FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

              |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended June 30, 1998

                                       or

              |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                         Commission File Number 33-83740

                        Diamond Cable Communications Plc
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

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

   Diamond Plaza, Daleside Road
   Nottingham NG2 3GG, England                             N/A
----------------------------------------     -----------------------------------
(Address of principal executive offices)                (Zip code)

                                 44-115-912-2217
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


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


                               Yes X      No __

     The number of shares outstanding of the Registrant's Ordinary Shares of 2.5
pence each outstanding as of June 30, 1998 was 59,138,791.



                                        1

<PAGE>



                        DIAMOND CABLE COMMUNICATIONS PLC

                                      INDEX


                                                                            Page


INTRODUCTION .............................................................    3

PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements

          Unaudited condensed consolidated statements of
             operations--Three and six months ended
             June 30, 1998 and 1997.......................................    5

          Condensed consolidated balance sheets--
             June 30, 1998 and December 31, 1997..........................    6

          Unaudited condensed consolidated statements of
             shareholders' equity -- Three and six months
             ended June 30, 1998..........................................    7

          Unaudited condensed consolidated statements of cash flows --
             Six months ended June 30, 1998
             and 1997.....................................................    8

          Notes to the unaudited condensed consolidated
             financial statements.........................................    9


Item 2.   Management's Discussion and Analysis of Results
             of Operations and Financial Condition.......................    13


Part II.  OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K...............................    25


SIGNATURES...............................................................    26



                                        2

<PAGE>



                                  INTRODUCTION

         Diamond Cable  Communications  Plc (the  "Company") is a public limited
company (with registered number 2965241)  incorporated under the laws of England
and Wales. The Company is a holding company which holds all of the shares of (i)
Diamond Cable  Communications  (UK) Limited (formerly Diamond Cable (Nottingham)
Limited) ("DCL") and its  subsidiaries and (ii) a group of companies  comprising
East Midlands Cable Group Limited ("EMCG"),  East Midlands Cable  Communications
Limited and East Midlands Cable Holdings Limited  (collectively  "LCL"), in both
cases through  intermediate  holding  companies,  Diamond Holdings plc and Jewel
Holdings  Limited  ("Jewel").  References  herein  to the  "Group"  refer to the
Company and its subsidiaries, including, since September 27, 1995, LCL.

         The Group operates a  telecommunications  and cable television business
focused  on  the  East  Midlands  area  of  England.   The  Group  is  currently
constructing  a broadband  fiber-optic  network to serve the  approximately  1.2
million homes and an estimated 60,600 businesses within its contiguous franchise
areas. As of June 30, 1998, the Group's cable television and  telecommunications
network had passed by civils  construction  approximately  616,100  homes and an
estimated  28,400   businesses,   of  which  portions  of  the  network  passing
approximately  601,000  homes  and  an  estimated  27,600  businesses  had  been
activated. As of that date, the Group also had approximately 197,400 residential
telephone  lines,  98,700  cable  television  subscribers  and  33,900  business
telephone  lines.  Through that date,  (pound)496  million had been invested (at
original cost) in the construction of the network and related systems.


                              --------------------


         THIS DOCUMENT CONTAINS CERTAIN FORWARD-LOOKING  STATEMENTS,  IDENTIFIED
AS SUCH, WITH RESPECT TO WHICH THE COMPANY IS SEEKING TO UTILIZE THE SAFE HARBOR
PROVIDED  BY  THE  PRIVATE  SECURITIES  LITIGATION  REFORM  ACT OF  1995.  THESE
STATEMENTS  ARE  ACCOMPANIED  BY, AND  SHOULD BE READ IN  CONJUNCTION  WITH,  AN
EXPLANATION  OF  IMPORTANT  FACTORS  THAT COULD CAUSE  ACTUAL  RESULTS TO DIFFER
MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS.



                                        3

<PAGE>



         The  Company  operates  only in the United  Kingdom  and,  accordingly,
publishes  its  financial  statements  in  pounds  sterling.   In  this  Report,
references  to  "pounds  sterling,"  "(pound)"  "pence" or "p" are to the lawful
currency of the United Kingdom and references to "U.S. dollars," "$" or "(cent)"
are to the lawful currency of the United States.  Merely for  convenience,  this
Report contains translations of certain pound sterling amounts into U.S. dollars
at   specified   rates.   These   translations   should  not  be   construed  as
representations  that the pound sterling  amounts  actually  represent such U.S.
dollar amounts or could have been or could be converted into U.S. dollars at the
rate  indicated  or  at  any  other  rate.  Unless  otherwise   indicated,   the
translations of pounds sterling into U.S.  dollars have been made at $1.6695 per
(pound)1.00, the noon buying rate in The City of New York for cable transfers in
pounds sterling as certified for customs purposes by the Federal Reserve Bank of
New York (the "Noon Buying Rate") on June 30, 1998. On August 13, 1998, the Noon
Buying Rate was $1.6265 per (pound)1.00.


         On June 16, 1998, the Company  announced that all of the holders of its
outstanding  ordinary  shares of 2.5p each and deferred  shares of 25p each have
agreed to exchange all outstanding shares in the Company for newly issued shares
of common stock of NTL Incorporated  ("NTL"), an alternative  telecommunications
company in the UK, the common stock of which is quoted on NASDAQ  (NTLi).  Under
the share exchange  agreement  between the Company's  shareholders  and NTL (the
"Share Exchange Agreement"),  the Company's  shareholders will receive one share
of NTL common stock for every four  Ordinary  Shares of the Company held subject
to adjustment in the event that the average NTL share price for a  predetermined
period before closing of the  transaction  exceeds a specified price (which will
be $52 per share until  October 16,  1998).  Holders of the  Company's  deferred
shares will receive one share of NTL common stock for each deferred share held.

         The  proposed  share  exchange  is subject  to a number of  conditions,
including  the  receipt of required  regulatory  approvals  and,  if  necessary,
approval by NTL  shareholders  and the  consent of holders of NTL's  outstanding
debt. The transaction  will not require the prior approval of the holders of the
Group's  outstanding  debt  securities,  but each of the indentures  pursuant to
which the Group's debt securities were issued requires that offers to repurchase
such  debt  securities  be made to  holders  of such  securities  subsequent  to
closing.  The parties  expect the  transaction  to be completed in the autumn of
this year.


                                        4

<PAGE>



PART I.   FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                        DIAMOND CABLE COMMUNICATIONS PLC

            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED JUNE 30,                   SIX MONTHS ENDED JUNE 30,
                                           --------------------------------------           --------------------------------  


                                                 1997         1998          1998             1997                1998          1998
                                                ------       ------        ------           ------              ------        -----
                                                                         (note 1)                                           (note 1)
                                                                              (in thousands)
<S>                                       <C>           <C>                <C>         <C>                 <C>              <C>

REVENUE
Business telecommunications...............(pound)3,347  (pound) 4,667       $ 7,792    (pound) 6,520     (pound) 8,999    $ 15,024
Residential telephone.....................       6,761         10,991        18,349           12,932            20,831      34,777
Cable television..........................       3,879          5,897         9,845            7,697            11,356      18,959
                                               -------        -------       -------         --------           -------    --------
                                                13,987         21,555        35,986           27,149            41,186      68,760
                                               -------        -------       -------          -------           -------     -------

