===============================================================================

                                    FORM 10-K
                         ------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
(Mark One)
[X]  ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR 15(d)  OF THE  
     SECURITIES EXCHANGE ACT OF 1934 
     FOR THE FISCAL YEAR ENDED

                                DECEMBER 31, 1997

                                       OR
[ ]  TRANSITION  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934
     FOR THE TRANSITION PERIOD FROM  ______________ TO ______________

                         Commission file number 0-24792

                        COMCAST UK CABLE PARTNERS LIMITED
             (Exact name of registrant as specified in its charter)

               BERMUDA                                 Not Applicable
   (State or other jurisdiction of                    (I.R.S. Employer 
   incorporation or organization)                     Identification No.)

            Clarendon House                          Comcast Corporation
          2 Church Street West                   1500 Market Street, 35th Floor
        Hamilton, HM 11, Bermuda                  Philadelphia, PA 19102-2148
            (441) 295-5950                             (215) 665-1700
     (Address, including zip code,                 (Name, address, including
        and telephone number,                        zip code, and telephone 
        including area code,                       number, including area code, 
      of Registrant's principal                       of agent for service)
         executive offices)
                        --------------------------------
           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                      NONE
                        ---------------------------------

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                 Class A Common Shares, (UK Pound)0.01 par value
                          ----------------------------

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 ____
                           --------------------------

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

As of February 28, 1998, the aggregate market value of the Class A Common Shares
held by non-affiliates of the Registrant was $285.1 million.
                           --------------------------

As of  February  28,  1998,  there  were  37,231,997  Class A Common  Shares and
12,872,605 Class B Common Shares outstanding.
                           --------------------------

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      NONE
                           --------------------------

===============================================================================
<PAGE>

                        COMCAST UK CABLE PARTNERS LIMITED
                          1997 FORM 10-K ANNUAL REPORT

                                TABLE OF CONTENTS

                                     PART I

Item  1       Business........................................................1

Item  2       Properties.....................................................15

Item  3       Legal Proceedings..............................................15

Item  4       Submission of Matters to a Vote of Security Holders............15


                                     PART II

Item  5       Market for the Registrant's Common Equity and Related
              Shareholder Matters ...........................................16

Item  6       Selected Financial and Other Data..............................17

Item  7       Management's Discussion and Analysis of Financial Condition and
                   Results of Operations.....................................21

Item  8       Financial Statements and Supplementary Data....................31

Item  9       Changes in and Disagreements with Accountants on Accounting
                   and Financial Disclosure..................................71

                                    PART III

Item  10      Directors and Executive Officers of the Registrant.............71

Item  11      Executive Compensation.........................................72

Item  12      Security Ownership of Certain Beneficial Owners 
              and Management.................................................72

Item  13      Certain Relationships and Related Transactions.................75

                                     PART IV

Item  14      Exhibits, Financial Statement Schedules and 
              Reports on Form 8-K............................................76

SIGNATURES...................................................................79

This Annual  Report on Form 10-K for the year ended  December 31,  1997,  at the
time of  filing  with the  Securities  and  Exchange  Commission,  modifies  and
supersedes  all prior  documents  filed pursuant to Sections 13, 14 and 15(d) of
the  Securities  Exchange Act of 1934 for purposes of any offers or sales of any
securities after the date of such filing pursuant to any Registration  Statement
or Prospectus filed pursuant to the Securities Act of 1933 which incorporates by
reference this Annual Report.

This  Annual  Report on Form  10-K  contains  forward  looking  statements  made
pursuant to the "safe harbor"  provisions of the Private  Securities  Litigation
Reform Act of 1995.  Readers are cautioned that such forward looking  statements
involve  risks and  uncertainties  which  could  significantly  affect  expected
results  in the  future  from  those  expressed  in  any  such  forward  looking
statements  made by, or on behalf of the  Company.  Certain  factors  that could
cause actual  results to differ  materially  include,  without  limitation,  the
effects of  legislative  and  regulatory  changes;  the  potential for increased
competition;  technological  changes; the need to generate substantial growth in
the subscriber base by successfully launching,  marketing and providing services
in  identified  markets;  pricing  pressures  which could affect  demand for the
Company's services; the Company's ability to expand its distribution; changes in
labor, programming, equipment and capital costs; the Company's continued ability
to  create  or  acquire  programming  and  products  that  customers  will  find
attractive;  future acquisitions;  the NTL Transaction (see Item 1 - Business --
"General  Developments of Business");  strategic  partnerships and divestitures;
general business and economic conditions;  and other risks detailed from time to
time in the Company's  periodic  reports filed with the  Securities and Exchange
Commission.
<PAGE>

                                     PART I
ITEM 1       BUSINESS

Comcast UK Cable  Partners  Limited and its  subsidiaries  (the  "Company"),  an
indirect controlled subsidiary of Comcast Corporation  ("Comcast") (see Item 5 -
"Market for the Registrant's  Common Equity and Related  Shareholder  Matters"),
was incorporated in 1992 to develop, construct, manage and operate the interests
of Comcast in the United Kingdom ("UK") cable and  telecommunications  industry.
As of December  31, 1997,  the Company has  interests  in four  operations  (the
"Operating  Companies"):   Birmingham  Cable  Corporation  Limited  ("Birmingham
Cable"),  in which the Company owns a 27.5%  interest,  Cable London PLC ("Cable
London"), in which the Company owns a 50.0% interest,  Cambridge Holding Company
Limited  ("Cambridge  Cable"), in which the Company owns a 100% interest and two
companies   holding  the  franchises   for  Darlington  and  Teesside,   England
("Teesside"),  in which the Company owns a 100%  interest.  On December 8, 1997,
the Company formed Comcast UK Holdings  Limited ("UK  Holdings") (a wholly owned
subsidiary  incorporated in Bermuda) in order to secure a financing  arrangement
to primarily  fund capital  expenditures  and working  capital  requirements  at
Cambridge Cable and Teesside (see "Item 7 - Management's Discussion and Analysis
- Liquidity and Capital Resources").

When build-out of the Operating  Companies'  systems is complete,  these systems
will  have the  potential  to serve  approximately  1.6  million  homes  and the
businesses  within their franchise areas. As of December 31, 1997, the Operating
Companies'  systems passed more than 1,197,000 homes or approximately 75% of the
homes in their franchise  areas and served more than 298,000 cable  subscribers,
359,000  residential   telephony   subscribers  and  11,000  business  telephony
subscribers.

The Company  accounts  for its  interests in  Birmingham  Cable and Cable London
under the equity method.  Through March 31, 1996, the Company also accounted for
its  interest  in  Cambridge  Cable  under the equity  method (see Note 4 to the
Company's consolidated financial  statements).  Collectively,  Birmingham Cable,
Cable  London  and  Cambridge  Cable  are  referred  to  herein  as the  "Equity
Investees"  (which term excludes  Cambridge  Cable as of and subsequent to March
31, 1996).

                        GENERAL DEVELOPMENTS OF BUSINESS

Amalgamation with NTL

On  February  4, 1998,  the  Company  entered  into a  definitive  agreement  to
amalgamate (the "NTL Transaction") with a wholly owned Bermuda subsidiary of NTL
Incorporated ("NTL"). NTL is an alternative telecommunications company in the UK
and is listed on  Nasdaq.  The NTL  Transaction  is  expected  to close in 1998,
subject  to,  among  other  things,  the  receipt  of  required  Bermuda  and UK
regulatory approvals, the approval of the Company's and NTL's shareholders,  the
consent of the Company's and NTL's bondholders,  the consent of certain NTL bank
lenders and other  customary  closing  matters.  Comcast,  through its  indirect
wholly owned subsidiary,  Comcast U.K. Holdings, Inc. ("Holdings"),  is the sole
holder of the multiple-voting Class B Common Shares of the Company (see Item 5 -
"Market for Registrant's Common Equity and Related Shareholder Matters") and has
agreed to vote for the  transaction,  assuring  its  approval  by the  Company's
shareholders. Upon consummation of the NTL Transaction, the Company would become
a wholly owned subsidiary of NTL.

Except in the  circumstances  described below, the Company's  shareholders  will
receive  0.3745  shares of NTL common  stock for each of the  Company's  Class A
Common Shares or Class B Common Shares.  If the average closing price of the NTL
common stock for a specified period of time prior to the Company's  shareholders
meeting  to  approve  the NTL  Transaction  (the  "Average  Price") is less than
$26.70,  the  Company  will have the option to  terminate  the NTL  Transaction,
subject to the right of NTL to adjust the exchange  ratio such that one share of
the  Company's  Class A Common Shares or Class B Common Shares will be exchanged
for a number of shares of NTL common stock equal to $10.00 (based on the Average
Price).

Pursuant  to   existing   arrangements   between   the   Company  and   Telewest
Communications  plc  ("Telewest"),  a co-owner of  interests in Cable London and
Birmingham Cable, Telewest has certain rights (the "Telewest Rights") to acquire
either or both of the  Company's  interests in these  systems as a result of the
NTL  Transaction.  However,  as  described  in  the  following  paragraphs,  the
consummation  of the NTL  Transaction  is not dependent on the resolution of the
Telewest Rights.

If the  Telewest  Rights  have been  exercised  prior to the  closing of the NTL
Transaction,  the Company's  shareholders may receive (at the option of NTL), in
lieu of a portion of the consideration  allocable to the interest subject to the
exercised  Telewest Rights, the per share proceeds from the sale of the interest
to Telewest (net of taxes on gain on sale), payable

<PAGE>
in cash or shares of NTL common  stock valued at the greater of $30.00 per share
or the Average Price at closing (the "Exercise Consideration").

Similarly,  if at closing either of the Telewest Rights have not been exercised,
and have not been waived or otherwise  expired,  the Company's  shareholders may
receive  (at the option of NTL),  shares of a new class of NTL  preferred  stock
equal to a portion of the consideration allocable to the interest subject to the
unexercised  Telewest  Rights.  Any shares of NTL preferred stock would have the
same voting and dividend rights as shares of NTL common stock,  would be subject
to redemption as described below, and would be expected to be listed for trading
on Nasdaq.  If following  closing the  Telewest  Rights are  exercised,  the NTL
preferred  stock will be redeemed for the Exercise  Consideration  (based on the
Average  Price at the time of  exercise).  If the  Telewest  Rights are resolved
without being exercised, the NTL preferred stock will be redeemed for NTL common
stock on a one-for-one basis.

Of the  consideration  to be received by the Company's  shareholders  in the NTL
Transaction,  the parties have allocated 31% to the Company's  interest in Cable
London and 17% to the Company's interest in Birmingham Cable. However, if either
or both of the Telewest  Rights are exercised,  the actual  consideration  to be
received by the  Company's  shareholders  may be materially  different  from the
portion of the consideration (the "allocable  portion") which has been allocated
by the  parties  to the  Company's  respective  interests  in Cable  London  and
Birmingham  Cable,  depending  on,  among  other  things,  the  value  of  these
interests,  as finally  determined,  whether NTL exercises its option to deliver
the Exercise  Consideration in lieu of the allocable  portion and, the amount of
any taxes payable by the Company on the sale of these interests.

                      DESCRIPTION OF THE COMPANY'S BUSINESS

                                     General

Cable  communications,  residential  telephony  and business  telecommunications
services  are  similar in that they  involve  the  transmission  of  information
between two or more geographically separated sites. The cable/telephony operator
generally offers  subscribers these services for a monthly fee for access to the
distribution  network, plus additional charges for certain usage of the network,
premium services and other services.

                              Cable Communications

A  cable   communications   system  delivers  multiple  channels  of  television
programming,   primarily   entertainment  and  information,   to  the  homes  of
subscribers  who pay a monthly  fee for the  service.  The  Operating  Companies
currently offer their subscribers a choice of basic services and various premium
services,  including  news services,  sports  channels,  movies,  and ethnic and
foreign language programs.  Each Operating Company sets its own rates, including
a  monthly  fee for  cable  communications  services.  From  time to  time,  the
Operating Companies offer premium services on a trial basis without charge or at
a discount.

The demand for cable  communications  services  is, in part,  a function of both
over-the-air reception quality and alternative programming  availability.  While
signal  reception  in  the UK  has  been  considered  adequate,  the  increasing
availability  of cable and  satellite  programming  is providing  an  attractive
alternative to limited over-the-air and other sources of programming,  including
video tape rentals.

Various  sources of programming  are available to cable system  operators in the
UK. British Sky  Broadcasting  Group,  plc ("BSkyB") is currently the industry's
and the Operating  Companies' primary  programming  supplier.  BSkyB is also the
principal provider of multi-channel  direct-to-home ("DTH") satellite television
services in the UK.  BSkyB's  programming  services  are  provided to all of the
Operating  Companies in accordance with the BSkyB rate card (see  "Competition -
Cable Communications").

Alternative  programming  sources are developing.  For example,  Flextech p.l.c.
("Flextech")  owns  interests in or manages  companies  that provide  additional
sources of programming to the Operating Companies. Flextech is a publicly listed
UK company  and is a majority  owned  subsidiary  of  Tele-Communications,  Inc.
("TCI"), a co-owner of Telewest. In addition,  the launch of digital television,
which is expected in 1998, will provide further potential programming sources to
the Operating Companies, but will also result in additional competition to their
cable  communication  services.  The Company cannot predict to what extent other
alternative  programming  services  will become  available or what effect future
increases  in the  cost  of  programming  will  have  on  its  or the  Operating
Companies' future financial position, results of operations or liquidity.

                                      - 2 -
<PAGE>
The full extent to which cable  communications  systems  will be able to compete
with existing and future television delivery systems is currently not known. The
Company believes that the  architecture of the networks the Operating  Companies
are constructing  will enable them more easily to implement new technologies and
provide  enhanced or new  services.  There can be no  assurance,  however,  that
existing,  proposed or as yet undeveloped  technologies will not become dominant
in the future and render cable  communications  systems less  profitable or even
obsolete.  However,  the  Company  endeavors  to monitor  closely  all  relevant
technological  developments and to cause or encourage the Operating Companies to
position themselves to remain competitive.

                              Residential Telephony

Residential telephony service permits subscribers to place and receive telephone
calls to and from other telephone users in the local area, the rest of the UK or
the rest of the world.  The Operating  Companies  route most calls made by or to
their subscribers  through their network  interconnections  with other telephony
operators  which  include  British  Telecommunications  plc ("BT")  and  Mercury
Communications  Ltd.  ("Mercury"),  the two  principal  providers of  nationwide
telephony  services in the UK. Mercury is an indirect wholly owned subsidiary of
Cable & Wireless  Communications  plc ("Cable & Wireless")  which is the largest
cable communications multiple system operator ("MSO") in the UK.

Each public  telephony  operator is required  to  negotiate  an  interconnection
agreement  with any public  telephony  operator  that seeks one and may  request
Office of Telecommunications  ("OFTEL") intervention if the parties cannot agree
on certain  terms.  The  interconnection  agreements are  essentially  wholesale
arrangements  that set forth the fees charged for completing a call  originating
on,  carried  over  or  terminating  on a local  or  national  public  telephony
operator's network. BT provides interconnection to all Public Telecommunications
Operators  ("PTOs")  under the terms of a  standard  interconnection  agreement.
OFTEL determines the charges for all standard interconnection services.

The Operating Companies have installed high capacity, digital telephony switches
in their  systems.  By owning and operating  their own  switches,  the Operating
Companies are better able to monitor calling patterns and, without relying on BT
or Mercury,  can  provide  detailed  and  customized  billing and offer  premium
services to their subscribers.

Each  of the  Operating  Companies  (with  the  exception  of  Cambridge  Cable)
participates with certain other  cable/telephony  companies in a central network
service center in Woking,  England (the "Network Service Center") established by
Telewest. Such services are provided to cable/telephony  companies at a fee. The
Network Service Center provides  24-hour a day centralized  switch  engineering,
interconnect access administration and related support services.

                           Business Telecommunications

The business telecommunications market consists of the same services provided to
the  residential  telephony  market,  as well as the  provision  of a variety of
advanced  telecommunications  services. Business users frequently require higher
transmission  capacity  for  additional  services,  including  central  exchange
("Centrex"),   high-speed  data  services,  leased  access,  voice  mail,  video
conferencing and other services.

