £13 million for employee
retention related to substantially all of NTLs UK employees and approximately
£10 million for financial advisor, legal, accounting and consulting costs. The
Company expects to be charged in the third quarter of 2002 for its share of
these expenses as well as expenses incurred after June 30, 2002.

Net (loss) income in the six and three months
ended June 30, 2002 and 2001 was £(18.6)
million, £(145.2) million, £40.2 million and £(53.6) million, respectively.
The decrease in the net loss in the six month period of £126.6 million and the
decrease in the net loss in the three month period of £93.9 million was
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

In August 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (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.

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, unless there are new indicators of impairment.

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).



|                       |                 |  |                           |   |      |  |           |       | 
|---------------------- | --------------- |  | ------------------------- | - | ---- |  | --------- | ----- | 
|                       |                 |  | Six Months Ended June 30,
|                       |                 |  |                          
|                       |                 |  | 2002                      |   | 2001
|                       |                 |  |                           |   |     
|Net loss  as reported |                 |  | £(18,624                  | ) |      |  | £(145,177 | )    
|                      
|                      
|                      
|                      
|Amortization of:       |                 |  |                           |   |      |  |           |      
|                      
|                      
|                      
|                      
|                       | Goodwill        |  |                           |  |      |  |           | 2,425 | 
|                      
|                      
|                      
|                      
|                       | Franchise costs |  |                           |  |      |  |           | 13    | 
|                       |                 |  |                           |   |      |  |           |      
|                       |                 |  |                          |   |      |  | 2,438     |      
|                       |                 |  |                           |   |      |  |           |      
|Net loss  as adjusted |                 |  | £(18,624                  | ) |      |  | £(142,739 | )    
|                       |                 |  |                           |   |      |  |           |      

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,

43



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##### Table of Contents



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

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.

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.

44



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##### Table of Contents



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

DIAMOND CABLE COMMUNICATIONS LIMITED

|                                         |                               |  |          |   |          |  |          |   |          |  |          |       |          |  |            |       |       |  |          |   |  |  |       |       |   |  |   |        |   |  |   |         |  |  |   |        | 
|---------------------------------------- | ----------------------------- |  | -------- | - | -------- |  | -------- | - | -------- |  | -------- | ----- | -------- |  | ---------- | ----- | ----- |  | -------- | - |  |  | ----- | ----- | - |  | - | ------ | - |  | - | ------- |  |  | - | ------ | 
|                                         |                               |  | Six      |   |          |  |          |   |          |  |          |       |          |  |            |       |       |  |          |   |  |  |       |       |   |  |   |        |   |  |   |         |  |  |  
|                                         |                               |  | 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 |  | 06/30/02
|                                         |                               |  |          |   |          |  |          |   |          |  |          |       |          |  |            |       |       |  |         
|Long-term Debt Including Current Portion |                               |  |          |   |          |  |          |   |          |  |          |       |          |  |            |       |       |  |          |   |  |  |       |       |   |  |   |        |   |  |   |         |  |  |   |       
|                                        
|                                        
|                                        
|                                        
|U.S. Dollars                             |                               |  |          |   |          |  |          |   |          |  |          |       |          |  |            |       |       |  |          |   |  |  |       |       |   |  |   |        |   |  |   |         |  |  |   |       
|                                        
|                                        
|                                        
|                                        
|                                         | Fixed Rate                    |  |          |  |          |  |          |  |          |  | $        | 285.1 |          |  | $          | 531.0 |       |  |          |  |  |  | $     | 420.5 |   |  | $ | 110.0  |   |  | $ | 1,346.6 |  |  | $ | 482.4  | 
|                                        
|                                        
|                                        
|                                        
|                                         | Average Interest Rate         |  |          |   |          |  |          |   |          |  |          | 13.25 | %        |  |            | 11.75 | %     |  |          |   |  |  |       | 10.75 | % |  |   | 9.13   | % |  |   |         |  |  |   |        | 
|                                        
|                                        
|                                        
|                                        
|                                         | Average Forward Exchange Rate |  |          |   |          |  |          |   |          |  |          | .7090 |          |  |            | .7040 |       |  |          |   |  |  |       | .6901 |   |  |   | .6809  |   |  |   |         |  |  |   |        | 
|                                        
|                                        
|                                        
|                                        
|U.K. Pound                               |                               |  |          |   |          |  |          |   |          |  |          |       |          |  |            |       |       |  |          |   |  |  |       |       |   |  |   |        |   |  |   |         |  |  |   |       
|                                        
|                                        
|                                        
|                                        
|                                         | Fixed Rate                    |  |          |  |          |  |          |  |          |  |          |      |          |  |            |      |       |  |          |  |  |  |       |      |   |  |   | £135.0 |   |  |   | £135.0  |  |  |   | £120.2 | 
|                                        
|                                        
|                                        
|                                        
|                                         | Average Interest Rate         |  |          |   |          |  |          |   |          |  |          |       |          |  |            |       |       |  |          |   |  |  |       |       |   |  |   | 10.0   | % |  |   |         |  |  |   |        | 

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




RISK FACTORS

Diamond Cable Communications and Diamond Holdings are intermediate holding
companies that are dependent upon receipt of sufficient funds from their
subsidiaries or parent companies to meet their obligations. Unless NTLs
proposed recapitalization plan is implemented, it is likely that NTL will not
be able to provide us with cash in the future, at least in the short-term.