OPERATING COSTS AND EXPENSES
Telephone.................................      (2,941)        (4,183)       (6,983)          (5,537)           (7,921)    (13,224)
Programming...............................      (2,258)        (3,166)       (5,286)          (4,550)           (6,191)    (10,336)
Selling, general, and
  administrative..........................      (6,367)        (9,195)      (15,351)         (12,568)          (17,924)    (29,924)
Depreciation and amortization.............      (6,635)       (10,330)      (17,246)         (13,015)          (19,650)    (32,806)
                                               --------       --------      --------         --------          --------    --------
                                               (18,201)       (26,874)      (44,866)         (35,670)          (51,686)    (86,290)
                                               --------       --------      --------         --------          --------    --------
OPERATING LOSS............................      (4,214)        (5,319)       (8,880)          (8,521)          (10,500)    (17,530)

Interest income...........................       2,026          3,875         6,469            2,969             6,881      11,488
Interest expense and amortization of debt
  discount and expenses...................     (15,019)       (21,456)      (35,821)         (27,200)          (40,415)    (67,473)
Foreign exchange gains/(losses), net......       6,271         (2,332)       (3,893)          (5,723)           10,165      16,970
Unrealized gain on derivative financial
  instruments.............................         168             --            --              244                --          --
Realized gain on derivative financial
  instruments.............................          --          2,302         3,843           11,553               412         688
                                              --------       --------      --------         --------           -------   ---------

Loss before income taxes..................     (10,768)       (22,930)      (38,282)         (26,678)          (33,457)     (55,857)
Income taxes..............................          --             --            --               --                --           --
                                              --------        --------      --------        ---------          --------   ---------
NET LOSS................................(pound)(10,768) (pound)(22,930)     $(38,282) (pound)(26,678)   (pound)(33,457)    $(55,857)
                                              ========        ========      =========        ========          ========   =========

         See the accompanying notes to the Unaudited Condensed Consolidated Financial Statements.
</TABLE>



                                        5

<PAGE>


                        DIAMOND CABLE COMMUNICATIONS PLC

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                             AT DECEMBER 31,             AT JUNE 30,
                                                                            ----------------             -----------
                                                                                                         (UNAUDITED)
                                                                                 1997                1998            1998
                                                                                ------              ------          ------
                                                                                                                   (NOTE 1)
                                                                                                (IN THOUSANDS)
<S>                                                                          <C>                <C>                  <C>
                   ASSETS

Cash and cash equivalents.................................................    (pound)75,680      (pound)221,120        $369,160
Trade receivables (net of allowance for doubtful accounts
  of (pound)2,788 at  December 31, 1997 and(pound)3,822 at
  June 30, 1998).........................................................            8,569               9,817          16,389
Other assets.............................................................            4,470               4,451           7,431
Deferred financing costs (less accumulated
  amortization of (pound)2,627 at December 31, 1997
  and (pound)3,674 at June 30, 1998).....................................           15,533              21,477          35,856
Property and equipment, net (note 4).....................................          365,636             416,410         695,197
Goodwill (less accumulated amortization of (pound)10,914 at December 31,
1997 and(pound)13,341 at June 30, 1998)..................................           86,046              83,621         139,605
Franchise costs (less accumulated amortization of
  (pound)116 at December 31, 1997 and (pound)130 at June 30, 1998)........              423                 409             683
                                                                                   -------             -------       ---------
TOTAL ASSETS.............................................................   (pound)556,357      (pound)757,305      $1,264,321
                                                                                   =======             =======       =========
              LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable.........................................................   (pound) 22,319      (pound) 26,658         $44,505
Other liabilities........................................................           11,224              20,319          33,923
Senior discount notes....................................................          534,861             557,403         930,584
Senior notes.............................................................                -             200,888         335,383
Capital lease obligations................................................            8,041               7,303          12,193
Mortgage loan............................................................            2,423               2,403           4,012
Shareholders' equity
  Ordinary shares (70,000,000 authorized;
    59,138,791 issued at December 31, 1997 and
    at June 30, 1998)....................................................            1,478               1,478           2,468
Non-voting deferred shares (6 shares authorized and
  issued at December 31, 1997 and June 30, 1998).........................                -                   -               -
Additional paid-in-capital...............................................          134,466             134,466         224,491
Accumulated other comprehensive loss.....................................             (204)             (1,905)         (3,181)
Accumulated deficit......................................................         (158,251)           (191,708)       (320,057)
                                                                                  --------            --------       ---------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY...............................   (pound)556,357      (pound)757,305      $1,264,321
                                                                                  ========             =======       =========
</TABLE>
         See the  accompanying  notes to the  Unaudited  Condensed  Consolidated
Financial Statements.



                                        6

<PAGE>


                        DIAMOND CABLE COMMUNICATIONS PLC

                   UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
                             OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                ADDITIONAL
                                                              NON-VOTING           PAID-
                                        ORDINARY SHARES     DEFERRED SHARES     IN-CAPITAL
                                        ---------------     ---------------     ----------
                                                 (IN THOUSANDS EXCEPT SHARE DATA)

                                      Number                  Number
                                      ------                  ------  
<S>                                 <C>         <C>             <C>    <C>    <C>
BALANCE AT JANUARY 1, 1998........  59,138,791  (pound)1,478    6      --     (pound)134,466
Unrealized loss on securities.....          --            --   --      --                 --

Net loss..........................          --            --   --      --                 --
                                   -----------  ------------  ------  ------   -------------
BALANCE AT JUNE 30, 1998..........  59,138,791  (pound)1,478    6      --     (pound)134,466
                                   ===========  ============  ======  ======   =============

BALANCE AT APRIL 1, 1998..........  59,138,791  (pound)1,478    6      --     (pound)134,466
Unrealized gain on securities.....          --            --   --      --                 --

Net loss..........................          --            --   --      --                 --
                                   -----------  ------------  ------  ------   -------------
BALANCE AT JUNE 30, 1998..........  59,138,791  (pound)1,478    6      --     (pound)134,466
                                   ===========  ============  ======  ======   =============

---------------
See the accompanying notes to the Unaudited Condensed Consolidated Financial Statements.
</TABLE>

<TABLE>
<CAPTION>
                                       ACCUMULATED
                                          OTHER                                TOTAL
                                      COMPREHENSIVE       ACCUMULATED      SHAREHOLDERS'
                                          LOSS              DEFICIT           DEFICIT
                                      -------------       -----------      -------------
                                                 (IN THOUSANDS EXCEPT SHARE DATA)

<S>                                   <C>              <C>                  <C>
BALANCE AT JANUARY 1, 1998........   (pound) (204)     (pound)(158,251)     (pound)(22,511)
Unrealized loss on securities.....         (1,701)                  --              (1,701)

Net loss..........................             --              (33,457)            (33,457)
                                     -------------     ----------------     ---------------
BALANCE AT JUNE 30, 1998..........  (pound)(1,905)     (pound)(191,708)     (pound)(57,669)
                                     =============     ================     ===============

BALANCE AT APRIL 1, 1998..........  (pound)(2,245)     (pound)(168,778)     (pound)(35,079)
Unrealized gain on securities.....            340                   --                 340

Net loss..........................             --              (22,930)            (22,930)
                                     -------------     ----------------     ---------------
BALANCE AT JUNE 30, 1998..........  (pound)(1,905)     (pound)(191,708)     (pound)(57,669)
                                     =============     ================     ===============

---------------
See the accompanying notes to the Unaudited Condensed Consolidated Financial Statements.
</TABLE>

                                       7


<PAGE>


                        DIAMOND CABLE COMMUNICATIONS PLC

            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                     SIX MONTHS ENDED JUNE 30,
                                                                                     -------------------------
                                                                            1997               1998               1998
                                                                         ----------         ----------         ----------
                                                                                                                 (NOTE 1)
                                                                                          (IN THOUSANDS)