                                      - 3 -
<PAGE>

Operating Companies' Systems

The following table sets forth, for each Operating Company,  Homes Passed, Homes
Marketed,  Cable  Subscriber,  Residential  Telephony  Subscriber  and  Business
Telephony Subscriber information for the five years ended December 31, 1997. The
information presented below does not give effect to the Company's  proportionate
ownership interests in the Equity Investees.
<TABLE>
<CAPTION>
                                               1997         1996          1995         1994         1993
<S>                                           <C>          <C>           <C>          <C>          <C>    
Homes Passed (1)
Birmingham Cable                              444,069      374,451       292,503      227,110      156,720
Cable London                                  358,707      312,050       246,198      171,864      121,755
Cambridge Cable                               238,942      188,513       151,577      115,518       75,072
Teesside                                      155,505      100,542        40,608

Homes Marketed (2)
Birmingham Cable                              429,638      369,512       291,875      220,632      150,248
Cable London                                  345,163      296,416       230,325      163,564      121,755
Cambridge Cable                               224,833      174,868       142,237      107,987       64,846
Teesside                                      145,665       92,839        34,585


Cable Subscribers (3)
Birmingham Cable                              116,995      111,432        88,719       73,540       55,356
Cable London                                   83,142       67,877        52,871       42,977       30,111
Cambridge Cable                                52,766       45,378        36,799       30,763       16,007
Teesside                                       45,387       30,280        14,391


Residential Telephony Subscribers (4)
Birmingham Cable                              123,354      105,128        81,268       57,944       35,430
Cable London                                   80,193       57,495        39,608       31,121       17,577
Cambridge Cable                                76,350       56,448        43,002       33,302       12,012
Teesside                                       79,840       49,612        20,094


Business Telephony Subscribers (4)
Birmingham Cable                                3,748        2,994         2,154        1,504        1,158
Cable London                                    2,963        2,560         1,864        1,429          889
Cambridge Cable                                 2,936        2,227         1,779        1,253          474
Teesside                                        1,796          554            75
<FN>
---------------
     (1)  A home is deemed  "passed" if it can be connected to the  distribution
          system without further extension of the transmission lines.
     (2)  A home is deemed  "marketed"  if it has been released to the Operating
          Companies' marketing departments for sales.
     (3)  A dwelling with one or more  television  sets connected to a system is
          counted as one Cable Subscriber.
     (4)  A dwelling with one or more telephone  lines  connected to a system is
          counted as one Telephony Subscriber.
</FN>
</TABLE>

Birmingham Cable Franchise Area. Birmingham Cable holds a franchise,  awarded in
1988, for the cities of Birmingham and Solihull with approximately 443,000 homes
and the local delivery operator license for the Wythall franchise,  a 4,000 home
franchise awarded in 1995.

Cable  London  Franchise  Area.   Cable  London  holds,   through  wholly  owned
subsidiaries,  the Camden, Haringey,  Enfield and Hackney/Islington  franchises,
which were  awarded in 1989 and 1990.  Cable  London's  franchise  area covers a
contiguous  area of  approximately  65 square  miles or  roughly  20% of Greater
London and contains approximately 437,000 homes.

Cambridge  Cable Franchise  Area.  Cambridge  Cable holds,  through wholly owned
subsidiaries,  the Cambridge,  Harlow and Ipswich/Colchester  franchises,  which
were awarded in 1990,  and the local  delivery  operator (the "LDO") license for
the South East Anglia area (the "SEA Franchise"), which was awarded in 1995. The
franchise  areas  contain   approximately  490,000  homes,  although  the  build
milestones in the SEA Franchise only require  Cambridge Cable to pass 104,000 of
the 205,000 homes in the SEA Franchise.

                                      - 4 -
<PAGE>

Teesside  Franchise  Area.  Wholly  owned  subsidiaries  of the Company hold the
Darlington  and  Teesside  franchises  which were  awarded  in 1991 and  contain
approximately 254,000 homes.

Network Construction Costs

Construction  of  integrated   cable/telephony  systems  is  capital  intensive,
requiring substantial investment for "network costs" including civils (trenching
and  constructing  underground  ducts),  cable and  telephony  plant and network
electronics,  "subscriber costs",  including converters,  subscriber electronics
and installation of cable from the network to the  subscriber's  home, and other
costs  such as  head-end  equipment,  switching  offices,  land  and  buildings,
computers and furniture and fixtures.  Through  December 31, 1997, the Operating
Companies had incurred  approximately  (UK Pound)939  million to construct their
systems.

Costs  relating  to the  construction  of the  Operating  Companies'  integrated
cable/telephony   systems  have  been  higher  than  costs  to  construct  cable
communications systems in the United States ("US"). This is due, in part, to the
nature of system  construction  in the UK which  requires  incremental  costs to
provide  residential  telephony  and  business  telecommunications  services  in
addition   to  cable   communications   services.   The  UK  does  not  have  an
infrastructure  of  existing  telephone  poles,  overhead  lines  or  electrical
conduits in which to run new fiber optic and coaxial cable. Therefore, all cable
installation requires newly constructed,  hand-trenched,  underground ducts. The
provision of  residential  telephony  and business  telecommunications  services
requires the  installation of additional  lines, as well as the  installation of
high capacity, digital telephony switches and transmission equipment.

Revenue Sources

Cable Communications

The Operating  Companies offer varying levels of cable  communications  service,
depending  primarily on their  respective  channel  capacities.  Monthly service
rates and related charges vary in accordance  with the type of service  selected
by the subscriber. The Company may receive an additional monthly fee for premium
services,  the  charge  for  which  varies  with the type and  level of  service
selected  by  the   subscriber.   Additional   charges  are  often  imposed  for
installation  services,   commercial  subscribers,   program  guides  and  other
services.  The Company also  generates  revenue from  pay-per-view  services and
advertising  sales.  Subscribers  typically pay on a monthly basis and generally
may discontinue services at any time.

Residential Telephony

The Operating  Companies  charge  residential  telephony  subscribers an initial
connection  fee, a monthly  exchange  line  rental fee,  usage  fees,  which are
charges  for each  local,  long  distance or  international  call,  and fees for
additional services.

Business Telecommunications

The  Operating  Companies  charge  business  telecommunications   subscribers  a
connection  fee based  upon the  number  of lines  being  installed  and for the
initial  connection or  reconnection  to the Operating  Companies'  networks,  a
monthly  exchange line rental fee, usage fees, which are charges for each local,
long distance or international call, and fees for additional services.

Competition

Cable Communications

The  Operating  Companies'  cable  communications  systems  compete  with direct
reception over-the-air broadcast television, DTH satellite-delivered  television
services and private satellite master antenna television ("SMATV") systems. They
also compete,  to varying degrees,  with other  communications and entertainment
media,  including home video  products,  such as videotape  cassette  recorders,
movie theaters,  live theater, live sporting events,  newspapers and interactive
online computer  services.  The extent of such  competition  depends upon, among
other things,  price,  variety and quality of the programming  offered and, with
respect to broadcast television,  the quality of reception. In the future, cable
communications  companies may face competition from television  services offered
by national public telephony  operators and by other  competitors using existing
or new delivery systems. In March 1997, a new over-the-air broadcast

                                      - 5 -

<PAGE>
channel, Channel 5 was launched, which is, currently, available to approximately
70% of the UK population through terrestrial broadcast.

There were an aggregate of approximately 3.7 million DTH subscribers compared to
approximately 2.5 million  broadband cable  subscribers  throughout the UK as of
December 31,  1997.  BSkyB offers DTH  television  service and  currently is the
predominant competitor in the UK multi-channel television market. Since DTH is a
satellite-based  system,  the DTH provider  does not need an  underground  cable
network to provide service to its subscribers.  A DTH subscriber,  however, must
purchase or rent a satellite  receiver and dish and then pay monthly  subscriber
fees to the DTH  provider  for the use of a decoder,  which makes the  satellite
signal usable.  Although DTH service currently presents substantial  competition
to cable communications  service, the Company believes that cable communications
may have certain  advantages over DTH. First,  installation of satellite  dishes
may require  compliance  with  restrictive  zoning  ordinances and, for renters,
landlord's  consent.  Second,  the satellite dishes must be installed outside of
the  building  with  a  "line-of-sight"   orientation  toward  the  transmitting
satellite,  which can be problematic in urban areas.  Third, DTH subscribers who
purchase,  as opposed to rent,  their satellite  dishes must arrange and pay for
any servicing required for the dish. Fourth, without substantial improvements in
existing technology,  DTH providers will not be able to offer telephony services
and  local-oriented  advertising  and  programming  currently  offered  by cable
communications  operators,  or the interactive video services that the Operating
Companies  expect  to be able to  offer in the  future.  The  Company,  however,
expects DTH providers,  including BSkyB, to provide substantial  competition for
the foreseeable  future and no assurances can be given that they will not become
an even stronger competitor.

A significant  factor in favor of BSkyB is its role as the sole source  supplier
of many popular cable television programs, including most sports and movies. If,
in the future,  BSkyB chooses to restrict the  programming it makes available to
cable  communications  operators or offers it at relatively  higher prices,  the
Operating Companies could be at a significant competitive disadvantage.  In 1995
and 1996, BSkyB's position regarding the supply of wholesale  programming to the
pay TV market was the subject of a review by the Office of Fair Trading ("OFT").
Pursuant  to  informal  undertakings  given by BSkyB to the OFT  following  this
review, BSkyB published a rate card for cable operators,  the structure of which
was agreed to by the Director General of Fair Trading. BSkyB is also required to
submit to the Director  General  separate  accounts for its own DTH distribution
business.  These  accounts  must  disclose  a charge  for  making  its  channels
available to its DTH distribution  business which is not lower than the price at
which they are supplied to cable operators.

A  number  of UK cable  operators  have  filed a  complaint  with  the  European
Commission  about  certain  aspects of BSkyB's  prices and  trading  conditions,
alleging  violation of Articles 85 and 86 of the Treaty of Rome (which relate to
anti-competitive  agreements  and abuse of a dominant  position,  respectively).
This  complaint  is currently  being  reviewed by the  European  Commission.  In
November 1996, the Independent  Television  Commission  ("ITC") started a public
consultation  process with respect to the way in which  television  channels are
currently  bundled  together for wholesale to cable operators and retail sale to
cable  communications  and DTH  satellite  customers.  In August  1997,  the ITC
announced that it would be extending this consultation into a second phase.

In the UK  Government's  1991  review of the  telecommunications  industry  (the
"Duopoly  Review"),  the UK  Government  stated that its policy was not to allow
national public telephony operators to convey or provide entertainment  services
over  their  existing  telephony  network  until  March  2001.  The  new  Labour
Government  (elected  on May 1, 1997) has  indicated  that this  policy  will be
reviewed,  possibly  starting in early 1998. The options to be considered  range
from  announcing a nationwide  lifting of the  restrictions  at a future date to
establishing  a program  of  rolling  entry for such  operators.  Because of the
transmission capacity limitations of twisted pair copper wires historically used
in BT's  telecommunications  network,  particularly  between its local switching
sites and its customers'  homes,  and the age and condition of older portions of
BT's  network,  the Company  believes  that BT may not be able to provide  cable
communications  service  comparable to that offered by the  Operating  Companies
without  substantial  capital investment or unless substantial  improvements are
made in digital compression or other technologies.

The ITC has confirmed that, in its view, a video-on-demand service does not need
to be licensed as a local delivery service. In addition, the Department of Trade
and  Industry   ("DTI")  and  OFTEL  have  taken  the  view  that  the  existing
telecommunications  licenses of BT and other national public telephony operators
would not  prohibit  them from  providing  video-on-demand  services  over their
systems.  The Operating  Companies  similarly are not prevented  from  providing
video-on-demand  services.  Video-on-demand  services  involve  transmission  of
individual  programs to a single household in response to a particular  request.
In  order  to offer  video-on-demand  services  on a broad  scale,  the  Company
believes  that BT would be required to upgrade its  existing  telecommunications
switches and to install video  distribution  facilities and  subscriber  decoder
devices. After initial trials of video-on-demand in Colchester and Ipswich using
standard telephone lines, further  video-on-demand trials were carried out by BT
with up to 1,000 customers connected to its

                                      - 6 -
<PAGE>
Westminster  cable  franchise in London.  The British  Broadcasting  Corporation
("BBC") is also  developing a video-on-  demand  service for digital  television
that may  allow  viewers  to see all the  programs  stored in its  archives.  No
assurance  can be  given  that  video-on-demand  will  not  provide  substantial
competition in the future.

The 1996  Broadcasting  Act (the  "1996  Act"),  which  became law in July 1996,
amended the 1990  Broadcasting Act (the  "Broadcasting  Act," which replaced the
Cable and  Broadcasting  Act 1984 (the "Cable Act")) and makes provision for the
regulation  of  broadcasting  in digital form of  television  and sound  program
services.  The 1996 Act also  addresses  rights to  televise  sporting  or other
events of national interest.  In May 1997, BT, BSkyB,  Midland Bank (part of the
HSBC group) and Matsushita  Electric  announced the formation of a joint venture
called British Interactive  Broadcasting  ("BIB"),  which is intended to deliver
digital interactive services to television viewers in the UK. BIB will also have
the capability to offer educational programming,  specialist local community and
national public information services, as well as connection to the Internet. BIB
will provide  subsidies on digital  satellite set top boxes capable of receiving
BIB services (as well as other satellite broadcast services).  In December 1997,
the ITC  granted a digital  multiplex  license to British  Digital  Broadcasting
("BDB"), a consortium comprising Carlton Communications and Granada Group, under
which  BDB will be  authorized  to  provide  a  digital  terrestrial  television
service. This service is expected to commence operations in 1998. BIB intends to
offer a  version  of its  service  to BDB,  as well as to cable  operators.  The
European Commission is currently reviewing the BIB joint venture. BSkyB has also
announced that it intends to launch a digital satellite broadcast service before
the end of the second quarter of 1998. The  introduction of digital  terrestrial
and  digital  satellite  television  will  provide  additional  programming  and
terrestrial  channels and, therefore,  additional  competition for the Operating
Companies.

Residential Telephony

BT, which serves approximately 90% of the UK residential  telephony market as of
March 31, 1997, is the Operating  Companies'  principal  competitor in providing
local residential  telephony service.  As the principal  end-to-end  provider of
telecommunications  services in the UK, BT is, and can be expected to remain,  a
formidable  competitor.  BT has a  fully-built  national  network and  resources
substantially greater than those of the Company and the Operating Companies.  BT
also offers  promotional  programs and  additional  services in order to compete
more effectively with cable/telephony operators such as the Operating Companies.
There can be no assurance  that the Operating  Companies will be able to compete
successfully with BT. In addition, the Operating Companies compete with cellular
telephony  operators  (i.e.  Cellnet (60% owned by BT) and  Vodafone);  personal
communications  network  operators,  such as  "Mercury  one 2 one" (50% owned by
Mercury  and 50%  owned  by US West)  and  "Orange";  and  wireless  local  loop
providers.  They also  compete  with  Mercury,  which,  through an  interconnect
agreement with BT, is able to provide alternative access fixed- link residential
telephony  service even though it generally has not built residential local loop
networks. Although the Operating Companies' licenses do not permit them to offer
cellular  telephony  services,  they are not prohibited from seeking  additional
licenses to do so or from entering into  distribution  agreements  with existing
cellular telephony operators.

Business Telecommunications

Competition in the business  telecommunications  area has been  substantial and,
because of the number of competitors in this area, is expected to intensify.  BT
is the principal competitor in providing business  telecommunications  services.
In addition to BT, the  Operating  Companies  compete with  Mercury,  as well as
other  telecommunications  companies,  including ENERGIS Communications Limited,
MFS Communications Limited and City of London Telecommunications Limited. BT and
Cable & Wireless have resources  substantially greater than those of the Company
and the Operating  Companies,  and there can be no assurances that the Operating
Companies  will be able to  compete  successfully  with  BT,  Mercury  or  other
telecommunications companies.

In July 1996,  BT's  license was modified to ensure the  introduction  of number
portability,  which allows BT's  existing  customers  to retain  their  existing
telephone  number  when  they  switch  from BT to  another  carrier  such as the
Operating   Companies  (see  "Legislation  and  Regulation  -  Telephone  Number
Portability").  At the end of 1995,  the UK  Monopolies  and Mergers  Commission
("MMC")  ruled that BT should pay  approximately  70% of the costs  involved  in
number  portability,  while other operators would pay the rest. In January 1997,
OFTEL determined BT's costs in providing  number  portability and the amounts it
can charge to other  operators  to recover  those  costs.  In April 1997,  OFTEL
consulted  on  modifications  to the  licenses  of BT  and  other  operators  to
implement  number  portability  of  non-geographic  numbers  (e.g.  premium rate
services, etc.). A draft determination of BT's charges for non-geographic number
portability  was issued in November  1997.  The  majority of PTO  licenses  were
modified  in January  1998 to oblige  operators  to provide  number  portability
services.

                                      - 7 -
<PAGE>

Legislation and Regulation

General. The operation of a cable/telephony network in the UK is regulated under
both  the   Broadcasting   Act  and  the   Telecommunications   Act  1984   (the
"Telecommunications  Act"). The operator of a cable/telephony franchise covering
over  1,000  homes  must hold two  principal  licenses:  (i) a cable  television
license (called a "local delivery  operator license" under the Broadcasting Act)
issued in the past under the Cable Act or since 1990 under the Broadcasting Act,
which allows the operator to provide cable television  services in the franchise
area, and (ii) a telecommunications  license issued under the Telecommunications
Act, which allows the operator to operate and use the physical network necessary
to  provide  cable  television  and  telecommunications  services.  The  ITC  is
responsible  for the licensing and  regulation of cable  television.  The DTI is
responsible for issuing, and OFTEL is responsible for regulating the holders of,
the telecommunications  licenses. In addition, an operator is required to hold a
license under the Wireless  Telegraphy  Acts of 1949-67 for the use of microwave
distribution  systems.  Any  system  covering  1,000  homes or less  requires  a
telecommunications license but not a cable television license, and a system that
covers only one building or two adjacent  buildings  can operate  pursuant to an
existing general telecommunications license.