Diamond Cable Communications and Diamond Holdings are intermediate holding
companies with no independent operations or significant assets other than
investments in and advances to their respective subsidiaries. We do not
generate sufficient cash flow from our operations to fund our operational
expenses and interest payments. We have historically met our cash requirements
through debt or equity from NTL Incorporated and or other NTL Incorporated
subsidiaries. Given NTLs liquidity situation, unless its proposed
recapitalization plan is implemented it is likely that NTL will not be able to
provide us with cash at least for the short-term.

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

We have limited liquidity. NTL does not currently
have access to its historic sources of liquidity in the
capital markets and NTLs credit facilities are either fully drawn or NTL is
currently unable to access remaining undrawn amounts. As a
consequence, NTL
needs to restructure its outstanding debt and/or raise new funds. On May 8,
2002, NTL Incorporated and five of its subsidiaries including the
Company and Diamond Holdings filed a pre-arranged joint
reorganization plan under Chapter 11 of the United States Bankruptcy Code. On
May 24, 2002, NTL filed an amended plan, which sets forth the joint
reorganization plan, subject to court approval, to which NTL, an unofficial
committee of its public bondholders and France Telecom, a significant holder of
NTL Incorporateds preferred stock, have agreed in principle. On July 15, 2002,
NTL Incorporated and its debtor subsidiaries filed an amended disclosure
statement and a second amended joint reorganization plan which has been
distributed to stakeholders of the Company. A steering committee of the lending
banks under NTLs credit facilities has given its agreement in principle (on a
non-legally binding basis) to the terms of the proposed plan of reorganization.
However, the proposed plan of reorganization remains subject to a favorable
vote of NTLs impaired creditors and bankruptcy court approval.
NTL may also face
the possibility of insolvency proceedings in the UK or elsewhere.

The successful implementation of the proposed recapitalization plan is not
assured as it will require the support of NTLs creditors and preferred
stockholders as well as other conditions including Court approval.

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

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

NTL is in default under its credit facilities.

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

The UK credit facilities waivers terminated on April 29, 2002, as a result of
which, there was an event of default under each of NTLs credit facilities with
respect to the missed interest payments on April 1, 2002. In addition, the
voluntary filings under Chapter 11 of the United States Bankruptcy Code
constituted an event of default under the 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 a steering committee of the
lenders has agreed in principle (on a non-legally binding basis) to the
proposed recapitalization, there can be no assurance that they will not take
such actions.

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

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

As a result of these payment defaults and as a result of NTLs Chapter 11
bankruptcy filings, there is currently an event of default in respect of all of
NTLs publicly traded notes other than the notes issued by NTL Triangle. As a
result of the Chapter 11 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. If that facility is not refinanced or Cablecom
cannot be sold, the Cablecom credit facility is due to be repaid on April 30,
2003. Without substantial investment from a third party or further borrowing,
Cablecom would be unable to repay the facility which would have a material
adverse effect on its business.

It is likely NTL will lose its net operating loss carryforwards for U.S. income
tax purposes in connection with the proposed recapitalization plan.

A restructuring of NTLs debt can be expected to give to rise to cancellation
of indebtedness (COD), which if it occurs in the course of a proceeding
pursuant to Chapter 11 of the United States Bankruptcy Code, would be
non-taxable. If the COD is non-taxable, NTL will be required to reduce 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 completion of
the proposed plan of recapitalization, NTL will have no U.S. net operating loss
carryforwards.

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

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 complete the recapitalization process, there is no assurance that
it will not adversely impact our results of operations or have a long-term
effect on our brand.

In addition, this uncertainty may adversely affect 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. This has diverted their time and
resources from managing the operations of NTLs business. If our senior
managers and directors continue to spend significant amounts of their time in
connection with the recapitalization process, this may have a negative impact
on our operations.

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

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

Our growth has been curtailed by funding constraints.

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

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

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 churn during 2001 included the continued
integration of our ConsumerCo acquisition, 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.

Our ability to reduce churn could also be adversely affected by the successful
launch of digital terrestrial television by BskyB and the BBC, who have
recently successfully applied for licenses to furnish such a service.

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 client base
will adversely impact our revenue and results of operations.

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

NTL Incorporated has granted substantial governance and economic rights in
connection with the France Telecom investment and has entered into transactions
with France Telecom that may impact us and a stockholders investment in NTL
Incorporated.