<S>                                                                   <C>               <C>                    <C>
Cash flows from operating activities:
Net loss..........................................................    (pound)(26,678)   (pound)(33,457)        $(55,857)
Adjustments to reconcile net loss to net cash provided by operating
activities:
  Depreciation and amortization...................................            13,015            19,676           32,849
  Unrealized foreign exchange losses/(gains)......................             5,242           (10,015)         (16,720)
  Loss on disposition of assets...................................                78                 -                -
  Accretion of Senior Note discount...............................            25,057            31,064           51,862
  Provision for losses on accounts receivable.....................               485             1,034            1,726
  Amortization of deferred financing costs........................             1,198             1,047            1,748

  Change in operating assets and liabilities:
    Change in trade receivables...................................              (735)           (2,282)          (3,809)
    Change in other assets........................................            (1,983)               19               32
    Change in accounts payable....................................             2,163             1,656            2,765
    Change in other liabilities...................................            (5,795)            8,596           14,350
                                                                             --------          --------         --------

Net cash provided by operating activities.........................            12,047            17,338           28,946
                                                                             --------          --------         --------
Cash flows from investing activities:
  Cash invested in property and equipment.........................           (51,741)          (64,973)        (108,472)
  Proceeds from disposition of assets.............................                39                65              108
                                                                             --------          --------        ---------
Net cash used in investing activities.............................           (51,702)          (64,908)        (108,364)
                                                                             --------          --------        ---------
Cash flows from financing activities:
  Proceeds of issue of debt.......................................           153,692           202,381          337,875
  Debt financing costs............................................            (5,246)           (6,527)         (10,897)
  Repayment of mortgage loan......................................               (35)              (21)             (35)
  Capital element of capital lease repayments.....................              (732)           (1,122)          (1,873)
                                                                             --------          --------        ---------
Net cash provided by financing activities.........................           147,679           194,711          325,070
                                                                             --------          --------        ---------
Net increase in cash and cash equivalents.........................           108,024           147,141          245,652
Cash and cash equivalents at beginning of period..................            18,311            75,680          126,348
Effect of exchange rate changes on cash and cash equivalents......              (746)           (1,701)          (2,840)
                                                                             --------          --------        ---------

Cash and cash equivalents at end of period........................    (pound)125,589    (pound)221,120          $369,160
                                                                       =============     ==============         ========

    See the accompanying notes to the Unaudited Condensed Consolidated Financial Statements.

</TABLE>

                                        8

<PAGE>


     NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.   BASIS OF PREPARATION

         Diamond Cable Communications Plc (the "Company") owns and operates
cable television and telecommunications systems through its subsidiaries. The
unaudited consolidated financial statements of the Company and its subsidiaries
(the "Group") have been prepared in accordance with U.S. generally accepted
accounting principles and the rules and regulations of the Securities and
Exchange Commission (the "SEC"). Accordingly, certain information and footnote
disclosures normally included in consolidated financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. The consolidated financial statements are stated in pounds sterling
((pound)). Merely for convenience the consolidated financial statements contain
translations of certain pound sterling amounts into U.S. dollars at $1.6695 per
(pound)1.00, the noon buying rate in the City of New York for cable transfers in
pounds sterling as certified for customs purposes by the Federal Reserve Bank of
New York on June 30, 1998.

2.   RESPONSIBILITY FOR INTERIM FINANCIAL STATEMENTS

         The financial statements as of and for the periods ended June 30, 1998
and 1997 are unaudited. However, in the opinion of the management, such
statements include all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation of the results for the periods
presented. The results of operations for any interim period are not necessarily
indicative of the results for the full year. The interim financial statements
should be read in conjunction with the financial information included in the
Company's 1997 Annual Report on Form 10-K filed with the SEC.

3.   COMPREHENSIVE LOSS

         SFAS No. 130, "Reporting Comprehensive Income" was issued in June 1997,
and is effective for accounting periods beginning after December 15, 1997. SFAS
No. 130 establishes standards for reporting and display of comprehensive income
and its components. Comprehensive loss for the six-month periods to June 30,
1997 and 1998 is shown below:


                                        9

<PAGE>

<TABLE>
<CAPTION>
                                                                                SIX MONTHS ENDED JUNE 30,
                                                                  -------------------------------------------------
                                                                       1997               1998              1998
                                                                  ---------------    --------------      ----------
                                                                                                           (NOTE 1)
                                                                                      (IN THOUSANDS)
<S>                                                                   <C>               <C>                <C>
Net loss..........................................................    (pound)(26,678)   (pound)(33,457)    $(55,857)
Other comprehensive loss net of tax:-
  Unrealized loss on securities...................................              (746)           (1,701)      (2,840)
                                                                      --------------    --------------     --------

Comprehensive loss...............................................     (pound)(27,424)   (pound)(35,158)    $(58,697)
                                                                      ==============    ==============     ========
</TABLE>


4.  PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>

                                        LAND AND          CABLE           OFFICE          MOTOR
                                       BUILDINGS         NETWORK        EQUIPMENT        VEHICLES          TOTAL
                                     -------------    ------------   -------------    -------------    -------------

                                                                     (IN THOUSANDS)
ACQUISITION COSTS
<S>                                   <C>           <C>               <C>                 <C>          <C>    

Balance at January 1, 1998.......     (pound)5,111  (pound)405,652     (pound)9,017       (pound)606   (pound)420,386
Additions........................              639          66,369              810              258           68,076
Dispositions.....................                -            (116)              -              (196)            (312)
                                       -----------   -------------      -----------       ----------   --------------
Balance at June 30, 1998.........            5,750         471,905            9,827              668          488,150
                                       -----------   -------------      -----------       ----------   --------------
ACCUMULATED DEPRECIATION

Balance at January 1, 1998.......              478          49,695            4,369              208           54,750
Charge for period................               90          16,045            1,020               82           17,237
Dispositions.....................                -             (95)                -            (152)            (247)
                                       -----------   -------------       ----------      -----------   --------------
Balance at June 30, 1998.........              568          65,645            5,389              138           71,740
                                       -----------   -------------       ----------      -----------   --------------
JUNE 30, 1998 NET BOOK VALUE.....            5,182         406,260            4,438              530          416,410
                                      ============  ==============     ============      ===========   ==============
DECEMBER 31, 1997 NET BOOK VALUE.     (pound)4,633  (pound)355,957     (pound)4,648       (pound)398   (pound)365,636
                                      ============  ==============     ============      ===========   ==============
</TABLE>


The estimated useful life of set-top boxes and initial subscriber  installations
was reduced  from seven  years to three years with effect from  January 1, 1998.
The effect of the change in  estimated  useful life was to reduce net income for
the period by (pound)3.0 million ($5.0 million).

5.   COMMITMENTS AND CONTINGENCIES

         The Company is obligated under the terms of its existing licenses,  and
under the milestone  requirements of its local delivery  licenses  ("LDLs"),  to
construct cable systems passing a predetermined  number of premises.  Should the
Company fail to achieve these  milestones,  without license  modifications,  the
Director General could commence


                                       10

<PAGE>



proceedings  to  require  compliance.   Similarly,  the  Independent  Television
Commission ("ITC") may commence proceedings to require compliance with the build
milestones  in the LDLs.  If the  Company is unable to comply,  its  licenses in
respect of which milestones have not been met could be revoked, which could have
a material adverse effect on the Company.