In addition,  cable  operators must comply with and are entitled to the benefits
of the New Roads and Street Works Act 1991, the principal benefit of which is to
allow  cable  operators  to "piggy  back"  their  construction  on that of local
utilities.  As a practical  matter,  however,  the  aggressive  build  schedules
followed by the Operating  Companies  make waiting for other local  utilities to
undertake construction impractical.

The cable  television  licenses  held by the  Operating  Companies  and/or their
subsidiaries were initially issued under the Cable Act for 15-year periods. With
the exception of the SEA Franchise and the Wythall  franchise in the  Birmingham
Cable franchise area (the cable television licenses for which were granted under
the Broadcasting Act in 1995 for 15-year  periods),  the terms of these licenses
have been  extended to 23 years and are  scheduled  to expire  beginning in late
2012  (see  "Cable  Television  License  - New  Cable  Television  Licenses  and
Renewals").  The  telecommunications   licenses  held  by  subsidiaries  of  the
Operating  Companies  are for  23-year  periods  and  are  scheduled  to  expire
beginning in late 2012 (see "Telecommunications License - New Telecommunications
Licenses; Renewal; Revocation; Transfer).

Cable Television License

General.  The stated policy of the ITC is that only one cable television license
will be granted in each franchise  area.  Each such license gives the holder the
right to provide cable television services within the franchise area using cable
(and in the case of cable  television  licenses  issued or renewed  for  15-year
periods  under the  Broadcasting  Act,  also by means of microwave  distribution
systems).  Affiliates  of  BT,  Mercury  and  other  national  public  telephony
operators are currently allowed to apply for and hold cable television  licenses
and,  since March  1994,  the  telephony  operators  have been  allowed to apply
directly for and hold licenses in new franchise areas.

Cable  operators are subject to competition  within their  franchise  areas from
direct reception  over-the-air  broadcast  television,  DTH  satellite-delivered
television services and SMATV systems.  With respect to the operation of a SMATV
system within a cable  operator's  franchise  area,  the DTI has stated that the
cable  operator  will have a right of first  refusal  to  provide  a similar  or
superior service at a reasonable price before the SMATV system will be permitted
to begin operations, subject to, among other things, the cable operator being in
compliance with the build schedules of its telecommunications licenses and other
previous commitments to provide service elsewhere in its franchise areas.

New Cable Television Licenses and Renewals. Cable television licenses originally
issued under the Cable Act were for a period of 15 years and,  upon  expiration,
may either be extended for an eight-year  period,  if the cable operator holds a
23-year  telecommunications  license,  or renewed for successive 15-year periods
under the Broadcasting Act. An application for renewal generally must be made to
the ITC within five years prior to the expiration of the license. A renewal will
be granted  if the  operator  agrees  with the ITC upon the fees to be paid and,
among  other  things,  the  operator's  proposed  telecommunications  system  is
acceptable to the DTI or OFTEL. If an operator chooses to extend its license for
an eight-year period, it will not be required to pay the annual fees referred to
below,  but at the end of the  eight-year  period the license  cannot be renewed
again and will be put out for  tender  and  awarded to the  highest  bidder,  as
described below. This is the position for the Operating Companies which have all
elected to extend their cable  television  licenses (except for the LDO licenses
for  the SEA  Franchise  and  the  Wythall  franchise  in the  Birmingham  Cable
franchise area) for an additional  eight-year  period. If an operator chooses to
renew its license  for a 15-year  period,  it will be required to pay  annually,
during the renewal period, a percentage to be fixed by the ITC of the operator's
cable  television  related  revenues,  plus an  additional  amount  that the ITC
believes a successful applicant would have bid for

                                      - 8 -
<PAGE>

the franchise if it were being  offered as a new  franchise.  At present,  cable
operators  are  only  required  to pay to the  ITC  annual  fees,  which  in the
aggregate are intended to cover the ITC's administrative costs.

As of December 31, 1997, cable  television  licenses have been granted in the UK
covering  franchise  areas with  approximately  18.4 million  homes.  The ITC is
continuing  to offer for tender,  cable  television  licenses for new  franchise
areas covering the remaining 5.3 million homes in the UK. Under the Broadcasting
Act, a new cable television license will be granted to the applicant who submits
the highest cash bid (i.e.  offers to pay the highest annual cash sum to the ITC
during each year of the license),  except where it appears to the ITC that there
are  "exceptional  circumstances"  which  make  it  appropriate  for  the  cable
television  license  to be awarded  to  another  applicant.  Under any new cable
television  license,  operators  will be  required  to pay  annually to the ITC,
during  the  term of the  license,  a  percentage  to be fixed by the ITC of the
operator's cable television related revenues, plus an additional amount equal to
the operator's cash bid. The percentage  fixed by the ITC for the new franchises
so far to come up for bid under the Broadcasting Act have varied from 0% for the
term of the license to a graduated fee structure of 0% for the first five years,
3.0% for the next five years and 8.0% for the last five years. Certain entities,
including local authorities, political bodies or groups, religious organizations
and advertising  agencies,  are presently not allowed to bid for or have certain
interests in entities holding cable television licenses.  Ownership restrictions
also apply to holders of other  Broadcasting  Act  licenses or local  newspapers
serving the same area as that served by the cable  operator.  The  Secretary  of
State has broad discretion to amend the rules relating to cross-media  ownership
and  accumulations  of  interests  in  licensed  services.  In May 1995,  the UK
Government published proposals for certain changes relating to these rules which
recognize the  continuing  need for specific  rules  governing  media  ownership
beyond  those  which  apply  under  general  competition  law but  also  need to
liberalize existing ownership regulations both within and across different media
sectors. These rules were subsequently incorporated into the 1996 Act.

Transfers of Licenses. The Broadcasting Act permits the transfer of a license to
a third party with the prior  written  consent of the ITC.  The ITC has absolute
discretion to refuse any proposed  transfer of a license.  In addition,  certain
changes in ownership of the  licensee  and certain  acquisitions  of an interest
(direct or indirect) in the licensee require 28 days notification to the ITC.

Revocation of Licenses.  The ITC can, after consultation with the DTI and OFTEL,
revoke a cable  television  license  if an  operator  fails to  comply  with its
conditions or with any direction of the ITC and the ITC considers  revocation to
be in the  public  interest.  If there is any  change  in either  the  nature or
characteristics  of an operator that is a corporate entity, or any change in the
persons  controlling  or having an  interest in it, the ITC can decide to revoke
the license if due to such changes it would not have  awarded the license  under
the new  circumstances.  With respect to licenses issued under the  Broadcasting
Act, the ITC can also impose fines and shorten the license period.

Obligations of Licensees.  Under the Broadcasting Act, cable operators may carry
certain  licensed  program  services on their  systems and are  responsible  for
ensuring that  advertising and foreign  satellite  programs  included by them in
their  services   conform  to  the  restrictions  set  forth  in  the  codes  on
advertising,  sponsorship  and  programming  produced by the ITC. Both the cable
television  and  the  telecommunications  licenses  impose  obligations  on  the
licensees to provide any  information  which either OFTEL or the ITC may require
for purposes of exercising their statutory functions.

Digital Broadcasting

The 1996 Act permits the provision of the following types of digital terrestrial
broadcast services:  digital "program services",  digital "additional  services"
(e.g.  text-based  services) and digital  "qualifying  services." Under the 1996
Act, qualifying services  essentially  comprise the broadcast in digital form of
services currently provided in analog form by existing terrestrial  broadcasters
such as ITV, Channel 4 and the new Channel 5.

The 1996 Act distinguishes  between  "multiplex  service providers" (who provide
the transmission  infrastructure)  and "digital program  providers" (who provide
the programs to be  transmitted).  Both need to be licensed  under the 1996 Act,
although the holders of existing  licenses for ITV, Channel 4, Channel 5 and the
public  teletext  service  will not require new  broadcast  licenses in order to
simulcast their existing services in digital form. The BBC will be authorized to
provide digital programs under its Royal Charter.

Under the 1996 Act,  capacity  on  multiplexes  has been  allocated  to existing
terrestrial  broadcasters.  In January 1997,  applications  for further  digital
terrestrial  multiplex  licenses  were  received  by the ITC from  BDB,  Digital
Television  Network  (owned by NTL) and S4C  Digital.  BDB and S4C Digital  were
successful in their applications and have been awarded multiplex licenses. BDB's
license for three  multiplex  frequencies  was only awarded (in  December  1997)
after

                                      - 9 -

<PAGE>
BSkyB  had  withdrawn  from  the BDB  consortium  at the  ITC's  request.  BDB's
application  has also been reviewed by the European  Commission.  At the time of
awarding  multiplex  licenses to BDB and Digital 3 and 4 Ltd, the ITC  indicated
that it was now in a position to accept  applications  for  digital  program and
additional  (text/data) service licenses.  As of March 18, 1998, no applications
for such licenses have been received by the ITC.

The  Operating  Companies  will be under a "must carry"  obligation  for digital
qualifying   services  (i.e.  the  digital   simulcasts  of  analog   television
broadcasts) as and when broadcast of those digital  qualifying  services  starts
and if they are operating a digital system.

Telecommunications License

General. A telecommunications  license permits the cable operator to operate the
system  over  which it  provides  cable  communications  and  telecommunications
services.  It also  authorizes the operator to connect its system to other cable
communications  or  telecommunications  systems  including those operated by the
broadcasting  authorities,  satellite  systems and certain other systems outside
the UK.  Although  the  telecommunications  license is granted for a  particular
area,  it is not  exclusive,  and as a  result,  a cable  operator  will have to
compete in the provision of telephony and other telecommunications services with
national public telephony operators, such as BT and Mercury, and other telephony
companies in their franchise areas.

A cable  operator  who holds a  telecommunications  license  is  subject  to the
Telecommunications    Code   (the   "Code"),   which   is   contained   in   the
Telecommunications Act. The Code grants certain rights in respect of the keeping
of apparatus  such as ducts,  cables and equipment on private or public land and
the  procedures  to be used for  installation  of equipment on public  highways.
Cable  operators  are  generally  required  by the  Code to enter  into  bonding
obligations with local authorities in order to ensure reinstatement of roads and
streets  in the event the  operator  becomes  insolvent,  ceases to carry on its
business or has its telecommunications license terminated.

New    Telecommunications    Licenses;    Renewal;     Revocation;     Transfer.
Telecommunications  licenses  that have been  issued to date to cable  operators
have been for  periods  of either 15 or 23 years.  The grant or  renewal  of any
telecommunications    license   involving   new    construction,    construction
specifications  and  timetables  (generally  expressed in terms of the number of
homes  passed)  will be  reviewed  by the  applicable  authorities  and  will be
incorporated in the terms of the license that is ultimately granted,  except for
new franchises,  where the construction  obligations are enforced by the ITC. It
is OFTEL's responsibility to enforce compliance with the build schedules and the
other  conditions of the license.  In addition,  certain changes in ownership of
the licensee and certain acquisitions of an interest (direct or indirect) in the
licensee require 30 days'  notification to DTI. Failure to comply with the build
schedules or other  conditions,  the occurrence of certain  insolvency events or
changes in control of the licensee which are deemed by the DTI to be contrary to
the UK's national  security  interests or relations with any other country could
result  in  revocation  of both the  telecommunications  license  and the  cable
television  license.  Unlike a cable television  license,  a  telecommunications
license is not transferable.

Technical Requirements. The principal technical requirements for cable/telephony
systems are contained in the telecommunications  licenses,  which address, among
other things,  technical  requirements for transmissions,  performance and radio
interference restrictions.

Telephony Operations

Duopoly Review.  In 1991,  pursuant to the Duopoly Review,  the requirement that
cable operators provide voice telephony  services only as an agent for either BT
or Mercury was removed, thereby enabling cable operators to provide all forms of
wired telecommunications services, including the ability to independently switch
their own  traffic.  In  addition,  cable  operators  were  granted the right to
require BT and Mercury to provide interconnection.

Interconnection  Agreements.  The  commercial  viability of telephony  and other
telecommunications services provided by cable operators depends on their ability
to  connect  cost-effectively  with  other  telecommunications   systems.  Cable
operators'  systems  must  connect  with  systems  operated by  national  public
telephony  operators,  international  telephony  companies  or  other  telephony
operators,  as the case may be, for calls that do not originate and terminate on
their  systems.  Each  national  public  telephony  operator  (including  BT and
Mercury),  as well as the  Operating  Companies,  is  required to  negotiate  an
interconnection  agreement  with any  other  such  operator  that  seeks one and
intervention  can be requested from OFTEL if the parties cannot agree on certain
terms. OFTEL also has the power to enforce the obligations of a party

                                     - 10 -
<PAGE>

under an interconnection  agreement.  In addition, BT is required by its license
to publish details of all interconnection agreements into which it enters.

In  June   1996,   OFTEL   published   a   statement   entitled,   "Pricing   of
Telecommunications  Services from 1997 - OFTEL's Proposals for Price Control and
Fair Trading," in which it confirmed that it would continue  working towards the
introduction  of a  network  price  cap as the  basis  for BT's  interconnection
charges.

Following the issue of further consultation documents, OFTEL published its final
proposals on the network price cap in July 1997,  establishing a framework which
effectively  comprises four different  approaches  that OFTEL has now adopted in
relation  to the  pricing of BT's  interconnection  services,  dependent  on the
degree of competition as follows:

        (i)     for "competitive services," BT will be free to set the charges;

        (ii)    for "prospectively  competitive services," BT will be subject to
                a price cap on each such service equal to the percentage  change
                in the UK domestic retail price index ("RPI"), plus zero;

        (iii)   for  bottleneck  and  non-competitive  services,  two baskets of
                services will be introduced,  each subject to a cap equal to RPI
                less 8%; and

        (iv)    for  interconnection-specific  services,  BT will be  subject to
                individual price caps equal to RPI less 8%.

The  prices BT sets  will be  subject  to the  application  of the fair  trading
license  condition  (see above) and OFTEL intends to use "floors" and "ceilings"
as the main yardsticks to consider whether a charge is  anti-competitive or not.
The starting values for its prices will be based on long-run  incremental costs.
BT has agreed to the amendment of its license to reflect the new network charges
regime which will remain effective through October 10, 2001.

OFTEL  has also  stated  that  operators  may be  required  to  provide  network
information to BT for  interconnection  purposes in much the same way as BT must
publish  information  about its own network,  although  OFTEL does not currently
propose to require other operators to publish their interconnection  agreements.
In the future, requirements may also be applied to other operators in respect of
interconnection  obligations,  such as accounting separation and transparency of
calculation  of  interconnection  charges,  if  OFTEL  concludes  that  any such
operator  has market  power and is in a position to distort  competition  to the
detriment of consumers.

In  April  1997,  OFTEL  announced  proposals  to  ensure  interworking  between
interconnecting  networks,  as well as between customer  premises  equipment and
telecommunication  networks.  This  was a  recognition  of  the  fact  that  the
introduction  of new  innovative  telecommunication  services in the UK would be
dependent  on  the  inter-operability  between  competing  networks.  OFTEL  has
proposed that for:

     (1)  "enhanced"  services,  no additional  regulatory  restrictions will be
          imposed. The  inter-operability of these services will be addressed by
          ensuring  that  the  basic  network   services   which  they  use  are
          inter-operable   between  competing  networks.   Any  anti-competitive
          behavior by an enhanced  service  provider would be dealt with through
          the general fair trading provisions;

     (2)  "basic network" services, rules will be established to address network
          to network  interface  issues, as well as interface with the customer.
          Operators  with  market  power  will have to publish  any new  network
          interfaces 15 months in advance of their  implementation and will have
          an  obligation  to provide  interconnection  to other  operators.  New
          customer  interfaces  will have to be  published  by all  operators 15
          months in advance of their launch.

OFTEL is  considering  responses  to its  proposals  which  are  expected  to be
implemented in 1998.

In June 1997, the European  Commission  adopted the Interconnect  Directive (the
"Directive"),  which essentially  requires  operators with  "significant  market
power" to provide  interconnection  on cost-based terms.  These principles would
also apply to European  cross-border  interconnection which is currently subject
to the  accounting  rate regime.  In November  1997,  the DTI and OFTEL issued a
consultation  document  on  the  UK's  implementation  of  the  Directive.   The
implementation  has been effected by means of secondary  legislation  which came
into force at the end of 1997. The new rules will require:

                                     - 11 -
<PAGE>
     (1)  modification  of the  interconnection  obligations  in all  operators'
          licenses;

     (2)  the  designation  of  BT  and  Kingston  Communication  (in  Hull)  as
          operators  with  "significant  market  power" in the  fixed  telephony
          market,  and Cellnet and  Vodaphone  as  operators  with  "significant
          market power" in the mobile market;

     (3)  a  classification  of  those  operators  who  should  be  entitled  to
          cost-based  interconnection  rates  (representing,  in OFTEL's view, a
          slight widening from the current position); and

     (4)  operators with special or exclusive  rights in other sectors will have
          to produce separate accounts where the turnover in the relevant sector
          exceeds ECU 50 million.