NTL Incorporated has granted rights to France Telecom, including the right to
appoint directors, preemptive rights and the right to veto some significant
corporate transactions. Exercise by France Telecom of some or all of such
rights may impact us, including our ability to effect a consensual
recapitalization, or the value of NTL Incorporateds stock held by persons
other than France Telecom. France Telecom is a holder of NTL Incorporateds
cumulative convertible preferred stock, Series A, which allows the holders
other than commercial banks and their affiliates to exchange such stock for
stock of an entity holding up to 50% of Cablecom. France Telecom has agreed in
principle to the proposed recapitalization.

The companies in which NTL Incorporated holds minority investments in
continental Europe may require additional financing to complete their network
rollouts  their ability to obtain such financing will depend on their ability
to access the capital markets and the value of our investment could be reduced
or diluted.

NTL Incorporated holds, directly and indirectly, minority investments in
broadband cable operations in Germany, France and Sweden. Each of those
companies may require substantial amounts of additional capital to complete
their network

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

rollouts and upgrades and their ability to obtain that financing will depend,
in part, on their ability to access the capital markets. The ability of those
companies to access the capital markets will be subject not only to the
performance of their business and prospects, but to conditions in the capital
markets generally. If those companies cannot complete their planned expansions
and upgrades for any reason, the value of NTLs investments could be reduced.
If those companies issue equity securities, it is likely that NTL will not be
able to participate which could lead to substantial dilution of the value of
these investments to NTL. Although the Company does not own any interest in
these investments, any impact on NTL (Delaware), Inc. or NTL Incorporated, our
parent companies, could affect the Company and its subsidiaries.

On April 15, 2002, a funding request for $20 million was received by NTL under
the terms of the investment agreement relating to NTLs investment in B2. NTL
has informed B2 and the other principal investors that it is not in a position
to comply with this request at this time. The B2 investment agreement provides
that if NTL fails to provide such funding, it may be sued for non-payment and
arguably could lose certain rights under the B2 shareholders arrangements.
Pursuant to the applicable documents, if this occurs the majority remaining
shareholders may also elect to terminate the shareholder arrangements 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
elected to exercise these rights, NTL could be forced to sell its stake in B2
at a loss. NTL believes, however, that it has certain defenses and protections
of and for NTLs rights under the B2 investment agreement and in respect of its
equity interest in B2 and intends to vigorously enforce such rights and
protections.

Another company in which NTL Incorporated indirectly holds an investment, iesy
Holdings GmbH, formerly known as eKabel Holdings GmbH, the cable network in the
Hessen province of Germany (which includes Frankfurt), has recently retained
advisors to assist it in a restructuring of its outstanding indebtedness. There
can be no assurance that iesy will successfully achieve a restructuring. If a
restructuring is not successfully achieved, it will likely have a negative
impact on the value of NTLs investment in iesy.

We are dependent upon a small number of key personnel.

A small number of key executive officers manage NTLs 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 many key executive
officers.

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 of date. In addition, NTLs business
plan contemplates the introduction of

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

services using new technologies. Cablecom and the operations in which NTL has
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, NTLs 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 NTLs ability to
fund such implementation may depend on NTLs ability to obtain additional
financing. We cannot be certain that NTL would be successful in obtaining any
additional financing required.

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

NTL obtains insurance of the type and in the amounts that we believe are
customary for similar companies. Consistent with this practice, NTL does 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.

We are 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
incur 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. We 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 us. 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 will incur currency losses.

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

The putative class action lawsuits filed against NTL Incorporated and certain
of its officers which were commenced by seven of its purported shareholders, on
behalf of certain purchasers of NTL Incorporateds securities 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 claims arising out of the remaining suits against NTL Incorporated
will be discharged under the Bankruptcy Code if the proposed recapitalization
plan is confirmed by the Bankruptcy Court. The claims arising out of the suits
against the individual officers remain and will not be discharged under the
Bankruptcy Code if the recapitalization plan is confirmed, but may be released
pursuant to the terms of the plan itself. If, for any reason, the claims
against these officers are not

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

released under the plan, 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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DIAMOND CABLE COMMUNICATIONS LIMITED
(DEBTOR IN POSSESSION)
FORM 10-Q
QUARTER ENDED JUNE 30, 2002




PART II. OTHER INFORMATION




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 and August 15, 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 June 30, 2002, Diamond Cable Communications and
Diamond Holdings are in default in respect of an aggregate of $1,552.4 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.

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




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
June 30, 2002, the Company filed a Current Report on
Form 8-K, dated May 24, 2002, reporting under Item 5,
Other Events, that Diamond Cable Communications Limited, NTL
Incorporated and certain of NTLs subsidiaries filed a disclosure statement and an amended joint
reorganization plan with the United States Bankruptcy Court. No financial statements were
filed with this report.
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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




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: August 19, 2002 |  | By:                                  |  | /s/ Barclay Knapp     
|                      |  |                                      |  |                       
|                      |  |                                      |  | Barclay Knapp
Director
|                     
|                     
|                     
|                     
|                      |  |                                      |  |                       
|                     
|                     
|                     
|                     
|Date: August 19, 2002 |  | By:                                  |  | /s/ John F. Gregg     
|                      |  |                                      |  |                       
|                      |  |                                      |  | John F. Gregg
Director

55