6.  ISSUE OF 1998 NOTES

         On February 6, 1998,  Diamond  Holdings  plc  ("Diamond  Holdings"),  a
subsidiary of the Company, issued  (pound)135,000,000 in principal amount of its
10% Senior Notes due February 1, 2008 and  $110,000,000  in principal  amount of
its 9 1/8% Senior Notes due February 1, 2008 (together,  the "1998 Notes").  The
1998 Notes have been  guaranteed  by the Company as to  principal,  interest and
other  amounts  due.  Net  proceeds  received  by Diamond  Holdings  amounted to
approximately  (pound)195 million after issuance costs of approximately (pound)7
million.

7.  SHARE EXCHANGE AGREEMENT

         On June 16, 1998, the Company  announced that all of the holders of its
outstanding  ordinary  shares of 2.5p each and deferred  shares of 25p each have
agreed to exchange all outstanding shares in the Company for newly issued shares
of common stock of NTL, an alternative telecommunications company in the UK, the
common  stock of which is  quoted  on NASDAQ  (NTLi).  Under the Share  Exchange
Agreement, the Company's shareholders will receive one share of NTL common stock
for every four Ordinary  Shares of the Company held subject to adjustment in the
event that the average NTL share price for a predetermined period before closing
of the transaction  exceeds a specified price (which will be $52 per share until
October 16,  1998).  Holders of the Company's  deferred  shares will receive one
share of NTL common stock for each deferred share held.

         The  proposed  share  exchange  is subject  to a number of  conditions,
including  the  receipt of required  regulatory  approvals  and,  if  necessary,
approval by NTL  shareholders  and the  consent of holders of NTL's  outstanding
debt. The transaction  will not require the prior approval of the holders of the
Group's  outstanding  debt  securities,  but each of the indentures  pursuant to
which the Group's debt securities were issued requires that offers to repurchase
such  debt  securities  be made to  holders  of such  securities  subsequent  to
closing.  The parties  expect the  transaction  to be completed in the autumn of
this year. Assuming consummation of the Share Exchange Agreement, the holders of
the Company's  outstanding  Discount  Notes and the 1998 Notes issued by Diamond
Holdings will have the right to require the issuer  thereof to  repurchase  such
securities at a price of 101% of their accreted value or principal amount. There
can be no  assurance  that the  Company  or  Diamond  Holdings  will have  funds
necessary to effect such repurchases.


                                       11

<PAGE>



8.  SUMMARIZED FINANCIAL INFORMATION

         The  following  table  presents   summarized   consolidated   financial
information for Diamond Holdings plc ("Diamond  Holdings") as of and for the six
months ended June 30,  1998.  This  summarized  financial  information  is being
provided  pursuant  to  Section G of Topic 1 of Staff  Accounting  Bulletin  No.
53--"Financial  Statement  Requirements  in Filings  Involving  the Guarantee of
Securities by a Parent".  The 1998 Notes have been  guaranteed by the Company as
to  principal,  interest and other  amounts  due.  The Company will  continue to
provide such summarized  financial  information for Diamond Holdings for as long
as the 1998 Notes remain outstanding and guaranteed by the Company.

<TABLE>
<CAPTION>
                                                                 Diamond Holdings plc (note a)
                                                                 ----------------------------
                                                           17 days ended             Six months ended
                                                         December 31, 1997            June 30, 1998
                                                         -----------------           ----------------
                                                                         (in thousands)
Summarized Consolidated Income Statement
Information
<S>                                                       <C>                     <C>              


Revenue                                                    (pound)-                 (pound) 41,186

Operating costs and expenses                                      -                         50,494

Net loss for the period                                    (pound)-                 (pound)(36,783)
                                                        ================            ===============


                                                        December 31, 1997             June 30, 1998
                                                        -----------------             -------------

                                                                          (in thousands)
Summarized Consolidated Balance Sheet
Information

Fixed and noncurrent assets                                (pound)-                 (pound)507,066
Current assets                                                    50                       206,198
                                                        ----------------            --------------
Total assets                                               (pound)50                (pound)713,264
                                                        ================            ==============


Current liabilities                                        (pound)-                 (pound) 46,159
Noncurrent liabilities                                            -                        812,390
Shareholders interest/(deficit)                                   50                      (145,285)
                                                        ----------------             --------------

Total liabilities and shareholders interest                (pound)50                (pound)713,264
                                                        ================             ==============
<FN>
         (a) Diamond  Holdings  was  incorporated  on December 15, 1997 and is a
wholly-owned,  direct subsidiary of Diamond Cable Communications Plc. On January
16, 1998 Diamond  Holdings became the  intermediate  holding company which holds
all of the shares of all Group companies (other than Diamond  National  Networks
Limited,  currently a company with no operations,  and (pound)2  called up share
capital).  The Summarized  Financial  Information  shows operating results as if
Diamond Holdings became the intermediate holding company on January 1, 1998.
</FN>
</TABLE>

                                       12

<PAGE>



                        DIAMOND CABLE COMMUNICATIONS PLC

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

LIQUIDITY AND CAPITAL RESOURCES

         The  Company  expended  net  cash  to  fund  investing   activities  of
approximately  (pound)110.1  million and  (pound)64.9  million in the year ended
December 31, 1997 and the first six months of 1998, respectively.  The Company's
investing activities consisted almost exclusively of the ongoing construction of
the  network  ((pound)110.1  million in the year  ended  December  31,  1997 and
(pound)65.0  million  in the first six  months of 1998).  Net cash  provided  by
financing  activities  in the year ended  December  31,  1997 was  approximately
(pound)146.6  million and (pound)194.7  million in the first six months of 1998.
The Company's net cash provided by operating  activities was (pound)20.9 million
in the year ended December 31, 1997 and (pound)17.3 million in the six months to
June 30, 1998. The Group's cash and funding requirements  historically have been
met  principally  through the  issuance of the Discount  Notes,  as well as from
equity  capital,  advances  from  its  shareholders,  and from  bank  and  lease
financing.  In February  1998, a subsidiary  of the Company,  Diamond  Holdings,
issued the 1998 Notes, raising net proceeds of approximately (pound)195 million.
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.

         The  further   development  and   construction  of  the  Group's  cable
television  and  telecommunications  network  will require  substantial  capital
investment.  The Group is obligated by the milestones in its  telecommunications
licenses and its LDLs to construct  and activate a network  passing an aggregate
of 1,021,894  premises within  prescribed time periods.  Failure by the Group to
meet its milestones could  potentially  subject the Group to enforcement  orders
from OFTEL or the ITC,  which could lead to revocation of the relevant  licenses
or a shortening of an LDL period or fines. The Group met the required  quarterly
milestone obligations under each of its  telecommunications  licenses as at June
30, 1998.  Principally because of delays by the Department of Trade and Industry
in granting  the Group a national  telecommunications  license,  and  consequent
delays in the  commencement of  construction,  the Group did not meet its annual
milestones  in six of its  seven  LDL  franchises  at the end of 1997,  although
construction  had  commenced in five of the seven LDL  franchises.  Following an
application by the Group to the ITC, on March 26, 1998 the ITC formally modified
the annual build milestone obligations in all of the Group's LDL franchise areas
except Vale of Belvoir with effect from December 30, 1997. The Group has met the
modified milestones in all of its LDL franchises as at December 31, 1997.