Price  Regulation.  In October 1996,  BT's license was modified to include a new
retail price control of RPI minus 4.5%,  which is applicable from August 1, 1997
until 2001, but only in relation to the bottom 80% of  residential  customers by
billed  amounts.  OFTEL has indicated  that this is likely to be the last retail
price control  imposed on BT. OFTEL has conceded that this, in combination  with
the changes to network  charges  discussed  above,  will result in "vastly  more
price  freedom for a still  dominant  BT" at both the retail and network  level.
However,  OFTEL expects that the new fair trading  provision  (described  below)
will protect others from BT's dominant position.

The new price control (together with the new fair trading provision)  represents
a further  withdrawal by OFTEL of detailed  regulation giving BT greater pricing
freedom and reducing  the number of  activities  which  remain  subject to price
control.

In October  1996,  OFTEL also  modified  BT's  license to  introduce  a new fair
trading  condition  which provides for similar  prohibitions to those set out in
Articles  85 and 86 of  the EC  Treaty.  The  new  license  condition  prohibits
entering into  anti-competitive  agreements and the abuse of a dominant position
in the UK, in addition to the  prohibitions  contained in the UK Competition Act
and Fair  Trading  Act.  It will  replace  other,  more  specific  fair  trading
conditions in BT's license. While the condition will not render anti-competitive
agreements and practices void from the outset or impose automatic  penalties for
non-compliance,  it  will  enable  the  Director  General  to  issue  final  and
provisional orders with respect to any such activity. The fair trading condition
has been or will be introduced in other operators'  licenses  including those of
the  Operating  Companies.  The Company  does not believe  that this will have a
material  effect on the  Operating  Companies'  financial  position,  results of
operations or liquidity.

OFTEL has published  guidelines  on the operation of the fair trading  condition
which  explain  how  it  will  determine  the  relevant  market  and  apply  the
prohibitions set out in the new condition.  OFTEL has stated in these guidelines
that it proposes to follow the approach used by the European  Commission and the
European  Court of  Justice in  determining  issues  such as market  definition,
dominance and abuse of market  power.  These  measures  represent a reduction of
detailed  regulation  and a move by  OFTEL  to  become  more  of a fair  trading
authority.

The Duopoly Review resulted in the  modification of BT's license to permit it to
offer discounts,  subject to several  conditions.  Most  importantly,  BT is not
allowed to offer  discounted  services in local  markets  without  offering them
nationally.  For so long as this  policy  remains  in  effect,  BT's  ability to
respond to local  competition will be restricted.  In its Effective  Competition
Document,  OFTEL has  proposed to make no change to its policy on  limiting  the
flexibility  available to BT to target large volume customers or on restrictions
on BT offering locally-discounted services.

In February  1997,  OFTEL  issued for  consultation  its further  proposals  for
universal service in the UK. It concluded that, after benefits,  the current net
cost involved in the provision of universal service in the UK was not proven and
did not justify  setting up a universal  service fund in the  short-term.  OFTEL
proposed,  however,  to amend BT's  license so as to require BT to offer a "Life
line" service  package  which will be low cost,  available to everyone and allow
incoming calls and emergency  outgoing  calls only.  Amendments to BT's existing
"Low User Scheme" were also proposed together with an agreement with BT designed
to reduce the number of disconnections for debt. The proposals also included new
draft  guidelines  relating to the provision of public call boxes by BT, as well
as suggestions  for special help for the elderly and disabled.  OFTEL intends to
carry out a full review of universal service  arrangements in the UK in 1999 and
modifications to BT's license to implement OFTEL's final proposals for universal
service  (issued in July 1997) were made in November 1997.  OFTEL has encouraged
all  licensees  to  publish  disconnection  policies.  Operators  have also been
requested  to  publish  disconnection   statistics  as  part  of  the  published
comparable performance indicators.

                                     - 12 -
<PAGE>

The  rates  of  other  telecommunications  companies,  including  the  Operating
Companies,  are not regulated by any UK Government entity,  although  conditions
prohibiting undue  discrimination are commonly  contained in  telecommunications
licenses  (including those held by the Operating Companies and BT). In September
1997,  OFTEL  completed  a review  of cable  operators'  Telecommunications  Act
licenses  and made  several  modifications.  The purpose of the  exercise was to
review the licenses in the light of the  progressive  introduction of "slimline"
PTO licenses and the  modifications  made to Mercury's  PTO license in 1996.  It
also took into account a number of important regulatory developments such as the
need to implement  the package of  modifications  for fair trading and to ensure
comparability with LDO PTO licenses, and to remove unnecessary  restrictions and
obligations.

Indirect and Equal Access.  One advantage  cable  operators  have  maintained in
marketing their telephony services has been their ability to offer direct access
to the system of another  operator (i.e.  Mercury),  whose long distance charges
have historically been less than those charged by BT. At present, in most areas,
the only way in which a  residential  BT customer can choose to route calls over
the Mercury  trunk  network is by  purchasing  a special  telephone  or using an
indirect  access  through which it is possible to select the Mercury  network in
preference  to the BT network.  The stated  policy of the UK  Government  in the
Duopoly Review was to introduce true equal access,  whereby all local  telephony
systems  would have to offer  access to each fixed  link  trunk  system  without
discrimination. BT's and Mercury's licenses have been amended to enable OFTEL to
require them to make available  equal access,  either by  pre-selection  or on a
call-by-call  basis,  subject  to,  among other  things,  a  cost-benefit  study
indicating  that the gains to  consumers  will  outweigh  the  likely  costs.  A
cost-benefit study was conducted and OFTEL has concluded that the study does not
justify introducing such equal access  arrangements.  Under existing licenses, a
cable  operator  would not  generally  be required by OFTEL to  introduce  equal
access until it had acquired a market share of 25% of local exchange lines. Many
cable operators opposed the equal access proposals in the Duopoly Review in this
respect  because equal access would reduce one of the current  attractions  of a
cable operator's  telephony system.  BT's willingness,  however,  to offer cable
operators  interconnection  on competitive  terms  potentially will enable cable
operators to offer equal access benefits to their customers on attractive terms.
The timing and terms of the  introduction  of equal access is unclear.  However,
OFTEL  stated in July 1996 that it  considers  the "well  established  operator"
threshold  of 25% of customer  connections  in a relevant  market to be a useful
guide in determining  whether a non-dominant  operator should, in the future, be
required to grant indirect access to other  operators.  This threshold would not
automatically mean that the operator would be required to grant indirect access,
but OFTEL would  investigate  the issue further in respect of that operator once
that threshold was reached.

In January 1998, BT announced  that it was to begin a technical  trial in London
with a provider of indirect phone calls and a mobile telecommunications  company
under which those companies would be able to use BT's network to serve their own
customers.  BT will supply and maintain  customer  phone lines in the trial area
for the two operators,  carrying out  installation and maintenance and providing
records of the calls made on those lines for charging purposes.  BT would charge
the operators for services  provided and for calls.  The two operators  will use
the lines to sell phone calls and services to their  customers,  under their own
branding  of the  service.  They  will set their own  prices  for that  service,
together with their own billing and customer services. Customers would no longer
receive  a BT bill and a  separate  bill from the  other  independent  operator;
instead  they will now  receive a single  bill  from the  independent  operator.
Depending on the outcome of the trial, BT has said that a full national  service
could be launched in the middle of 1998.

The European Commission has finalized proposals for the introduction, by January
1, 2000, of equal access by telecommunication operators with "significant market
power." If adopted,  an Equal Access  Directive will require the introduction of
carrier  pre-selection whereby subscribers can choose an alternative operator to
convey their long distance calls to the one providing their local connection and
calls.

Telephone  Number  Portability.   Business  and  residential  telecommunications
customers  changing  their  telephone  services  to a cable  company  or another
telecommunications provider previously had to change their telephone numbers. BT
did not offer customers  telephone number  portability until 1996,  although its
PTO license has required this, subject to certain preconditions,  since 1991. As
a  result,   some   business   customers   have  used  their  cable  company  or
telecommunications  provider lines  primarily for outbound  telephone  calls and
maintained their BT lines for inbound calls.

BT's PTO license  was  modified in July 1996 to  incorporate  a condition  which
supports the  implementation  of number  portability  and in January  1997,  the
Director General  determined BT's costs in providing number  portability and the
charges it can make to other  operators to recover  those costs.  BT has reached
agreement  with several cable  companies on number  portability.  The absence of
number   portability  was  a  significant   impediment  to  competition  in  the
telecommunications market. Its implementation is providing BT's competitors with
access to greater  numbers of customers.  The number  portability  modifications
made to BT's license related to the portability of numbers at a particular

                                     - 13 -

<PAGE>

geographic  address.  In April 1997,  OFTEL  consulted on  modifications  to the
licenses  of  BT  and  other  operators  to  implement  number   portability  of
non-geographic numbers (e.g., freefone, premium rate services, etc.). Commercial
terms for number  portability  are now included in the BT standard  interconnect
agreement.

Other Recent Developments

In December  1996,  OFTEL  published a  consultative  document on the  practical
regulation of conditional access services for digital television. OFTEL has five
key objectives:

     (i)  To ensure that the control of  conditional  access  technology  is not
          used to  distort,  restrict or prevent  competition.  This would be of
          significance  where  a  conditional  access  service  provider  has an
          associated   programming   supply   business  and  is  also  providing
          conditional access services to its competitors.

     (ii) To ensure that control of conditional  access technology does not lead
          to  consumer  choice  being  artificially  constrained  in relation to
          consumers' choice of equipment or the range of services  available via
          that equipment.

     (iii)To facilitate consumers being able to access services on more than one
          delivery  mechanism or switch  between  delivery  mechanisms,  without
          having to incur unnecessary additional expense.

     (iv) To  facilitate   consumer   choice  by  ensuring  ease  of  access  to
          information  about  the  range  of  services  available  and  ease  of
          selection of those services.

     (v)  To ensure control of proprietary  conditional access technology is not
          exploited anti-competitively (e.g. by excessive pricing for the use of
          that technology).

The guidelines  set out the approach  OFTEL will take in regulating  conditional
access systems.  This includes,  in particular,  enforcing the conditions of the
Conditional   Access  Service  Class  and  the  Advances   Television   Standard
Regulations (the "Regulations"), which both came into force in January 1997.

The Regulations include requirements on:

     o    The offer of technical conditional access services to broadcasters "on
          a fair, reasonable and non-discriminatory basis."

     o    The  licensing on fair,  reasonable  and  non-discriminatory  terms of
          industrial   property  rights  in  conditional  access  technology  to
          manufacturers of consumer equipment. This would prevent licensors from
          including in the license agreements  conditions that would prohibit or
          discourage  manufacturers  of consumer  decoder units from including a
          common interface  allowing  connection with other  conditional  access
          systems or means specific to another conditional access system.

     o    The provision for cost-effective trans-control by cable operators.

In February 1997, OFTEL issued a statement containing proposed measures designed
to  promote  competition  in  services  over  telecommunications   networks  and
addressing a number of issues of  particular  relevance to  independent  service
providers  ("ISPs").  The  measures  include an updated  classification  of BT's
systems (or network  services)  business  ("SB") and  supplemental  services (or
enhanced  services)  business  ("SSB")  (the  importance  of which is that  this
classification  underpins the prices that BT charges  itself since BT's SSB must
pay the same for BT's network services as any ISP is required to) and additional
information  to be published in BT's  financial  statements  with respect to the
split between its SB and SSB. BT is being allowed  greater  flexibility to offer
lower prices to ISPs in order to promote  competitively  priced  services to all
levels  (although access to cost-based  interconnection  prices is largely to be
limited to operators  installing  networks).  ISPs are now becoming  entitled to
allocations   of  numbering   capacity   without   having  to  have   individual
telecommunications licenses.

In July  1997,  the DTI and  OFTEL  issued  a joint  consultation  paper  on the
extension of the UK conditional  access  regulatory  regime to non-broadcast and
digital   non-television   services.   In  October  1997,  OFTEL  published  for
consultation  the  principles  that it proposed to use when examining the prices
proposed by a conditional access provider.

                                     - 14 -
<PAGE>

International Facilities Liberalization

In June 1996, the DTI invited  applications  for licenses to install and operate
telecommunications  systems for the provision of all types of telecommunications
services between the UK and the rest of the world.

Since December 1996,  over 60 new  international  facilities  licenses have been
issued  marking  the  removal  of one of the  few  remaining  barriers  to  full
competition in the  provisioning  of  infrastructure  and services in the UK. On
January 1, 1998, full competition in most of the European Union was introduced.

                                    EMPLOYEES

Comcast,   through  Comcast  UK  Cable  Partners   Consulting,   Inc.  ("Comcast
Consulting"),   a  wholly  owned  subsidiary  of  Comcast  U.K.  Holdings,  Inc.
("Holdings"), which is an indirect, wholly owned subsidiary of Comcast, provides
all  administrative  services to the Company and  provides  all  management  and
consulting  services to the Operating Companies that the Company is obligated to
provide.

As of December 31, 1997, Teesside,  Birmingham Cable, Cable London and Cambridge
Cable had  approximately  390,  650, 520 and 450  employees,  respectively.  The
Company  believes  that  the  Operating  Companies'   relationships  with  their
employees are good.

ITEM 2          PROPERTIES

The Company  does not own or lease any  significant  real or  personal  property
other than through its interests in the Operating Companies.

The Operating  Companies  own their cable and telephony  plant and equipment and
generally own or lease,  under long-term leases, the head-end and switching node
sites.  The  Company  believes  that the  Operating  Companies'  facilities  are
adequate to serve their existing customers.

ITEM 3          LEGAL PROCEEDINGS

The  Company is  subject to legal  proceedings  and  claims  which  arise in the
ordinary  course of its business.  In the opinion of  management,  the amount of
ultimate  liability with respect to these actions will not materially affect the
financial position, results of operations or liquidity of the Company.

ITEM 4          SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders,  through a solicitation
of proxies or otherwise,  during the fourth  quarter of the year ended  December
31, 1997.


                                     - 15 -

<PAGE>

                                                      PART II

ITEM 5      MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
            MATTERS

The Class A Common  Shares of the  Company  are  traded in the  over-the-counter
market  and  are  included  on  Nasdaq  under  the  symbol  CMCAF.  There  is no
established  public trading market for the Class B Common Shares of the Company.
The Class B Common  Shares are  convertible,  on a share for share  basis,  into
Class A Common  Shares.  The  following  table  sets  forth,  for the  indicated
periods,  the high and low sale  price  range of the  Class A Common  Shares  as
furnished by Nasdaq.

                                                          Class A
                                                   High               Low

1997
  First Quarter..................                 $14  1/8           $9  3/4
  Second Quarter.................                  13                10  1/2
  Third Quarter..................                  12  1/4            9  1/8
  Fourth Quarter.................                  12  1/8            8  3/4

1996
  First Quarter..................                 $14  1/4          $11  1/2
  Second Quarter.................                  14  1/4           11  7/8
  Third Quarter..................                  13  7/8            9  5/8
  Fourth Quarter.................                  14                10

The Company does not  anticipate  paying any cash dividends on its common shares
for the foreseeable  future (see Item 7 - "Management's  Discussion and Analysis
of  Financial  Condition  and  Results of  Operations  -  Liquidity  and Capital
Resources").  The Company is  prohibited  from paying  dividends  on the Class B
Common  Shares  without  also  paying pro rata  dividends  on the Class A Common
Shares.  The Company has not paid cash dividends since inception.  The Company's
11.20% Senior Discount Debentures, due 2007 and issued in November 1995, contain
restrictive covenants which limit the Company's ability to pay dividends.

The Class A Common Shares and Class B Common Shares vote  together.  Each record
holder  of Class A Common  Shares  is  entitled  to one vote per  share and each
record  holder of Class B Common  Shares is entitled to ten votes per share.  In
the election of  directors,  Class A Common  Shares and Class B Common Shares do
not have cumulative voting rights.

As of February 28, 1998,  there were 32 record holders of the Company's  Class A
Common Shares.  Holdings,  through its ownership of the Company's Class B Common
Shares,  controls  77.6% of the  total  voting  power of all of the  outstanding
shares of the Company.



                                     - 16 -

<PAGE>
ITEM 6            SELECTED FINANCIAL AND OTHER DATA

The following  selected  consolidated  financial data have been derived from and
should be read in conjunction  with the  consolidated  financial  statements and
notes thereto included in Part II Item 8 of this Form 10-K.

The Company (4)
<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                      1997             1996            1995              1994             1993
                                                                         (In thousands, except per share data)
<S>                                                <C>              <C>              <C>              <C>              <C>  
Statement of Operations Data:
Service income.............................(UK Pound)55,603 (UK Pound)31,358  (UK Pound)1,530    (UK Pound)      (UK Pound)
Consulting fee income .....................           1,059            1,070            1,313            1,356            1,248
Operating loss ............................         (22,604)         (24,553)         (11,809)          (2,824)          (1,124)
Equity in net losses of affiliates ........         (21,359)         (18,432)         (23,677)         (16,289)         (13,143)
Net loss ..................................         (67,356)         (40,575)         (28,962)         (16,266)         (13,183)
Net loss per share (1) ....................           (1.34)            (.84)           (0.70)           (0.54)           (0.50)

Balance Sheet Data:
At year end:
     Total assets .........................         445,854          484,370          431,889          254,739           95,239
     Noncurrent liabilities ...............         247,970          216,027          207,978            9,106
     Contributed capital ..................         359,049          359,049          287,810          287,863          127,162
     Accumulated deficit ..................        (187,373)        (120,017)         (79,442)         (50,480)         (34,214)

Other Data:
Operating income (loss) before depreciation
   and amortization (3) ...................           2,984           (7,853)          (8,760)          (1,596)            (558)
</TABLE>



See Notes to Selected Financial and Other Data on page 20.


                                     - 17 -

<PAGE>

Birmingham Cable - Selected Consolidated Financial and Other Data
<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                      1997            1996             1995              1994             1993
                                                                                 (In thousands)
<S>                                                 <C>              <C>              <C>               <C>              <C>    
Statement of Operations Data:
Service income.............................(UK Pound)67,166 (UK Pound)52,472 (UK Pound)39,004 (UK Pound)27,505 (UK Pound)18,345
Operating loss ............................         (15,825)         (11,694)         (11,345)          (9,674)          (7,864)
Net loss ..................................         (30,826)         (20,378)         (14,279)          (9,293)          (8,967)

Balance Sheet Data:
At year end:
     Total assets .........................         260,035          325,646          331,589          160,044          119,018
     Noncurrent liabilities ...............         165,413          188,863          185,864            6,222            4,989

Other Data:
Operating income (loss) before depreciation
     and amortization (3) .................          10,602            7,996            3,110               25           (2,217)
</TABLE>

Cable London - Selected Consolidated Financial and Other Data
<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                      1997            1996             1995              1994             1993
                                                                                 (In thousands)
<S>                                                 <C>              <C>              <C>              <C>              <C>     
Statement of Operations Data:
Service income.............................(UK Pound)52,816 (UK Pound)40,091 (UK Pound)30,277 (UK Pound)21,830 (UK Pound)14,403
Operating loss ............................         (12,711)         (13,906)         (13,808)         (10,524)          (9,863)
Net loss ..................................         (25,168)         (21,241)         (17,675)         (11,354)         (11,304)

Balance Sheet Data:
At year end:
     Total assets .........................         195,693          170,123          136,450          104,994           85,648
     Noncurrent liabilities ...............         173,038           60,831           73,772           27,659           21,118

Other Data:
Operating income (loss) before depreciation
     and amortization (3) .................           7,029              956           (2,961)          (3,531)          (5,869)
</TABLE>


Cambridge Cable - Selected Consolidated Financial and Other Data (4)
<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                      1997            1996             1995              1994             1993
                                                                                 (In thousands)
<S>                                                                <C>              <C>                <C>              <C>    
Statement of Operations Data:
Service income.............................                  (UK Pound)6,401 (UK Pound)20,585 (UK Pound)12,064  (UK Pound)3,571
Operating loss ............................                           (2,133)         (12,838)          (8,807)          (7,437)
Net loss ..................................                           (4,419)         (20,398)         (12,223)          (7,930)

Balance Sheet Data:
At year end:
     Total assets .........................                                           118,885           99,275           56,799
     Noncurrent liabilities ...............                                           109,662           74,916           22,163

Other Data:
Operating income (loss) before depreciation
     and amortization (3) .................                               35           (5,688)          (4,171)          (4,770)
</TABLE>

See Notes to Selected Financial and Other Data on page 20.

                                     - 18 -
<PAGE>

Operating Companies - Proportionate Combined Selected Consolidated Financial and
Other Data

The following  proportionate  combined selected consolidated financial and other
data  have  been  derived  from the  consolidated  financial  statements  of the
Company, Birmingham Cable and Cable London, after giving effect to the Company's
ownership  interests in each of the Operating Companies as of December 31, 1997.
As of December 31, 1997, the Company had a 27.5% interest in Birmingham Cable, a
50.0%  interest in Cable London,  a 100% interest in Cambridge  Cable and a 100%
interest in Teesside.  The Company  believes that  presentation of proportionate
combined selected  consolidated  financial data, although not in accordance with
US  Generally  Accepted   Accounting   Principles   ("GAAP"),   facilitates  the
understanding  and  assessment  of its operating  performance  since the Company
accounts for its interests in Birmingham Cable and Cable London under the equity
method.  Prior to March 31,  1996,  the Company  accounted  for its  interest in
Cambridge  Cable under the equity  method (see Note 4 to Selected  Financial and
Other Data on page 20).  Beginning on March 31, 1996, the financial position and
results of operations  of Cambridge  Cable were  consolidated  with those of the
Company (see Note 4 to the Company's  consolidated  financial  statements).  The
financial  position and results of operations of Teesside are consolidated  with
those of the Company.

<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                1997              1996              1995                1994               1993
                                                        (In thousands, except homes passed and subscriber information)
<S>                                        <C>                <C>                <C>                <C>                 <C>  
Statement of Operations Data:
Service income.....................(UK Pound)100,462   (UK Pound)72,061   (UK Pound)47,968   (UK Pound)30,535   (UK Pound)15,812 
                                   -----------------   ----------------   ----------------   ----------------   ----------------
Operating, selling, general
     and administrative expenses...           89,051             74,733             60,633             37,096             24,125
Depreciation and amortization .....           41,593             30,571             18,924             10,840              6,215
                                   -----------------   ----------------   ----------------   ----------------   ----------------
Operating loss ....................          (30,182)           (33,243)           (31,589)           (17,401)           (14,528)
                                   -----------------   ----------------   ----------------   ----------------   ----------------
Interest expense, net .............           20,367             15,172             10,160              3,726              1,517
                                   -----------------   ----------------   ----------------   ----------------   ----------------

Operating Companies' proportionate
     net loss .....................          (50,549)           (48,415)           (41,749)           (21,127)           (16,045)
Reconciliation to the Company's
     consolidated net loss (2) ....          (16,807)             7,840             12,787              4,861              2,862
                                   -----------------   ----------------   ----------------   ----------------   ----------------
Company's consolidated net loss....((UK Pound)67,356) ((UK Pound)40,575) ((UK Pound)28,962) ((UK Pound)16,266) ((UK Pound)13,183)
                                   =================   ================   ================   ================   ================

Other Data:
Operating income (loss) before 
 depreciation and amortization (3). (UK Pound)11,411   ((UK Pound)2,672) ((UK Pound)12,665)  ((UK Pound)6,561)  ((UK Pound)8,313)
Homes passed (5) ..................          695,786            547,942            395,635            263,837            179,000
Cable subscribers (6) .............          171,863            140,207            101,997             72,453             46,269
Telephony subscribers (7) .........          237,415            168,569            108,602             67,160             31,770
</TABLE>


See Notes to Selected Financial and Other Data on page 20.


                                     - 19 -
<PAGE>

Notes to Selected Financial and Other Data

(1)  For 1993 and 1994,  net loss per share  has been  presented  on a pro forma
     basis as if the restructuring of the Company's equity in September 1994 and
     the conversion of the redeemable  convertible  preference  shares issued in
     connection  with the  acquisition  of  Teesside  were  outstanding  for all
     periods presented.

(2)  Includes  the  effects  of  differences  between  the  Company's  ownership
     percentages in the Operating  Companies during the relevant periods and its
     ownership  percentages  as of  December  31,  1997,  as well as net  income
     (losses) of the  Company  and its  subsidiaries,  other than  Teesside  and
     Cambridge (subsequent to March 31, 1996).

(3)  Operating  income (loss) before  depreciation  and amortization is commonly
     referred to in the Company's businesses as "operating cash flow (deficit)."
     Operating  cash flow  (deficit)  is a measure  of a  company's  ability  to
     generate  cash  to  service  its   obligations,   including   debt  service
     obligations, and to finance capital and other expenditures. In part, due to
     the capital intensive nature of the Company's  businesses and the resulting
     significant  level  of  non-cash   depreciation  expense  and  amortization
     expense,  operating  cash flow  (deficit) is frequently  used as one of the
     bases for comparing  businesses in the Company's  industries,  although the
     Company's measure of operating cash flow (deficit) may not be comparable to
     similarly titled measures of other companies. Operating cash flow (deficit)
     does not purport to represent  net income or net cash provided by operating
     activities,  as those terms are defined under generally accepted accounting
     principles,  and  should  not  be  considered  as an  alternative  to  such
     measurements as an indicator of the Company's performance.

(4)  As a  result  of the  SingTel  Transaction  (see  Note  4 to the  Company's
     consolidated  financial  statements),  the Company  owns 100% of  Cambridge
     Cable and has consolidated the financial position and results of operations
     of  Cambridge  Cable  beginning  on March 31,  1996.  The 1996  results  of
     operations  information  for Cambridge  Cable is for the three months ended
     March 31, 1996.

(5)  A home is deemed "passed" if it can be connected to the distribution system
     without further extension of the transmission lines.

(6)  A dwelling  with one or more  television  sets  connected  to the system is
     counted as one Cable Subscriber.

(7)  A dwelling  with one or more  telephone  lines  connected  to the system is
     counted as one Telephony Subscriber.


                                     - 20 -
<PAGE>



ITEM 7   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

Overview

Comcast UK Cable  Partners  Limited and its  subsidiaries  (the  "Company"),  an
indirect controlled subsidiary of Comcast Corporation  ("Comcast") (see Item 5 -
"Market for the Registrant's  Common Equity and Related  Shareholder  Matters"),
was incorporated in 1992 to develop, construct, manage and operate the interests
of Comcast in the United Kingdom ("UK") cable and  telecommunications  industry.
As of December  31, 1997,  the Company has  interests  in four  operations  (the
"Operating  Companies"):   Birmingham  Cable  Corporation  Limited  ("Birmingham
Cable"),  in which the Company owns a 27.5%  interest,  Cable London PLC ("Cable
London"), in which the Company owns a 50.0% interest,  Cambridge Holding Company
Limited  ("Cambridge  Cable"), in which the Company owns a 100% interest and two
companies   holding  the  franchises   for  Darlington  and  Teesside,   England
("Teesside"),  in which the Company owns a 100%  interest.  On December 8, 1997,
the Company formed Comcast UK Holdings  Limited ("UK  Holdings") (a wholly owned
subsidiary  incorporated in Bermuda) in order to secure a financing  arrangement
to primarily  fund capital  expenditures  and working  capital  requirements  at
Cambridge Cable and Teesside (see "Liquidity and Capital Resources" below).

When build-out of the Operating  Companies'  systems is complete,  these systems
will  have the  potential  to serve  approximately  1.6  million  homes  and the
businesses  within their franchise areas. As of December 31, 1997, the Operating
Companies'  systems passed more than 1,197,000 homes or approximately 75% of the
homes in their franchise  areas and served more than 298,000 cable  subscribers,
359,000  residential   telephony   subscribers  and  11,000  business  telephony
subscribers.

The Company  accounts  for its  interests in  Birmingham  Cable and Cable London
under the equity method.  Through March 31, 1996, the Company also accounted for
its  interest  in  Cambridge  Cable  under the equity  method (see Note 4 to the
Company's consolidated financial  statements).  Collectively,  Birmingham Cable,
Cable  London  and  Cambridge  Cable  are  referred  to  herein  as the  "Equity
Investees"  (which term excludes  Cambridge  Cable as of and subsequent to March
31, 1996).

General Developments of Business

Amalgamation with NTL
See Item 1 - Business -- "General Developments of Business."

Liquidity and Capital Resources

The Company

Historically,  the Company has financed  its cash  requirements,  including  its
investments in the Equity  Investees,  through  capital  contributions  from its
shareholders,  as well as with the proceeds  from the Company's  initial  public
offering of 15.0  million of its Class A Common  Shares (net  proceeds of $209.4
million or (UK  Pound)132.6  million) in September  1994 and from the  Company's
offering  of its $517.3  million  principal  amount at  maturity  11.20%  Senior
Discount  Debentures due 2007 (the "2007 Discount  Debentures") (net proceeds of
$291.1 million or (UK Pound)186.9  million) in November 1995.  Interest accretes
on the 2007  Discount  Debentures at 11.20% per annum  compounded  semi-annually
from  November 15, 1995 to November 15, 2000,  after which date interest will be
paid in cash on each May 15 and November 15 through  November 15, 2007. The 2007
Discount  Debentures  contain  restrictive  covenants  which limit the Company's
ability to pay  dividends.  The Operating  Companies are not expected to pay any
dividends or advances in the foreseeable future.

On  December  23,  1997,  UK Holdings  entered  into a loan  agreement  (the "UK
Holdings  Agreement")  with a consortium of banks to provide  financing  under a
credit  facility  (the "UK  Holdings  Credit  Facility")  up to a maximum of (UK
Pound)200.0  million.  Under the terms of the UK Holdings Agreement,  borrowings
under the UK Holdings  Credit  Facility are guaranteed by Teesside and Cambridge
Cable (see "The Operating Companies - Cambridge Cable - Teesside").

On January 14, 1998, UK Holdings borrowed (UK Pound)75.0 million under Tranche A
of the UK Holdings Credit Facility.  Of this initial  borrowing,  (UK Pound)50.4
million was paid to the  Company as a dividend  and (UK  Pound)17.8  million was
used to fund capital  expenditures and working capital requirements at Cambridge
Cable and Teesside.

                                     - 21 -
<PAGE>

Amounts  available  under the UK Holdings  Credit  Facility will be reduced each
quarter in varying  amounts  beginning  March 31,  2000 and  continuing  through
December 31, 2000. The UK Holdings  Credit Facility bears interest at a rate per
annum equal to the London Interbank Offered Rate ("LIBOR") plus 1/2% to 2 1/4%.

The UK Holdings Credit Facility  contains  restrictive  covenants which limit UK
Holdings'  ability to enter into  arrangements  for the  acquisition and sale of
property and  equipment,  investments,  mergers and the incurrence of additional
debt.  Certain of these covenants require that certain financial ratios and cash
flow levels be maintained and contain certain restrictions on dividend payments.
The Company's right to receive  consulting fee payments from Cambridge Cable and
Teesside  has been  subordinated  to the  banks  under  the UK  Holdings  Credit
Facility. In addition,  the Company's shares in UK Holdings have been pledged to
secure the UK Holdings Credit Facility.

The consummation of the NTL Transaction  will result in a change in control,  as
defined  in the UK  Holdings  Credit  Facility.  Upon a change in  control,  all
amounts   outstanding   under  the  UK  Holdings  Credit  Facility  will  become
immediately due and payable.

Except for its  working  capital  requirements,  the  Company's  cash needs will
depend on management's investment decisions.  Investment  considerations include
(i) whether further capital  contributions will be made to the Equity Investees,
(ii) whether the Operating  Companies can obtain debt  financing,  (iii) whether
the Operating  Companies will be able to generate positive  operating cash flow,
(iv) the timing of the build-out of the Operating  Companies'  systems,  and (v)
whether  there may be future  acquisitions  and trades funded in cash or Company
shares.   There  are  no  agreements  or  negotiations  for  specific   material
acquisitions currently pending.

Historically,  the  Company  has made  investments  in the Equity  Investees  in
conjunction  with  proportionate  investments  by its  strategic  and  financial
partners.  The Company made capital  contributions and advances to the Operating
Companies in the aggregate of (UK Pound)91.1 million, (UK Pound)92.1 million and
(UK Pound)71.4  million during the years ended December 31, 1997, 1996 and 1995,
respectively.  Of these amounts,  (UK Pound)8.7 million,  (UK Pound)10.7 million
and (UK Pound)25.2  million relate to capital  contributions and advances to the
Equity  Investees  during the years  ended  December  31,  1997,  1996 and 1995,
respectively.  Although the Company is not  contractually  committed to make any
additional capital  contributions or advances to either of the Equity Investees,
it  currently  intends to fund its share of the  amounts  necessary  for capital
expenditures and to finance  operating  deficits.  Failure to do so could dilute
the Company's ownership interests in the Equity Investees.

The Company  estimates that the Operating  Companies will require  approximately
(UK  Pound)146.0  million in 1998 to continue the  build-out  of their  systems.
Management  believes that the entire (UK  Pound)146.0  million  required will be
funded through drawdowns under currently  outstanding credit facilities (subject
to compliance with certain  financial and operating  covenants).  If such credit
facilities  are not  available  for  drawdown,  the  Company  expects  that  its
strategic  and  financial  partners in the Equity  Investees  will provide their
pro-rata  share of any required  fundings,  although they are not  contractually
obligated  to do so. Thus,  no  assurance  of such funding can be given.  If the
Company's  strategic and financial partners fail to provide such financing,  the
Equity  Investees  will be required to seek  additional  funds  elsewhere.  Such
additional  funds may come from the Company,  from new  strategic  and financial
partners,  from borrowings under existing or new credit facilities or from other
sources,  although there can be no assurance  that any such  financing  would be
available on acceptable terms and conditions.  The Company and its strategic and
financial  partners  generally have veto rights over the Equity  Investees' debt
financing  decisions.  Failure  of any  Operating  Company  to obtain  financing
necessary  to complete  the  build-out of its system could result in loss of its
cable franchises and licenses.

The Company's ability to meet its long-term  liquidity and capital  requirements
is  contingent  upon the  Operating  Companies'  ability  to  generate  positive
operating  cash flow and obtain  external  financing,  although  there can be no
assurance  that any such  financing  will be  obtained on  acceptable  terms and
conditions.  The Company  believes that its existing  cash and cash  equivalents
will be sufficient  to fund the Company's  required  capital  contributions  and
advances  to  Birmingham  Cable and Cable  London  and  borrowings  under the UK
Holdings Credit Facility will be sufficient to fund development and construction
costs for Cambridge Cable and Teesside throughout 1998.