         The Company  expects that the Group's  residential  cable  network will
extend approximately 14,300 kilometers (plus 920 kilometers to


                                       13

<PAGE>



interconnect  the residential  build) and pass  approximately  1.2 million homes
once completed.  The network will be substantially completed by the end of 2001.
The Company currently  estimates that the additional  capital  expenditures from
July 1, 1998  required  for the  Group to  substantially  complete  construction
sufficient to satisfy its aggregate milestone  obligations of approximately 1.02
million premises (including  estimated  subscriber  connection expenses) will be
approximately (pound)366 million, although further capital expenditures would be
required  to  substantially  complete  the  network.  These  amounts  could vary
significantly  depending  on such  factors as the number of  customers  actually
connected to the network,  the  availability of  construction  resources and the
impact of competition from other cable operators or delivery mechanisms.

         At June 30, 1998,  the Group had  constructed  and  activated a network
comprising  approximately 62% of its aggregate  milestones.  The Group estimates
that existing cash  resources  and estimated  future cash flows from  operations
will be sufficient to complete the construction and activation of its network to
almost 84% of its aggregate final milestones, which level the Group estimates it
will  achieve  by the end of 1999.  Thereafter,  the Group will be  required  to
obtain further debt and/or equity financing to complete construction  sufficient
to satisfy its aggregate milestones. To the extent that (i) the amounts required
to construct the Group's  network to meet its  milestones  exceed its estimates,
(ii) the  Group's  cash  flow  does not meet  expectations  or (iii)  the  Group
continues its construction of the network beyond its milestone obligations,  the
amount of further debt and/or equity financing required will increase. There can
be no assurance that any such debt or equity  financing will be available to the
Group on acceptable commercial terms or at all.

         The foregoing  information  with regard to expected  completion  times,
future capital expenditures and the sufficiency of funding is forward-looking in
nature. Due to a number of factors,  including those identified in the preceding
paragraph and below, actual results may differ materially from expected results.
In particular, the anticipated further funding requirements will depend upon the
Group's  cash flow  which,  in turn,  will  depend  upon a number of  variables,
including  revenue  generated  from  business  telecommunications,   residential
telephone and cable  television  services,  churn,  expenses such as programming
costs  and   interconnect   charges,   network   construction   and  development
expenditures and financing costs.  Adverse developments in any of these or other
areas could adversely  affect the Group's cash flow.  Moreover,  there can be no
assurance that (i) conditions  precedent to the  availability of funds under any
future debt  instruments  will be satisfied  when funds are  required;  (ii) the
Group  will be able to  generate  sufficient  cash from  operations  to meet any
unfunded portion of its capital  requirements  when required;  (iii) the cost of
constructing  and activating the network will not increase  significantly;  (iv)
the Group will not acquire  additional  franchise  areas,  which  would  require
additional  capital  expenditures;  or (v) the Group will not incur  losses from
foreign currency transactions


                                       14

<PAGE>



or its exposure to foreign currency  exchange rate  fluctuations,  each of which
factors would increase the Group's funding needs.

         Assuming  consummation of the Share Exchange Agreement,  the holders of
the Company's  outstanding  Discount  Notes and the 1998 Notes issued by Diamond
Holdings will have the right to require the issuer  thereof to  repurchase  such
securities at a price of 101% of their accreted value or principal amount. There
can be no  assurance  that the  Company  or  Diamond  Holdings  will have  funds
necessary to effect such repurchases.



                                       15

<PAGE>



SELECTED OPERATING DATA

         The  following  table sets forth  certain data  concerning  the Group's
franchises at and for the years ended  December 31, 1996 and 1997 and at and for
the three-month  period ended March 31, 1998 and the six-month period ended June
30, 1998.

<TABLE>
<CAPTION>

                                                        DECEMBER 31,             MARCH 31,    JUNE 30,
                                                       -------------            ----------   ---------
                                                      1996       1997              1998         1998
                                                     ------     ------            -----        ------
<S>                                             <C>          <C>            <C>           <C>

Homes passed by civils construction(1)..........     453,496      536,110        574,557       616,110
Homes activated(2)..............................     347,246      508,801        550,862       601,082
Homes marketed(3)...............................     252,601      405,787        456,438       504,049
Student services rooms marketed(4)..............           -        1,805          4,583         7,086
BUSINESS TELECOMMUNICATIONS
Business customers accounts.....................       3,935        5,723          6,165         6,671
Business lines connected........................      18,932       27,124         29,571        33,947
Private circuits(5).............................         226          258            269           304
Average lines per business(6)...................         4.8          4.7            4.8           5.1
Average monthly revenue per line(7)(8)..........(pound)50.17 (pound)46.26   (pound)45.88  (pound)44.50
Pro-forma average monthly revenue per line(8)...(pound)51.25 (pound)46.26   (pound)45.88  (pound)44.50
RESIDENTIAL TELEPHONE(4)
Residential lines connected.....................     104,460      157,171        177,612       197,369
Penetration rate of homes marketed(9)...........       41.4%        38.6%          38.5%         38.6%
Average monthly revenue per line(8)(10).........(pound)18.40 (pound)18.75   (pound)18.77  (pound)18.77
Pro-forma average monthly revenue per line(8)...(pound)18.64 (pound)18.75   (pound)18.77  (pound)18.77
Churn(11)(12)...................................       20.6%        16.3%          12.6%         14.2%
CABLE TELEVISION
Basic service subscribers.......................      59,242       83,793         90,498        98,694
Penetration rate of homes marketed(13)..........       23.5%        20.6%          19.8%         19.6%
Average monthly revenue per subscriber(14)......(pound)18.03 (pound)19.84   (pound)19.95  (pound)19.88
Churn(11)(12)...................................       40.9%        32.7%          29.2%         26.3%

--------------------
<FN>

(1)  Homes passed by civils is the number of homes  (excluding  student  services rooms) that have had
     ducting buried outside.

(2)  Homes  activated is the number of homes  (excluding  student  services rooms) that are capable of
     receiving  cable service without further  extension of transmission  lines,  apart from the final
     connection to the home.

(3)  Homes marketed is the number of homes activated  (excluding student services rooms) for which the
     initial marketing phase (including door to door direct marketing) has been completed.

(4)  During 1997 the Group began to provide  telephone  services and internet  access to students at a
     number of large  educational  establishments  in its  franchise  area.  Academic  terms make this
     business seasonal in nature. In order to fairly present the results,  the Company has adopted the
     following policy: (i) rental revenue is recognized evenly over a full twelve month period (or the
     balance of the period to the start of the next  academic  year if shorter),  (ii) call revenue is
     recognized  in the month in which it is  earned  and is  incorporated  in  residential  telephone
     average monthly revenue per line,  (iii) a student  services line is recognized as the equivalent
     of 3/4 of a residential  line, (iv) each student room at which service is available is treated as
     a home marketed and incorporated in the calculation of residential telephone penetration and, (v)
     any net  decrease in the number of  students  taking the service  between one  academic  year and
     another is ignored for the purposes of calculating residential telephone churn.

(5)  Private circuits are point-to-point customer specific connections for which a fixed annual rental
     charge is made.

(6)  Average  lines per  business  account is  calculated  by dividing  the number of  business  lines
     connected on the given date by the number of business customer accounts on such date.

(7)  The average monthly  business  telecommunications  revenue per line is calculated by dividing (i)
     business  telecommunications  line and equipment rental,  outgoing call charges and incoming call
     charges  (including  revenue from private  circuits) for the period by (ii) the average number of
     business  telecommunications  lines and private  circuits  (calculated as a simple average of the
     number of subscribed  lines and private  circuits at the end of each month during the period) and
     dividing  that amount by 12 (for the years ended  December 31, 1996 and 1997),  by three (for the
     three months ended March 31, 1998) or by six (for the six months ended June 30, 1998).