The  Company is exposed to market  risk  including  changes in foreign  currency
exchange rates. To manage the volatility relating to this exposure,  the Company
enters into various derivative  transactions  pursuant to the Company's policies
in areas such as  counterparty  exposure and hedging  practices.  Positions  are
monitored using techniques including market value and sensitivity analyses.  The
Company does not hold or issue any derivative financial  instruments for trading
purposes  and  is  not a  party  to  leveraged  instruments.  The  credit  risks
associated with the Company's  derivative  financial  instruments are controlled
through  the  evaluation  and   monitoring  of  the   creditworthiness   of  the
counterparties. Although

                                     - 22 -

<PAGE>



the  Company  may be  exposed  to losses in the event of  nonperformance  by the
counterparties,  the  Company  does  not  expect  such  losses,  if  any  to  be
significant.

The Company has entered into certain  foreign  exchange  option  contracts  ("FX
Options")  as a normal part of its foreign  currency  risk  management  efforts.
During  1995,  the Company  entered  into  certain  foreign  exchange put option
contracts  ("FX Puts") which may be settled only on November 16, 2000.  These FX
Puts are used to limit the Company's exposure to the risk that the eventual cash
outflows  related to net monetary  liabilities  denominated in currencies  other
than its functional currency (the UK Pound Sterling or "UK Pound")  (principally
the 2007  Discount  Debentures)  are  adversely  affected by changes in exchange
rates. As of December 31, 1997 and 1996, the Company had (UK Pound)250.0 million
notional  amount of FX Puts to  purchase  United  States  ("US")  dollars  at an
exchange rate of $1.35 per (UK Pound)1.00  (the "Ratio").  The FX Puts provide a
hedge,  to the  extent the  exchange  rate falls  below the Ratio,  against  the
Company's  net monetary  liabilities  denominated  in US dollars since gains and
losses  realized on the FX Puts are offset  against  foreign  exchange  gains or
losses realized on the underlying net liabilities. Premiums paid for the FX Puts
of (UK Pound)13.9 million are included in foreign exchange put options and other
in the Company's consolidated balance sheet, net of related amortization.  These
premiums  are being  amortized  over the terms of the related  contracts of five
years.  As of December 31, 1997 and 1996, the FX Puts had carrying values of (UK
Pound)8.0 million and (UK Pound)10.7 million,  respectively.  The estimated fair
value of the FX Puts was (UK Pound)3.2  million as of both December 31, 1997 and
1996. The difference between the carrying amount and the estimated fair value of
the FX Puts was not significant as of December 31, 1995.

In 1995, in order to reduce  hedging  costs,  the Company sold foreign  exchange
call option contracts ("FX Calls") to exchange (UK Pound)250.0  million notional
amount and received (UK Pound)3.4  million.  These contracts may only be settled
on their expiration dates. Of these contracts,  (UK Pound)200.0 million notional
amount, with an exchange ratio of $1.70 per (UK Pound)1.00,  expired unexercised
in November 1996 while the remaining  contract,  with a (UK  Pound)50.0  million
notional  amount  and an  exchange  ratio of  $1.62  per (UK  Pound)1.00,  has a
settlement  date in November  2000.  In the fourth  quarter of 1996, in order to
continue to reduce hedging costs,  the Company sold  additional FX Calls for (UK
Pound)2.1  million,  to exchange (UK Pound)200.0  million  notional amount at an
average  exchange ratio of $1.75 per (UK  Pound)1.00.  These  contracts  expired
unexercised in the fourth quarter of 1997. The FX Calls are  marked-to-market on
a current basis in the Company's consolidated statement of operations.

As of December 31, 1997 and 1996,  the estimated  fair value of the  liabilities
related to the FX Calls,  as  recorded  in the  Company's  consolidated  balance
sheet,  was (UK  Pound)2.7  million  and (UK  Pound)7.2  million,  respectively.
Changes  in fair  value  between  measurement  dates  relating  to the FX  Calls
resulted  in  exchange  gains of (UK  Pound)4.5  million  during  the year ended
December 31, 1997 and exchange  losses of (UK Pound)1.3  million during the year
ended December 31, 1996 in the Company's  consolidated  statement of operations.
There were not significant  exchange gains or losses relating to these contracts
for the year ended December 31, 1995.

The table set forth  below  summarizes  the fair  values and  contract  terms of
financial   instruments,   subject  to  foreign  currency  exchange  rate  risk,
maintained by the Company ((UK Pound) in millions):
<TABLE>
<CAPTION>
                                                                         Expected        Fair Value at
                                                                       Maturity 2007       12/31/97
<S>                                                                        <C>             <C>  
On Balance Sheet Financial Instruments

(UK Pound)UK Functional Currency:
     Long-term debt (denominated in $US) at accreted value...........  (UK Pound)229.2 (UK Pound)253.1
         Average interest rate.......................................            11.20%

                                                                         Expected        Fair Value at
                                                                       Maturity 2000     12/31/97 (1)

Foreign Exchange Rate Derivatives

(UK Pound)UK Functional Currency:
     FX Puts
         Contract amount.............................................  (UK Pound)250.0   (UK Pound)3.2
         Exchange rate ($US/(UK Pound)UK)............................             1.35
     FX Calls
         Contract amount.............................................   (UK Pound)50.0  ((UK Pound)2.7)
         Exchange rate ($US/(UK Pound)UK)............................             1.62
----------------
<FN>
(1) The estimated  fair value  approximates  the proceeds  (costs) to settle the
outstanding contracts.
</FN>
</TABLE>

                                     - 23 -
<PAGE>
Year 2000 Issue

The Year 2000 Issue is the result of computer  programs  being written using two
digits rather than four to define the applicable year.  Certain of the Company's
and the Operating Companies' computer programs that have date-sensitive software
may  recognize a date using "00" as the year 1900 rather than the year 2000 (the
"Year 2000 Issue").  If this situation occurs, the potential exists for computer
system  failure or  miscalculations  by  computer  programs,  which  could cause
disruption of operations.

Based on an inventory conducted in 1997, the Company and the Operating Companies
have identified  computer systems that will require  modification or replacement
so that they will properly  utilize dates beyond  December 31, 1999. The Company
presently  believes that with modifications to existing software and conversions
to new  software,  the  Year  2000  Issue  can be  mitigated.  However,  if such
modifications  and  conversions  are not made,  or are not  completed  within an
adequate  time frame,  the Year 2000 Issue  could have a material  impact on the
operations of the Company and/or the Operating Companies.

The Company and the Operating  Companies have initiated  communications with all
of their significant  software  suppliers and service bureaus to determine their
plans for remediating the Year 2000 Issue in their software which the Company or
the Operating Companies use or rely upon. The Company's estimate to complete the
remediation plan includes the estimated time associated with mitigating the Year
2000 Issue for third party software. However, there can be no guarantee that the
systems of other companies on which the Company or the Operating  Companies rely
will be  converted  on a timely  basis,  or that a failure to convert by another
company  would not have  material  adverse  effect  on the  Company  and/or  the
Operating Companies.

The Company  and the  Operating  Companies  continue  to use both  internal  and
external   resources  to  reprogram  or  replace  the  software  for  Year  2000
modifications.  Management  of the Company  will also  continue to  periodically
report the progress of its Year 2000  remediation plan to the Audit Committee of
the Company's board of directors.  The Company and the Operating  Companies plan
to complete the Year 2000 mitigation in 1999. The costs directly attributable to
the Year 2000 Issue are not expected to have a material  effect on the Company's
or the Operating Companies' results of operations.

The costs of the project  and the date on which the  Company  and the  Operating
Companies  plan to complete the Year 2000  modifications  and  replacements  are
based on management's  best estimates,  which were derived using  assumptions of
future  events  including  the  continued  availability  of  resources  and  the
reliability  of  third  party  modification  plans.  However,  there  can  be no
guarantee that these  estimates will be achieved and actual results could differ
materially  from those plans.  Specific  factors that might cause such  material
differences  include,  but are not  limited  to,  the  availability  and cost of
personnel with appropriate  necessary skills,  the ability to locate and correct
all relevant computer code and similar uncertainties.

The Operating Companies

The following is a discussion of the liquidity and capital  resources of each of
the Operating  Companies.  Such financial  information has not been adjusted for
the Company's proportionate ownership percentages in the Operating Companies.

Birmingham Cable.  Historically,  Birmingham  Cable's primary sources of funding
have been  capital  contributions  and loans from the Company and the  Company's
strategic  and  financial  partners,  and cash from the  issuance of  Birmingham
Cable's preference shares (see below).

In February 1995, a subsidiary of Birmingham Cable issued 175,000 cumulative (UK
Pound)1.00  redeemable five year term  preference  shares for a paid up value of
(UK Pound)175.0 million.  Also in February 1995, Birmingham Cable entered into a
(UK Pound)175.0  million five year revolving  credit  facility (the  "Birmingham
Facility") which provided for conversion into a five year term loan on March 31,
2000. In March 1997, the terms of the Birmingham Facility were amended to extend
the  maturity  of the term loan to December  31, 2005 and to amend the  required
cash flow levels (as defined) and certain  other  terms.  Interest  rates on the
Birmingham Facility are at LIBOR plus 5/8% to 2 1/4%.

In July  1997,  the  preference  shareholder  exercised  its  option to  require
Birmingham  Cable to purchase  its  shareholding.  Birmingham  Cable  funded the
redemption  of the  preference  shares  with the  proceeds  from the  Birmingham
Facility and restricted cash and settled its five year (UK  Pound)175.0  million
interest  rate  exchange  agreement  with  Barclays Bank PLC. The balance of the
Birmingham Facility will be used, subject to certain  restrictions,  for capital
expenditures and working capital  requirements  relating to the build-out of its
systems.

                                     - 24 -
<PAGE>
The Birmingham  Facility contains  restrictive  covenants which limit Birmingham
Cable's  ability  to enter into  arrangements  for the  acquisition  and sale of
property and  equipment,  investments,  mergers and the incurrence of additional
debt.   Certain  of  these   covenants   require  that  certain   minimum  build
requirements,  financial  ratios and cash flow levels be maintained  and contain
restrictions   on  dividend   payments.   Birmingham   Cable's  three  principal
shareholders'  (including the Company) right to receive  consulting fee payments
from  Birmingham  Cable has been  subordinated to the banks under the Birmingham
Facility.  The payment of consulting fees is restricted  until  Birmingham Cable
meets certain  financial ratio tests under the Birmingham  Facility.  Birmingham
Cable  has  pledged  the  shares of its  material  subsidiaries  to  secure  the
Birmingham  Facility.  Upon a change  of  control,  all  amounts  due  under the
Birmingham Facility become immediately due and payable.  The consummation of the
NTL  Transaction  will not  result  in a change of  control  as  defined  in the
Birmingham Facility.

Birmingham  Cable enters into interest rate exchange  agreements  ("Swaps") as a
normal  part of its risk  management  efforts to limit its  exposure  to adverse
fluctuations  in  interest  rates.  Using  Swaps,  Birmingham  Cable  agrees  to
exchange,  at specified  intervals,  the  difference  between fixed and variable
interest amounts  calculated by reference to an agreed upon notional amount.  In
conjunction with the Birmingham  Facility,  a subsidiary of Birmingham Cable and
Barclays Bank PLC entered into a five year (UK Pound)175.0 million Swap, whereby
the subsidiary receives fixed interest at a rate of 8.83% and pays floating rate
interest at the six month LIBOR. The (UK Pound)175.0 million Swap was settled in
July 1997 along  with  redemption  of the  preference  shares  (see  above).  In
addition,  a subsidiary of Birmingham Cable entered into a second series of five
year Swaps with three banks.  Under the  agreements,  the subsidiary  pays fixed
rate  interest at 9.20% and receives  floating rate interest at six month LIBOR,
based upon the outstanding notional amount of the Swaps. As of December 31, 1997
and 1996, the notional amount  outstanding on the second series of Swaps was (UK
Pound)149.0 million and (UK Pound)106.0 million,  respectively, and increased to
(UK  Pound)160.0  million on January 2, 1998.  While Swaps represent an integral
part  of  Birmingham  Cable's  interest  rate  risk  management  program,  their
incremental  effect on interest  expense for the years ended  December 31, 1997,
1996 and 1995 was not significant.

The Company estimates that approximately (UK Pound)22.0 million will be required
in  1998  to  continue   development  and  construction  of  Birmingham  Cable's
cable/telephony network. The Company expects that such funds will be provided by
borrowings under the Birmingham Facility.

Cable London. Historically,  Cable London's primary sources of funding have been
capital contributions and loans from the Company and the Company's strategic and
financial  partner.  In June 1995,  Cable London  entered into a (UK  Pound)60.0
million revolving credit facility (the "London Facility") with various banks. In
April 1997, the amount  available under the London Facility was increased to (UK
Pound)65.0  million.  In May 1997,  Cable London entered into a (UK  Pound)170.0
million  revolving  credit facility (the "London  Revolver") with various banks,
which  converts into a five year term loan on June 30, 2001.  Interest  rates on
the London Revolver are at LIBOR plus 1/2% to 2 3/8%. In May 1997,  Cable London
repaid all amounts  outstanding  under the London  Facility  with  proceeds from
borrowings under the London Revolver. The balance of the London Revolver will be
used,  subject to certain  restrictions,  for capital  expenditures  and working
capital requirements relating to the build-out of its systems.

The London Revolver  contains  restrictive  covenants which limit Cable London's
ability to enter into  arrangements for the acquisition and sale of property and
equipment,  investments,  mergers and the incurrence of additional debt. Certain
of these covenants require that certain financial ratios and cash flow levels be
maintained and contain certain restrictions on dividend payments.  The Company's
right to receive consulting fee payments from Cable London has been subordinated
to the banks  under the  London  Revolver.  The  payment of  consulting  fees is
restricted  until Cable London  meets  certain  financial  ratio tests under the
London  Revolver.  In addition,  the Company's  shares in Cable London have been
pledged to secure the London Revolver. Upon a change of control, all amounts due
under the London Revolver become  immediately due and payable.  The consummation
of the NTL Transaction  will not result in a change of control as defined in the
London Revolver.

Cable London enters into Swaps and interest rate collar  agreements  ("Collars")
as a normal part of its risk management efforts to limit its exposure to adverse
fluctuations in interest rates. Using Swaps, Cable London agrees to exchange, at
specified intervals,  the difference between fixed and variable interest amounts
calculated by reference to an agreed upon notional  amount.  Collars limit Cable
London's  exposure to and benefits from interest rate  fluctuations  on variable
rate debt to within a certain  range of  interest  rates.  In June  1997,  Cable
London entered into a series of four year interest Swaps with three banks. Under
the  agreements,  Cable  London pays fixed rate  interest at 7.34% and  receives
floating rate interest at three month LIBOR, based upon the outstanding notional
amount of the Swaps. As of December 31, 1997, the notional amount outstanding on
the Swaps was (UK Pound)44.5  million and increased to (UK Pound)49.5 million on
January 7, 1998.  Also in June 1997,  Cable  London  entered into a Collar which
limits the interest rate on the notional amount to between 6%

                                     - 25 -
<PAGE>

and 9%. As of December 31, 1997, the notional  amount  outstanding on the Collar
was (UK Pound)22.3 million and increased to (UK Pound)24.8 million on January 7,
1998.  While Swaps and Collars  represent  an  integral  part of Cable  London's
interest rate risk  management  program,  their  incremental  effect on interest
expense for the year ended December 31, 1997 was not significant.

The Company estimates that approximately (UK Pound)38.0 million will be required
in  1998  to  continue   development   and   construction   of  Cable   London's
cable/telephony network. The Company expects that such funds will be provided by
borrowings under the London Revolver.

Cambridge Cable.  Prior to the SingTel  Transaction (see Note 4 to the Company's
consolidated financial statements), Cambridge Cable's primary sources of funding
have been  capital  contributions  and loans from the Company and the  Company's
strategic and financial  partner.  The Company estimates that  approximately (UK
Pound)41.0  million  will  be  required  in  1998 to  continue  development  and
construction of Cambridge Cable's  cable/telephony  network. The Company expects
that such funds will be provided  by  borrowings  under the UK  Holdings  Credit
Facility.

Teesside.  Historically,  Teesside's  primary source of funding has been capital
contributions  from the Company.  The Company  estimates that  approximately (UK
Pound)45.0  million  will  be  required  in  1998 to  continue  development  and
construction  of Teesside's  cable/telephony  network.  The Company expects that
such funds will be provided by borrowings under the UK Holdings Credit Facility.

Statement of Cash Flows

Cash and cash  equivalents  decreased (UK Pound)25.9  million as of December 31,
1997 from December 31, 1996, decreased (UK Pound)98.9 million as of December 31,
1996 from December 31, 1995 and increased (UK Pound)62.1  million as of December
31, 1995 from December 31, 1994.  Changes in cash and cash equivalents  resulted
from cash flows from  operating,  financing and investing  activities  which are
explained below.

Net cash  provided by (used in) operating  activities  amounted to (UK Pound)5.7
million,  ((UK  Pound)3.0)  million  and (UK  Pound)491,000  for the years ended
December 31, 1997, 1996 and 1995, respectively.  The change in net cash provided
by (used in) operating activities in 1997 as compared to 1996 is principally due
to the  increase in the  Company's  operating  income  before  depreciation  and
amortization  and  changes  in  working  capital  as a result  of the  timing of
receipts  and  disbursements.  The  changes  in net cash  provided  by (used in)
operating  activities  in 1996 and 1995 are due  primarily to changes in working
capital as a result of the timing of receipts and disbursements.

Net cash  (used  in)  provided  by  financing  activities,  which  includes  the
issuances of securities as well as borrowings,  was ((UK Pound)1.6) million, (UK
Pound)414,000 and (UK Pound)176.0 million for the years ended December 31, 1997,
1996 and 1995,  respectively.  During 1995, the Company received proceeds of (UK
Pound)192.5  million  in  connection  with its  offering  of the  2007  Discount
Debentures  and paid premiums of (UK Pound)13.9  million in connection  with the
purchase of the FX Puts.

Net cash used in investing activities was (UK Pound)30.0 million, (UK Pound)96.3
million and (UK Pound)114.3 million for the years ended December 31, 1997, 1996,
and 1995,  respectively.  During  1997,  net cash used in  investing  activities
includes   capital   expenditures   of  (UK   Pound)82.1   million  and  capital
contributions  and  loans to  affiliates  of (UK  Pound)8.7  million,  offset by
proceeds from the sales of short-term  investments  of (UK  Pound)61.5  million.
During 1996, net cash used in investing  activities  includes the acquisition of
Cambridge  Cable  of (UK  Pound)10.4  million,  net of  cash  acquired,  capital
expenditures of (UK Pound)70.6  million and capital  contributions  and loans to
affiliates of (UK  Pound)10.7  million.  During 1995, net cash used in investing
activities  includes  capital  expenditures of (UK Pound)45.3  million,  capital
contributions and loans to affiliates of (UK Pound)25.8 million and purchases of
short-term investments of (UK Pound)43.1 million.


                                     - 26 -

<PAGE>

Results of Operations

The Company

Summarized  consolidated  financial  information  for the  Company for the three
years  ended  December  31,  1997 is as  follows  (in  thousands,  "NM"  denotes
percentage is not meaningful):
<TABLE>
<CAPTION>
                                                                      Year Ended
                                                                     December 31,                     Increase/(Decrease)
                                                                 1997           1996            (UK Pound)             %
<S>                                                          <C>                <C>                <C>             <C> 
Revenues                                              (UK Pound)56,662   (UK Pound)32,428  (UK Pound)24,234           74.7%
Operating, selling, general and administrative expenses         50,474             37,284            13,190           35.4
Management fees                                                  3,204              2,997               207            6.9
                                                     ------------------ ------------------
Operating income (loss) before depreciation and
   amortization (1)                                              2,984             (7,853)           10,837             NM
Depreciation and amortization                                   25,588             16,700             8,888           53.2
                                                     ------------------ ------------------
Operating loss                                                 (22,604)           (24,553)           (1,949)          (7.9)
                                                     ------------------ ------------------
Interest expense                                                25,243             23,627             1,616            6.8
Investment income                                               (7,259)           (12,555)           (5,296)         (42.2)
Equity in net losses of affiliates                              21,359             18,432             2,927           15.9
Exchange losses (gains) and other                                5,409            (13,482)           18,891             NM
                                                     ------------------ ------------------
Net loss                                             ((UK Pound)67,356) ((UK Pound)40,575) (UK Pound)26,781          66.0%
                                                     ================== ==================

                                                                      Year Ended
                                                                     December 31,                     Increase/(Decrease)
                                                                 1996           1995            (UK Pound)             %
Revenues                                              (UK Pound)32,428    (UK Pound)2,843   (UK Pound)29,585          NM
Operating, selling, general and administrative expenses         37,284              8,498             28,786          NM
Management fees                                                  2,997              3,105               (108)       (3.5)
                                                     ------------------ ------------------
Operating loss before depreciation and
   amortization (1)                                             (7,853)            (8,760)              (907)      (10.4)
Depreciation and amortization                                   16,700              3,049             13,651          NM
                                                     ------------------ ------------------
Operating loss                                                 (24,553)           (11,809)            12,744          NM
                                                     ------------------ ------------------
Interest expense                                                23,627              3,539             20,088          NM
Investment income                                              (12,555)           (11,758)               797         6.8
Equity in net losses of affiliates                              18,432             23,677             (5,245)      (22.2)
Exchange (gains) losses and other                              (13,482)             1,695            (15,177)         NM
                                                     ------------------ ------------------
Net loss                                             ((UK Pound)40,575) ((UK Pound)28,962)  (UK Pound)11,613        40.1%
                                                     ================== ==================
<FN>
------------
(1)  Operating  income (loss) before  depreciation  and amortization is commonly
     referred to in the Company's businesses as "operating cash flow (deficit)."
     Operating  cash flow  (deficit)  is a measure  of a  company's  ability  to
     generate  cash  to  service  its   obligations,   including   debt  service
     obligations, and to finance capital and other expenditures.  In part due to
     the capital intensive nature of the Company's  businesses and the resulting
     significant  level  of  non-cash   depreciation  expense  and  amortization
     expense,  operating  cash flow  (deficit) is frequently  used as one of the
     bases for comparing  businesses in the Company's  industries,  although the
     Company's measure of operating cash flow (deficit) may not be comparable to
     similarly titled measures of other companies. Operating cash flow (deficit)
     does not purport to represent  net income or net cash provided by operating
     activities,  as those terms are defined under generally accepted accounting
     principles,  and  should  not  be  considered  as an  alternative  to  such
     measurements as an indicator of the Company's  performance.  See "Statement
     of Cash Flows"  above for a  discussion  of net cash  provided by (used in)
     operating activities.
</FN>
</TABLE>

The Company  recognized  net losses of (UK  Pound)67.4  million,  (UK Pound)40.6
million and (UK Pound)29.0  million for the years ended December 31, 1997,  1996
and 1995,  respectively,  representing  increases of (UK Pound)26.8 million from
1996 to 1997 and (UK  Pound)11.6  million from 1995 to 1996. The increase in the
Company's  net  loss  from  1996 to 1997 is due to the  effects  of the  SingTel
Transaction  which resulted in the consolidation of the results of operations of
Cambridge Cable beginning on March 31, 1996,  decreases in investment income due
to the effects of lower average cash, cash equivalents and short-term investment

                                     - 27 -

<PAGE>
balances,  the impact of  fluctuations  in the  valuation of the UK Pound on the
2007 Discount  Debentures,  which are denominated in US Dollars, and the Company
recognizing its  proportionate  share of the Equity  Investees' net losses.  The
increase in the Company's net loss from 1995 to 1996 is due to interest  expense
on the 2007 Discount Debentures,  the effects of the continuing  construction of
Teesside's cable/telephony network and the effects of the SingTel Transaction.

Substantially  all of the  increases  in  service  income,  operating  expenses,
selling,  general and administrative expenses, and depreciation and amortization
expense  from 1996 to 1997 and 1995 to 1996 are  attributable  to the effects of
the  SingTel  Transaction  and  the  effects  of the  continued  development  of
Teesside's  and Cambridge  Cable's  operations and increased  business  activity
resulting  from the  growth in the  number of  subscribers  in their  respective
franchise areas.

Comcast U.K.  Consulting,  Inc. ("UK Consulting"),  a wholly owned subsidiary of
the Company,  earns consulting fee income under  consulting  agreements with the
Equity  Investees.  The consulting fee income is generally based on a percentage
of gross  revenues or a fixed amount per dwelling unit in the Equity  Investees'
franchise areas.

Management fee expense is incurred under  agreements  between the Company on the
one hand, and Comcast and Comcast UK Cable Partners  Consulting,  Inc. ("Comcast
Consulting"),  an indirect  wholly owned  subsidiary  of Comcast,  on the other,
whereby Comcast and Comcast Consulting provide consulting services to the Equity
Investees on behalf of the Company and management services to the Company.  Such
management  fees  are  based  on  Comcast's  and  Comcast  Consulting's  cost of
providing such services.

Interest  expense for the years ended  December 31, 1997,  1996 and 1995 was (UK
Pound)25.2   million,   (UK  Pound)23.6   million  and  (UK  Pound)3.5  million,
respectively,  representing increases of (UK Pound)1.6 million from 1996 to 1997
and (UK Pound)20.1  million from 1995 to 1996. The increase from 1996 to 1997 is
primarily  attributable  to the  compounding  of interest  on the 2007  Discount
Debentures and the effects of foreign currency exchange rate  fluctuations.  The
increase from 1995 to 1996 is primarily  attributable to interest expense on the
2007 Discount Debentures issued in November 1995.

Investment  income for the years ended December 31, 1997,  1996 and 1995 was (UK
Pound)7.3  million,   (UK  Pound)12.6   million  and  (UK  Pound)11.8   million,
respectively, representing a decrease of (UK Pound)5.3 million from 1996 to 1997
and an increase of (UK  Pound)797,000  from 1995 to 1996. The decrease from 1996
to 1997 is  primarily  attributable  to  decreases  in the  average  cash,  cash
equivalents and short-term  investments balances held by the Company during 1997
as compared to 1996 and the effects of the  SingTel  Transaction.  The  increase
from 1995 to 1996 is primarily attributable to the increase in the average cash,
cash equivalents and short-term  investments balances held by the Company during
1996 as  compared  to 1995,  primarily  as a  result  of the  proceeds  from the
offering of the 2007 Discount  Debentures in November 1995 and the proceeds from
the Company's initial public offering in September 1994.

Equity in net losses of affiliates for the years ended  December 31, 1997,  1996
and 1995 was (UK Pound)21.4  million,  (UK Pound)18.4 million and (UK Pound)23.7
million,  respectively,  representing an increase of (UK Pound)3.0  million from
1996 to 1997 and a decrease  of (UK  Pound)5.3  million  from 1995 to 1996.  The
increase  from 1996 to 1997 is  attributable  to  increases in the net losses of
Birmingham  Cable  and  Cable  London,  offset  by the  effects  of the  SingTel
Transaction. The decrease from 1995 to 1996 is attributable to the consolidation
of Cambridge Cable effective March 31, 1996,  partially offset by the effects of
increases in the net losses of Birmingham Cable and Cable London.

Exchange  losses (gains) and other for the years ended  December 31, 1997,  1996
and 1995 were (UK Pound)5.4 million,  ((UK Pound)13.5) million and (UK Pound)1.7
million, respectively,  representing changes of (UK Pound)18.9 million from 1996
to 1997 and (UK Pound)15.2  million from 1995 to 1996.  These changes  primarily
result from the impact of  fluctuations  in the valuation of the UK Pound on the
2007  Discount  Debentures,  which are  denominated  in US  Dollars,  and on the
Company's  FX Calls and on cash held in US  Dollars.  The  Company's  results of
operations will continue to be affected by exchange rate fluctuations.


                                     - 28 -
<PAGE>

The Operating Companies

Summarized  proportionate  combined  financial  information  for  the  Operating
Companies  for the  three  years  ended  December  31,  1997 is as  follows  (in
thousands, "NM" denotes percentage is not meaningful):
<TABLE>
<CAPTION>
                                                                      Year Ended
                                                                     December 31,                 Increase/(Decrease)
                                                                1997               1996       (UK Pound)            %
<S>                                                          <C>                <C>               <C>           <C> 
Service income                                       (UK Pound)100,462   (UK Pound)72,061  (UK Pound)28,401        39.4%
Operating, selling, general and administrative 
   expenses                                                     89,051             74,733            14,318        19.2
                                                     -----------------  -----------------
Operating income (loss) before depreciation and
   amortization (a)                                             11,411             (2,672)           14,083         NM
Depreciation and amortization                                   41,593             30,571            11,022        36.1
                                                     -----------------  -----------------
Operating loss                                                 (30,182)           (33,243)           (3,061)       (9.2)
                                                     -----------------  -----------------
Interest expense                                                21,644             18,023             3,621        20.1
Investment income                                               (1,277)            (2,851)           (1,574)      (55.2)
                                                     -----------------  -----------------
Net loss                                             ((UK Pound)50,549) ((UK Pound)48,415)  (UK Pound)2,134         4.4%
                                                     =================  =================

                                                                      Year Ended
                                                                     December 31,                 Increase/(Decrease)
                                                                1996               1995       (UK Pound)            %
Service income                                        (UK Pound)72,061   (UK Pound)47,968  (UK Pound)24,093        50.2%
Operating, selling, general and administrative 
   expenses                                                     74,733             60,633            14,100        23.3
                                                     -----------------  -----------------
Operating loss before depreciation and
   amortization (a)                                             (2,672)           (12,665)           (9,993)      (78.9)
Depreciation and amortization                                   30,571             18,924            11,647        61.5
                                                     -----------------  -----------------
Operating loss                                                 (33,243)           (31,589)            1,654         5.2
                                                     -----------------  -----------------
Interest expense                                                18,023             13,807             4,216        30.5
Investment income                                               (2,851)            (3,647)             (796)      (21.8)
                                                     -----------------  -----------------
Net loss                                             ((UK Pound)48,415) ((UK Pound)41,749)  (UK Pound)6,666        16.0%
                                                     =================  =================
-------------
<FN>
(a) - See Note (1) on page 27.
</FN>
</TABLE>

Due to the similar nature of their  operations,  the following  discussion  with
respect to the Operating  Companies'  results of operations  for the years ended
December  31,  1997,  1996 and 1995 is  based  on their  proportionate  combined
results of operations.  Such  proportionate  combined results of operations have
been  derived  from the  financial  statements  of the  Company  and the  Equity
Investees,  after giving effect to the Company's  ownership interests in each of
the  Operating  Companies  as of December 31, 1997.  The Company  believes  that
presentation  of  proportionate   combined  financial  data,   although  not  in
accordance  with  generally  accepted  accounting  principles,  facilitates  the
understanding  and  assessment  of its operating  performance  since the Company
accounts for its interests in Birmingham Cable, Cable London and Cambridge Cable
(through March 31, 1996) under the equity  method.  The results of operations of
Teesside and Cambridge  Cable  (subsequent  to March 31, 1996) are  consolidated
with those of the Company.

Proportionate   combined  service  income  was  (UK  Pound)100.5   million,  (UK
Pound)72.1  million and (UK Pound)48.0  million for the years ended December 31,
1997,  1996 and 1995,  respectively,  representing  increases of (UK  Pound)28.4
million  from  1996 to 1997  and  (UK  Pound)24.1  million  from  1995 to  1996.
Substantially  all of the growth in service  income during these periods was due
to increases in the number of cable  communications  and telephony  subscribers,
primarily as a result of additional homes passed.  Approximately one-half of the
Operating  Companies' service income for the years ended December 31, 1997, 1996
and 1995 is derived from monthly subscription charges and approximately one-half
of their service income for these periods is derived from usage charges.

Proportionate combined operating,  selling,  general and administrative expenses
were (UK Pound)89.0  million,  (UK Pound)74.7 million and (UK Pound)60.6 million
for the years ended December 31, 1997, 1996 and 1995, respectively, representing
increases of (UK Pound)14.3 million from 1996 to 1997 and (UK Pound)14.1 million
from 1995 to 1996.  Substantially  all of the increases were attributable to the
continued  development  of  Teesside's  and  Cambridge  Cable's  operations  and
increased  business  activity  resulting  from  the  growth  in  the  number  of
subscribers and development of the Operating Companies' franchise areas.

                                     - 29 -
<PAGE>

The  Operating  Companies  account  for costs  and  expenses  applicable  to the
construction and operation of their cable  telecommunications  systems under the
provisions  of  Statement  of Financial  Accounting  Standards  ("SFAS") No. 51,
"Financial  Reporting by Cable Television  Companies." Under SFAS No. 51, during
the period  while a system is  partially  under  construction  and  partially in
service (the "Prematurity Period"), costs of telecommunications plant, including
materials,   direct   labor   and   construction   overhead   are   capitalized.
Subscriber-related  costs and general and  administrative  costs are expensed as
incurred.  Costs incurred in anticipation of servicing a fully operating  system
that  will not vary  regardless  of the  number  of  subscribers  are  partially
expensed and partially  capitalized  based upon the percentage of average actual
or  estimated  subscribers,  whichever  is  greater,  to  the  total  number  of
subscribers  expected at the end of the  Prematurity  Period  (the  "Fraction").
During the Prematurity Period, depreciation and amortization of system assets is
determined  by  multiplying  the  depreciation  and  amortization  of the  total
capitalized  system assets expected at the end of the Prematurity  Period by the
Fraction. At the end of the Prematurity Period, depreciation and amortization of
system assets is based on the remaining undepreciated cost at that date.

Proportionate  combined depreciation and amortization expense was (UK Pound)41.6
million,  (UK Pound)30.6  million and (UK Pound)18.9 million for the years ended
December 31, 1997, 1996 and 1995,  respectively,  representing  increases of (UK
Pound)11.0  million  from 1996 to 1997 and (UK  Pound)11.7  million from 1995 to
1996. These increases were due to certain of the Operating  Companies'  discrete
build areas  ending their  Prematurity  Periods as set out under SFAS No. 51, as
well as an increase in the percentage used to calculate  depreciation expense as
a result of an increased number of subscribers in those discrete franchise areas
remaining in their Prematurity Period.