                                                  16

<PAGE>




(8)  The  calculation  of the average  monthly  revenue per line (for both  residential  telephone and
     business telecommunication  revenues) for the year to December 31, 1996 reflects the reduction in
     revenues  stemming from rebates to BT on incoming  termination  revenues relating in part to 1995
     but recorded in full against  revenues in 1996.  The rebates were  calculated in accordance  with
     revised interconnect  agreements with BT that were made effective  retroactively from April 1995.
     The  pro-forma  average  monthly  revenue per line (for both  residential  telephone and business
     telecommunications  revenues) gives effect to the revised interconnect  agreements as if they had
     been in effect from April 1995 and  allocates  to each  period the  portion of the  rebates  that
     relates to such period.

(9)  Penetration  rate of homes  marketed is calculated by dividing the number of  residential  lines,
     including  student  services  lines  recognized at the  equivalent  of 3/4 of a residential  line
     connected on the given date by the total  number of homes  marketed  and student  services  rooms
     marketed as of such date, expressed as a percentage.

(10) The average monthly revenue per residential telephone line is calculated by dividing (i) line and
     equipment  rental,  outgoing  call charges and  incoming  call charges for the period by (ii) the
     average number of residential  telephone  lines  (calculated as a simple average of the number of
     subscribed  lines at the end of each month during the period) and dividing that amount by 12 (for
     the years ended December 31, 1996 and 1997), by three (for the three months ended March 31, 1998)
     or by six (for the six months ended June 30, 1998).  Call revenue from student  services lines is
     recognized  in the month in which it is  earned  and is  incorporated  in  residential  telephone
     average monthly revenue per line, with each student services line recognized as the equivalent of
     3/4 of a residential line.

(11) Churn is  calculated  by dividing net  disconnections  (total  disconnections  less the number of
     disconnected  accounts for which service is later  restored) in a period by the average number of
     subscribers in the period (calculated as a simple average of the number of subscribers at the end
     of each month during the period).  Churn for the three months ended March 31, 1998 is  annualized
     by multiplying  the amount as calculated  above by four.  Churn for the six months ended June 30,
     1998 is annualized by multiplying the amount as calculated above by two.

(12) Since the  beginning  of 1997,  the Group's  reported  churn has excluded  from net  disconnected
     accounts  subscribers who disconnect from the service when moving  residence and reconnect to the
     service in their new residence.  Previously,  those  subscribers  were not  identified  under the
     Group's  information  system and were therefore included in the churn calculation as disconnected
     accounts.  If churn for 1997 and the quarter to March 31, 1998 were  calculated on the basis used
     in periods prior to 1997,  annualized  churn would have been 36.9% and 33.9% for cable television
     and 21.3% and 17.8% for residential telephone,  respectively. If churn for the six months to June
     30, 1998 were calculated on the basis used in periods prior to 1997,  annualized churn would have
     been 31.2% for cable television and 19.8% for residential telephone. The difference between churn
     on the new and prior bases is not  necessarily  indicative of the adjustment  that would arise if
     churn for prior periods were restated.

(13) Penetration  rate of homes marketed is calculated by dividing the number of homes receiving basic
     cable  television  on the given  date by the  total  number of homes  marketed  as of such  date,
     expressed as a percentage.

(14) The average monthly revenue per cable television subscriber is calculated by dividing total cable
     television  subscriber revenues (excluding  installation  revenues) for the period by the average
     number of cable  television  subscribers  (calculated  as a simple average of the number of basic
     service  subscribers  at the end of each month during the period) and dividing  that amount by 12
     (for the years ended December 31, 1996 and 1997),  by three (for the three months ended March 31,
     1998) or by six (for the six months ended June 30, 1998).
</FN>
</TABLE>


                                                  17

<PAGE>



RESULTS OF OPERATIONS FOR THE THREE AND SIX-MONTH PERIODS ENDED JUNE 30,
1997 AND 1998

         The  Group  continued  to  experience  increases  in  its  subscribers,
revenues  and expenses  during the  six-month  period  ended June 30,  1998.  In
general,  these  increases were  attributable to the Group's  continued  network
construction, activation and marketing of new homes and businesses. Homes passed
by civils  construction  increased by 80,000 homes  (14.9%) and homes  activated
increased by 92,281  (18.1%) from December 31, 1997 to June 30, 1998.  The Group
met  the   required   quarterly   milestone   obligations   under  each  of  its
telecommunications licenses as at June 30, 1998.

         In order to improve the management and quality of the residential sales
force,  commencing  in  February  1997,  the  Company  began to develop  its own
internal sales force through direct hiring of residential  sales people.  All of
these sales staff  underwent a training  process  which the Group  believes  has
increased their long-term effectiveness but which hindered their productivity in
the short-term. Sales performance was affected by increased competitive activity
during 1997 and the first half of 1998, in particular  from BT, Ionica,  CWC and
BSkyB and at June 30, 1998,  residential  telephone  line  penetration  remained
steady at  38.6%,  the same  rate as at  December  31,  1997.  Cable  television
penetration  at June 30,  1998 had fallen to 19.6% from  20.6% at  December  31,
1997.  Penetration  rates for  residential  telephone and cable  television were
39.2% and 20.3% respectively at June 30, 1997.

    REVENUE

         For  the  three  months  ended  June  30,  1998,  total  revenues  were
(pound)21.6  million, a 54% increase over total revenues of (pound)14.0  million
for the comparable  period in 1997. For the six months ended June 30, 1998 total
revenues  were  (pound)41.2  million,  a 52%  increase  over total  revenues  of
(pound)27.1   million  for  the  comparable  period  in  1997.  This  growth  is
attributable  to increases in revenues in all three of the Group's primary lines
of business.

         Business Telecommunications.  Business telecommunications revenues were
(pound)4.7  million and (pound)9.0  million for the three and six-month  periods
respectively  ended June 30, 1998 compared to (pound)3.3  million and (pound)6.5
million respectively for the comparable periods in 1997,  representing increases
of 39% and 38% respectively. The growth in reported revenues is due primarily to
an increase in the number of business  lines  installed  from 23,073 at June 30,
1997 to 33,947 at June 30, 1998, an increase of 47%. The average monthly revenue
per line  decreased  from  (pound)47.05  in the six  months to June 30,  1997 to
(pound)44.50  in the  comparable  period  in  1998.  The  decrease  was due to a
combination  of, (i) an  increase in centrex  lines  which have a lower  average
revenue  per  line  than  other  business   customer  lines  (centrex   services
represented  42.2% and 48.4% of the total  number of business  lines at June 30,
1997 and June

                                       18

<PAGE>



30, 1998  respectively)  and (ii)  reductions in certain  tariffs in response to
price reductions by competitors, offset in part by increased call usage per line
and higher line rental  charges  which were  increased  in September  1997.  The
Company may lower prices in the future if necessary for competitive reasons.

         Residential Telephone.  Residential telephone revenues were (pound)11.0
million and (pound)20.8 million in the three and six-month periods  respectively
to June  30,  1998  compared  to  (pound)6.8  million  and  (pound)12.9  million
respectively for the comparable periods in 1997,  representing  increases of 63%
and 61%  respectively.  The  growth  in  residential  telephone  revenue  is due
primarily  to an  increase  in the number of  residential  telephone  lines from
122,953 at June 30, 1997 to 197,369 at June 30, 1998,  representing  an increase
of 61%.  Average monthly revenue per line was  (pound)18.78  and (pound)18.70 in
the three and six-month  periods  respectively to June 30, 1997 and (pound)18.76
and (pound)18.77  respectively in the comparable periods in 1998. The relatively
stable level of average  revenues was largely due to increased  call usage which
largely offset reductions in call and incoming  termination  tariffs during 1997
and the first six months of 1998. The churn rate  (annualized) was 14.2% for the
first six months of 1998 as compared to 17.8% in the comparable  period in 1997.
The relatively high churn in the first half of 1997 was  attributable in part to
the application of a stricter  disconnect  policy  relating to non-payment.  The
churn rate was 15.7% in the three  months to June 30, 1998  compared to 12.6% in
the  three  months  to  March  31,  1998.  The  increase  in  churn  is  largely
attributable  to a higher level of subscribers  moving out of the cabled area in
the second quarter of 1998 compared to the first quarter of 1998.

         Cable Television.  Cable television  revenues increased from (pound)3.9
million and  (pound)7.7  million in the three and six-month  periods to June 30,
1997  respectively  to  (pound)5.9  million  and  (pound)11.4   million  in  the
comparable periods in 1998,  representing increases of 52% and 48% respectively.
This growth in cable television  revenue was primarily due to an increase in the
number of the Company's cable television  subscribers  which rose from 63,642 at
June 30, 1997 to 98,694 at June 30,  1998,  an increase  of 55%.  The  Company's
average monthly revenue per subscriber was relatively stable, being (pound)19.81
and  (pound)19.88  for the three and six months to June 30,  1998  respectively,
compared to (pound)19.80 and (pound)20.07 for the comparable periods in 1997.

         The  Group's  churn  rates  were  23.7% and 26.3% for the three and six
months  respectively  to June 30,  1998 as  compared to churn rates of 37.8% and
42.2% in the  comparable  periods in 1997. The Group believes that the reduction
in churn this year is largely the result of new policies introduced by the Group
to  reduce  churn,  including  that  it  now  requires  subscribers  to  pay  an
installation fee in connection with new residential services.  In addition,  the
Group introduced other policies which contributed to the reducing trend in churn
between comparable quarters including improvements in the management and quality
of the


                                       19

<PAGE>



sales force, the introduction of more program packaging choice for customers and
increased focus on the retention of customers.

    OPERATING COSTS AND EXPENSES

         Telephone  expenses,  consisting  principally of  interconnect  charges
payable to BT,  Mercury,  Energis  and Global One were  (pound)2.9  million  and
(pound)5.5  million  in the  three  and  six-month  periods  to  June  30,  1997
respectively  and  (pound)4.2  million and  (pound)7.9  million in the three and
six-month  periods  to June 30,  1998.  As a  percentage  of  combined  business
telecommunications  and  residential  telephone  revenues,  these  direct  costs
decreased  from 29% and 28% in the three and six-month  periods to June 30, 1997
respectively  to 27% and 26% in the comparable  periods in 1998 due primarily to
reduced interconnect tariffs paid to these operators.

         Direct costs for cable television  programming,  which generally depend
on the number of  subscribers  and  per-subscriber  rates charged by programming
suppliers, increased from (pound)2.3 million and (pound)4.6 million in the three
and six-month  periods to June 30, 1997  respectively to (pound)3.2  million and
(pound)6.2  million in the comparable  periods in 1998. As a percentage of cable
television  revenues,  these direct costs  decreased from 58% in the three-month
period ended June 30, 1997 to 54% in the comparable  period in 1998 and from 59%
to 55% in the  six-month  periods to June 30,  1997 and 1998  respectively.  The
decrease  was in large part due to an increased  proportion  of  subscribers  on
higher  margin  basic and  premium  program  packages  in 1998  compared  to the
comparable periods in 1997.

         Selling,  general and administrative  expenses as a percentage of total
revenues in the three and  six-month  periods to June 30, 1997 were 46% compared
to 43% and 44%  respectively  in the  comparable  periods in 1998.  These  costs
increased by 44% and 43%  respectively  from the three and six-month  periods to
June 30, 1997 to the comparable  periods in 1998. The increase was due to higher
administration  and sales  force  costs  associated  with the  expansion  of the
Company's business, together with LDL cash bid payments which commenced in 1998.

         Depreciation  and  amortization  expenses  increased  by 56%  from  the
three-month  period to June 30, 1997 to the comparable period in 1998 and by 51%
from the  six-month  period to June 30, 1997 to the  comparable  period in 1998.
This increase was  attributable  to a combination of the increasing  size of the
Company's network and the additional depreciation resulting from a change in the
estimated useful lives of set-top boxes and initial subscriber installations. In
anticipation  of changes in  technology,  the estimated  useful lives of set-top
boxes and initial subscriber installations was reduced from seven years to three
years with effect from  January 1, 1998.  The effect of the change in  estimated
useful life on the  depreciation  charge for the three and six-month  periods to
June 30, 1998 was an  increase of  (pound)1.6  million  and  (pound)3.0  million
respectively.

                                       20

<PAGE>



         The Group continues to review the potential  consequences of changes in
technology,  its network infrastructure and the industry structure within the UK
in general for its plans,  operations  and the assessment of the useful lives of
its assets.

    INTEREST INCOME/EXPENSE

         Interest expense was (pound)21.5 million and (pound)40.4 million in the
three and  six-month  periods  ended  June 30,  1998  respectively  compared  to
(pound)15.0  million and (pound)27.2  million in the comparable periods in 1997.
The  increase  is due  primarily  to the  accretion  on the  Discount  Notes  of
(pound)15.9  million and (pound)31.1  million in the three and six-month periods
to June 30,  1998  (compared  to  (pound)13.8  million and  (pound)25.0  million
respectively  in the  comparable  periods in 1997) and  (pound)4.9  million  and
(pound)7.9 million respectively accrued interest on the 1998 Notes. In addition,
amortization of debt financing  costs was (pound)0.6  million and other interest
expense was (pound)0.1 million in the three months to June 30, 1998, compared to
(pound)0.7  million and (pound)0.5  million  respectively in the three months to
June 30, 1997.  Amortization of debt financing costs was (pound)1.0  million and
other  interest  expense  was  (pound)0.4  million in the six months to June 30,
1998, compared to (pound)1.2 million and (pound)1.0 million  respectively in the
six months to June 30, 1997.  Interest  received was  (pound)3.9  million in the
three months to June 30, 1998 compared to (pound)2.0 million in the three months
to June 30, 1997.  Interest received was (pound)6.9 million in the six months to
June 30, 1998 compared to (pound)3.0  million in the six months to June 30, 1997
and the increase was  primarily  due to temporary  investment of the proceeds of
the 1998 Notes.

    FOREIGN EXCHANGE

         A  substantial  portion of the Group's  existing debt  obligations  are
denominated  in U.S.  dollars,  while the  Group's  revenues  and  accounts  are
generated and stated in pounds sterling.  Foreign currency translation gains and
losses, except for unrealized gains and losses on available-for-sale securities,
are  reported  as part of the profit or loss of the Group.  In the three  months
ended  June 30,  1997,  the Group  recognized  a net  foreign  exchange  gain of
(pound)6.3  million  primarily due to the unrealized  gain on translation of its
liability on the Discount Notes. In the six months ended June 30, 1997 the group
recognized a net foreign  exchange loss of (pound)5.7  million  primarily due to
the  unrealized  loss on  translation  of its  liability on the Discount  Notes.
Because of changes in prevailing  rates,  during the three months ended June 30,
1998, the Group recorded a net foreign  exchange loss of (pound)2.3  million and
during  the six  months  ended June 30,  1998 the Group  recorded a net  foreign
exchange gain of (pound)10.2  million primarily due to the unrealized losses and
gains on translation of its liability on the Discount Notes and 1998 Notes.


                                       21

<PAGE>



    DERIVATIVE FINANCIAL INSTRUMENTS

         Realized  gains  on  derivative  financial  instruments  of  (pound)2.3
million in the three months to June 30, 1998 and  (pound)0.4  million in the six
months to June 30, 1998 consist primarily of the settlement on the two (pound)50
million foreign exchange forward  contracts  referred to below which were closed
on June 17, 1998.

         The  Company  entered  into a  foreign  exchange  forward  contract  on
November 1, 1996 for settlement on May 6, 1997 to sell  (pound)200  million at a
rate of $1.6289 to (pound)1.  On January 31, 1997 an  offsetting  agreement  was
entered into at a rate of $1.6014 to (pound)1.  The  offsetting  contracts  were
settled on February 6, 1997 with a payment of approximately  (pound)3.4  million
to the Company. Because of changes in prevailing rates, the Company recorded for
the year ended December 31, 1996, an unrealized loss of approximately (pound)8.1
million on the pounds sterling sell forward  contract which partially offset the
gain  that  was  recorded  on the  translation  of the U.S.  dollar  denominated
obligations  on the  Discount  Notes  issued  in 1994 and 1995  during  the same
period.  During  the first  quarter  of 1997,  the  Company  recorded  a gain of
approximately  (pound)11.5  million  on the two  offsetting  forward  contracts,
reflecting the reversal of an (pound)8.1  million loss referred to above and the
approximately  (pound)3.4  million cash payment on settlement of the  contracts.
The realized gain on the foreign  exchange forward contract in the first quarter
of 1997 largely offset the unrealized  loss that was recorded in the same period
on the  translation of the U.S. dollar  denominated  obligations on the Discount
Notes.  The Company entered into a foreign exchange forward contract on June 23,
1997 for  settlement  on June 25,  1998 to sell  (pound)50  million at a rate of
$1.6505 to (pound)1.  The Company also entered into a foreign  exchange  forward
contract  on June 27,  1997 for  settlement  on July 1,  1998 to sell  (pound)50
million  at a rate of  $1.6515  to  (pound)1.  On June 16,  1998 two  offsetting
agreements  were entered  into at rates of $1.6326 and $1.6322 to (pound)1.  The
offsetting  contracts were settled on June 17, 1998 with a payment of (pound)1.1
million to the  Company.  Because of changes in  prevailing  rates,  the Company
recorded  for  the  year  ended   December  31,  1997  an  unrealized   gain  of
approximately  (pound)0.7  million on the two  (pound)50  million  sell  forward
contracts. During the first half of 1998 the Company recorded a realized gain of
approximately  (pound)0.4 million on the settlement of the offsetting  contracts
reflecting the cash payment on settlement of the contracts in excess of the gain
recognized  during  1997.  The Company  continues to monitor  conditions  in the
foreign  exchange  market and may from time to time enter into foreign  currency
contracts  based on its  assessment of foreign  currency  market  conditions and
their effect on the Company's  operations  and financial  condition.  Therefore,
changes in currency exchange rates may continue to have a material effect on the
results of  operations  of the Group and may  materially  affect  the  Company's
ability to satisfy its obligations, including obligations under outstanding debt
instruments, as they become due.


                                       22

<PAGE>



     NET LOSS

         As a  result  of the  foregoing  factors,  Diamond  had net  losses  of
(pound)22.9  million in the three-month period ended June 30, 1998,  compared to
net losses of (pound)10.8  million in the comparable  period of 1997, and a loss
of (pound)33.5  million for the six-month period ended June 30, 1998 compared to
a loss of (pound)26.7 million in the comparable period in 1997.

     INFORMATION SYSTEMS - YEAR 2000

         The Group is actively  reviewing  its  information  systems in light of
year 2000 information processing requirements.  The Group believes that its main
hardware and operating systems are currently  compliant and expects that its key
subscriber  management  and  financial  systems  will be compliant by the end of
1998. The costs of investigating and correcting year 2000 information processing
problems  have not  been  and are not  expected  by the  Group  to be  material.
Although  the Group  intends to ensure that all of its systems will be year 2000
compliant,  it is  generally  reliant on third party  suppliers  for delivery of
appropriate  system  solutions.  In addition,  the Group may be affected by year
2000 problems  encountered  by its primary  suppliers or customers.  Significant
year 2000 information processing problems encountered by the Group or certain of
its customers or suppliers could have a material adverse effect on the Group.

    RECENT DEVELOPMENTS

         On April 23, 1998 the  Department  of Trade and Industry  announced the
U.K. government's intention to progressively end the policy of granting only one
cable  television  license for a franchise  area.  Any  operator  can now seek a
licence to compete in the  provision of broadcast  entertainment  in those areas
outside  current  cable  franchises.  From  January 1, 2001  competition  within
current cable franchises will also be permitted.

         On June 16, 1998, the Company  announced that all of the holders of its
outstanding  ordinary  shares of 2.5p each and deferred  shares of 25p each have
agreed to exchange all outstanding shares in the Company for newly issued shares
of common stock of NTL, an alternative telecommunications company in the UK, the
common  stock of which is  quoted  on NASDAQ  (NTLi).  Under the Share  Exchange
Agreement, the Company's shareholders will receive one share of NTL common stock
for every four Ordinary  Shares of the Company held subject to adjustment in the
event that the average NTL share price for a predetermined period before closing
of the transaction  exceeds a specified price (which will be $52 per share until
October 16,  1998).  Holders of the Company's  deferred  shares will receive one
share of NTL common stock for each deferred share held.


                                       23

<PAGE>



         The  proposed  share  exchange  is subject  to a number of  conditions,
including  the  receipt of required  regulatory  approvals  and,  if  necessary,
approval by NTL  shareholders  and the  consent of holders of NTL's  outstanding
debt. The transaction  will not require the prior approval of the holders of the
Group's  outstanding  debt  securities,  but each of the indentures  pursuant to
which the Group's debt securities were issued requires that offers to repurchase
such  debt  securities  be made to  holders  of such  securities  subsequent  to
closing.  The parties  expect the  transaction  to be completed in the autumn of
this year. Assuming consummation of the Share Exchange Agreement, the holders of
the Company's  outstanding  Discount  Notes and the 1998 Notes issued by Diamond
Holdings will have the right to require the issuer  thereof to  repurchase  such
securities at a price of 101% of their accreted value or principal amount. There
can be no  assurance  that the  Company  or  Diamond  Holdings  will have  funds
necessary to effect such repurchases.


                                       24

<PAGE>



                        DIAMOND CABLE COMMUNICATIONS PLC

PART II.    OTHER INFORMATION

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

       (a)  Exhibits -

                None.

       (b)  Reports on Form 8-K -

         The Company filed on June 17, 1998 a report on Form 8-K incorporating a
press release  announcing the signing of the Share  Exchange  Agreement with NTL
Incorporated.

                                       25

<PAGE>



                                   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 PLC



Date: August 13, 1998                       By: /s/ Robert T. Goad
                                                -----------------------------
                                                    Robert Goad
                                                    (Chief Executive Officer)



Date: August 13, 1998                       By: /s/ Nicholas Millard
                                                -----------------------------
                                                    Nicholas Millard
                                                    (Chief Financial Officer)



Date: August 13, 1998                       By: /s/ Duncan Craig
                                                ------------------------------
                                                    Duncan Craig
                                                    (Chief Accounting Officer)




                                       26