Proportionate   combined  interest  expense  was  (UK  Pound)21.6  million,  (UK
Pound)18.0  million and (UK Pound)13.8  million for the years ended December 31,
1997,  1996 and 1995,  respectively,  representing  increases  of (UK  Pound)3.6
million  from 1996 to 1997 and (UK  Pound)4.2  million  from  1995 to 1996.  The
increases were primarily  attributable to additional loans from shareholders and
borrowings under credit facilities.

Proportionate   combined  investment  income  was  (UK  Pound)1.3  million,  (UK
Pound)2.9  million and (UK  Pound)3.6  million for the years ended  December 31,
1997,  1996 and 1995,  respectively,  representing  decreases  of (UK  Pound)1.6
million from 1996 to 1997 and (UK Pound)796,000 from 1995 to 1996. The decreases
were  attributable  to a decrease  in the average  cash,  cash  equivalents  and
restricted cash balances held by the Operating  Companies  during the respective
periods.


                                     - 30 -

<PAGE>



ITEM 8   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareholders
Comcast UK Cable Partners Limited

We have audited the accompanying  consolidated balance sheet of Comcast UK Cable
Partners  Limited (a company  incorporated  in Bermuda) and  subsidiaries  as of
December  31,  1997  and  1996,  and  the  related  consolidated  statements  of
operations,  shareholders'  equity and of cash flows for each of the three years
in the period ended  December  31,  1997.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion,  such consolidated  financial  statements present fairly, in all
material  respects,  the financial position of Comcast UK Cable Partners Limited
and  subsidiaries  as of December  31,  1997 and 1996,  and the results of their
operations  and their cash flows for each of the three years in the period ended
December 31, 1997 in conformity with accounting principles generally accepted in
the United States of America.




Deloitte & Touche LLP

Philadelphia, Pennsylvania
February 27, 1998


                                     - 31 -

<PAGE>



COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
(in (UK Pound)000's, except share data)
<TABLE>
<CAPTION>
                                                                               December 31,
                                                                         1997                  1996
<S>                                                                   <C>                  <C>   
ASSETS

CURRENT ASSETS
    Cash and cash equivalents ..................................(UK Pound)37,372     (UK Pound)63,314
    Short-term investments .....................................                               61,466
    Accounts receivable, less allowance for doubtful accounts
       of (UK Pound)2,598 and (UK Pound)1,338 ..................           4,255                2,922
    Other current assets .......................................           5,419                5,359
                                                               -----------------    -----------------
       Total current assets ....................................          47,046              133,061
                                                               -----------------    -----------------

INVESTMENTS IN AFFILIATES ......................................          61,363               69,472
                                                               -----------------    -----------------

PROPERTY AND EQUIPMENT .........................................         315,702              232,112
    Accumulated depreciation ...................................         (33,000)             (13,765)
                                                               -----------------    -----------------
    Property and equipment, net ................................         282,702              218,347
                                                               -----------------    -----------------

DEFERRED CHARGES ...............................................          60,770               60,867
    Accumulated amortization ...................................         (13,985)              (8,379)
                                                               -----------------    -----------------
    Deferred charges, net ......................................          46,785               52,488
                                                               -----------------    -----------------

FOREIGN EXCHANGE PUT OPTIONS AND OTHER, net ....................           7,958               11,002
                                                               -----------------    -----------------

                                                               (UK Pound)445,854    (UK Pound)484,370
                                                               =================    =================
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
    Accounts payable and accrued expenses ......................(UK Pound)23,605     (UK Pound)23,086
    Current portion of long-term debt ..........................           1,683                1,463
    Foreign exchange call options ..............................                                4,086
    Due to affiliates ..........................................             920                  676
                                                               -----------------    -----------------
       Total current liabilities ...............................          26,208               29,311
                                                               -----------------    -----------------

LONG-TERM DEBT, less current portion ...........................         234,010              202,626
                                                               -----------------    -----------------

FOREIGN EXCHANGE CALL OPTIONS ..................................           2,688                3,079
                                                               -----------------    -----------------

LONG-TERM DEBT, due to shareholder .............................          11,272               10,322
                                                               -----------------    -----------------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
    Preferred shares, (UK Pound).01 par value - authorized, 
        10,000,000 shares; issued none
    Class A common shares, (UK Pound).01 par value - authorized,
        50,000,000 shares; issued, 37,231,997 ...................            372                  372
    Class B common shares, (UK Pound).01 par value - authorized,
        50,000,000 shares; issued, 12,872,605 ..................             129                  129
    Additional capital .........................................         358,548              358,548
    Accumulated deficit ........................................        (187,373)            (120,017)
                                                               -----------------    -----------------
       Total shareholders' equity ..............................         171,676              239,032
                                                               -----------------    -----------------
                                                               (UK Pound)445,854    (UK Pound)484,370
                                                               =================    =================
</TABLE>

See notes to consolidated financial statements

                                     - 32 -
<PAGE>

COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in (UK Pound)000's, except per share data)
<TABLE>
<CAPTION>
                                                                              Year Ended December 31,
                                                                      1997             1996              1995
REVENUES
<S>                                                           <C>                <C>                 <C>  
   Service income......................................... (UK Pound)55,603   (UK Pound)31,358    (UK Pound)1,530
   Consulting fee income..................................            1,059              1,070              1,313
                                                           ----------------   ----------------    ---------------
                                                                     56,662             32,428              2,843
                                                           ----------------   ----------------    ---------------
COSTS AND EXPENSES
   Operating..............................................           19,624             12,211                683
   Selling, general and administrative....................           30,850             25,073              7,815
   Management fees........................................            3,204              2,997              3,105
   Depreciation and amortization..........................           25,588             16,700              3,049
                                                           ----------------   ----------------    ---------------
                                                                     79,266             56,981             14,652
                                                           ----------------   ----------------    ---------------

OPERATING LOSS............................................          (22,604)           (24,553)           (11,809)

OTHER (INCOME) EXPENSE
   Interest expense.......................................           25,243             23,627              3,539
   Investment income......................................           (7,259)           (12,555)           (11,758)
   Equity in net losses of affiliates.....................           21,359             18,432             23,677
   Exchange losses (gains) and other......................            5,409            (13,482)             1,695
                                                           ----------------   ----------------    ---------------
                                                                     44,752             16,022             17,153
                                                           ----------------   ----------------    ---------------

NET LOSS..................................................((UK Pound)67,356) ((UK Pound)40,575) ((UK Pound)28,962)
                                                          =================  =================  =================

NET LOSS PER SHARE........................................  ((UK Pound)1.34)    ((UK Pound).84)    ((UK Pound).70)
                                                          =================  =================  =================

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
   OUTSTANDING............................................           50,105             48,216             41,245
                                                          =================  =================  =================
</TABLE>

See notes to consolidated financial statements.

                                     - 33 -
<PAGE>
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS
(in (UK Pound)000's)
<TABLE>
<CAPTION>
                                                                              Year Ended December 31,
                                                                      1997             1996              1995
<S>                                                                  <C>                <C>                 <C>  
OPERATING ACTIVITIES
   Net loss...............................................((UK Pound)67,356) ((UK Pound)40,575) ((UK Pound)28,962)
   Adjustments to reconcile net loss to net cash provided
    by (used in) operating activities:
     Depreciation and amortization........................           25,588             16,700              3,049
     Amortization on foreign exchange contracts...........            2,770              2,752                (75)
     Non-cash interest expense............................           24,684             23,209              3,539
     Non-cash investment income...........................           (2,521)            (2,854)            (5,016)
     Exchange losses (gains)..............................            2,852            (18,857)               944
     Equity in net losses of affiliates...................           21,359             18,432             23,677
     Other................................................              991               (199)               619
                                                          -----------------  -----------------  -----------------
                                                                      8,367             (1,392)            (2,225)

     Increase in accounts receivable, other
       current assets and other...........................           (3,447)            (1,154)            (2,658)
     Increase in accounts payable and accrued expenses....              519              1,045             10,002
     Increase (decrease) in due to affiliates.............              244             (1,548)            (4,628)
                                                          -----------------  -----------------  -----------------

         Net cash provided by (used in) operating
                activities................................            5,683             (3,049)               491
                                                          -----------------  -----------------  -----------------

FINANCING ACTIVITIES
   Proceeds from borrowings...............................                                                192,542
   Repayments of debt.....................................           (1,633)            (1,711)
   Debt acquisition costs.................................                                                 (6,089)
   Purchase of foreign exchange put options...............                                                (13,855)
   Proceeds from sales of foreign exchange call options...                               2,125              3,415
   Other..................................................                                                    (53)
                                                          -----------------  -----------------  -----------------
         Net cash (used in) provided by financing
                activities................................           (1,633)               414            175,960
                                                          -----------------  -----------------  -----------------

INVESTING ACTIVITIES
   Acquisition, net of cash acquired......................                             (10,373)
   Proceeds from sales (purchases) of short-term 
     investments, net.....................................           61,466             (4,226)           (43,141)
   Capital contributions and loans to affiliates..........           (8,713)           (10,667)           (25,829)
   Capital expenditures...................................          (82,125)           (70,624)           (45,308)
   Additions to deferred charges..........................             (620)              (392)               (59)
                                                          -----------------  -----------------  -----------------

         Net cash used in investing activities............          (29,992)           (96,282)          (114,337)
                                                          -----------------  -----------------  -----------------

(DECREASE) INCREASE IN CASH AND CASH
   EQUIVALENTS............................................          (25,942)           (98,917)            62,114

CASH AND CASH EQUIVALENTS, beginning of year..............           63,314            162,231            100,117
                                                          -----------------  -----------------  -----------------

CASH AND CASH EQUIVALENTS, end of year.................... (UK Pound)37,372   (UK Pound)63,314  (UK Pound)162,231
                                                          =================  =================  =================
</TABLE>


See notes to consolidated financial statements.

                                     - 34 -
<PAGE>
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(in thousands)
<TABLE>
<CAPTION>
                                     A Common            B Common               Additional         Accumulated
                                Shares       Amount   Shares     Amount           Capital            Deficit           Total
<S>                            <C>              <C>  <C>              <C>            <C>                 <C>               <C>    
BALANCE, JANUARY 1, 1995......  28,372 (UK Pound)284  12,873 (UK Pound)129  (UK Pound)287,450   ((UK Pound)50,480)(UK Pound)237,383
  Net loss....................                                                                            (28,962)          (28,962)
  Other.......................                                                            (53)                                  (53)
                                ------ -------------  ------ -------------  -----------------   -----------------  ----------------

BALANCE, DECEMBER 31, 1995....  28,372           284  12,873           129            287,397             (79,442)          208,368
  Net loss....................                                                                            (40,575)          (40,575)
  Shares issued in connection
    with SingTel Transaction..   8,860            88                                   71,151                                71,239
                                ------ -------------  ------ -------------  -----------------   -----------------  ----------------

BALANCE, DECEMBER 31, 1996....  37,232           372  12,873           129            358,548            (120,017)          239,032
  Net loss....................                                                                            (67,356)          (67,356)
                                ------ -------------  ------ -------------  -----------------   -----------------  ----------------

BALANCE, DECEMBER 31, 1997....  37,232 (UK Pound)372  12,873 (UK Pound)129  (UK Pound)358,548  ((UK Pound)187,373)(UK Pound)171,676
                                ====== =============  ====== =============  =================   =================  ================
</TABLE>


See notes to consolidated financial statements.

                                     - 35 -

<PAGE>
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

1.   BUSINESS

     Comcast UK Cable  Partners  Limited and  subsidiaries  (the  "Company"),  a
     Bermuda  company  incorporated  in 1992, was formed to develop,  construct,
     manage and operate the interests of Comcast Corporation  ("Comcast") in the
     United Kingdom ("UK") cable and telecommunications industry. The Company is
     a controlled  subsidiary of Comcast U.K.  Holdings,  Inc.  ("Holdings"),  a
     Delaware corporation indirectly wholly owned by Comcast. As of December 31,
     1997,  the  Company  has  interests  in  four  operations  (the  "Operating
     Companies"):  Birmingham Cable Corporation Limited ("Birmingham Cable"), in
     which the Company owns a 27.5% interest, Cable London PLC ("Cable London"),
     in which the  Company  owns a 50.0%  interest,  Cambridge  Holding  Company
     Limited ("Cambridge  Cable"), in which the Company owns a 100% interest and
     two companies  holding the franchises for Darlington and Teesside,  England
     ("Teesside"),  in which the Company owns a 100% interest.  The Company also
     owns a 100%  interest in Comcast UK Holdings  Limited  ("UK  Holdings"),  a
     company incorporated in Bermuda in December 1997.

     On February 4, 1998,  the Company  entered into a  definitive  agreement to
     amalgamate (the "NTL  Transaction")  with a wholly owned Bermuda subsidiary
     of  NTL  Incorporated  ("NTL").  NTL is an  alternative  telecommunications
     company in the UK and is listed on Nasdaq.  The NTL Transaction is expected
     to close in 1998,  subject to, among other things,  the receipt of required
     Bermuda and UK  regulatory  approvals,  the approval of the  Company's  and
     NTL's shareholders, the consent of the Company's and NTL's bondholders, the
     consent of certain NTL bank lenders and other  customary  closing  matters.
     Comcast,  through Holdings, is the sole holder of the multiple-voting Class
     B Common Shares of the Company and has agreed to vote for the  transaction,
     assuring its approval by the Company's  shareholders.  Upon consummation of
     the NTL Transaction,  the Company would become a wholly owned subsidiary of
     NTL.

     Except in the  circumstances  described below,  the Company's  shareholders
     will receive  0.3745  shares of NTL common stock for each of the  Company's
     Class A Common  Shares or Class B Common  Shares.  If the  average  closing
     price of the NTL common  stock for a specified  period of time prior to the
     Company's shareholders meeting to approve the NTL Transaction (the "Average
     Price") is less than $26.70,  the Company will have the option to terminate
     the NTL  Transaction,  subject to the right of NTL to adjust  the  exchange
     ratio such that one share of the Company's Class A Common Shares or Class B
     Common  Shares will be exchanged for a number of shares of NTL common stock
     equal to $10.00 (based on the Average Price).

     Pursuant  to  existing   arrangements  between  the  Company  and  Telewest
     Communications  plc  ("Telewest"),  a co-owner of interests in Cable London
     and Birmingham Cable,  Telewest has certain rights (the "Telewest  Rights")
     to acquire either or both of the Company's  interests in these systems as a
     result of the NTL  Transaction.  However,  as  described  in the  following
     paragraphs, the consummation of the NTL Transaction is not dependent on the
     resolution of the Telewest Rights.

     If the Telewest  Rights have been exercised prior to the closing of the NTL
     Transaction, the Company's shareholders may receive (at the option of NTL),
     in lieu of a portion of the consideration allocable to the interest subject
     to the exercised  Telewest Rights,  the per share proceeds from the sale of
     the interest to Telewest (net of taxes on gain on sale), payable in cash or
     shares of NTL common stock valued at the greater of $30.00 per share or the
     Average Price at closing (the "Exercise Consideration").

     Similarly,  if at  closing  either  of the  Telewest  Rights  have not been
     exercised  and have not been waived or  otherwise  expired,  the  Company's
     shareholders  may receive (at the option of NTL),  shares of a new class of
     NTL preferred  stock equal to a portion of the  consideration  allocable to
     the interest subject to the unexercised  Telewest Rights. Any shares of NTL
     preferred stock would have the same voting and dividend rights as shares of
     NTL common stock,  would be subject to redemption as described  below,  and
     would be expected to be listed for trading on Nasdaq.  If following closing
     the Telewest Rights are exercised, the NTL preferred stock will be redeemed
     for the Exercise  Consideration  (based on the Average Price at the time of
     exercise). If the Telewest Rights are resolved without being exercised, the
     NTL preferred  stock will be redeemed for NTL common stock on a one-for-one
     basis.

                                     - 36 -

<PAGE>


COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)

     Of the  consideration  to be received by the Company's  shareholders in the
     NTL Transaction,  the parties have allocated 31% to the Company's  interest
     in Cable  London and 17% to the  Company's  interest in  Birmingham  Cable.
     However, if either or both of the Telewest Rights are exercised, the actual
     consideration  to  be  received  by  the  Company's   shareholders  may  be
     materially  different from the portion of the consideration (the "allocable
     portion")  which  has  been  allocated  by the  parties  to  the  Company's
     respective  interests in Cable London and Birmingham  Cable,  depending on,
     among other things,  the value of these interests,  as finally  determined,
     whether NTL exercises its option to deliver the Exercise  Consideration  in
     lieu of the  allocable  portion and, the amount of any taxes payable by the
     Company on the sale of these interests.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of Accounting
     Subsidiaries of the Company  maintain their books and records in accordance
     with accounting  principles  generally accepted in the UK. The consolidated
     financial  statements  have been  prepared  in  accordance  with  generally
     accepted accounting principles as practiced in the United States ("US") and
     are stated in UK pounds  sterling ("UK Pound").  There were no  significant
     differences  between  accounting  principles  followed  for UK purposes and
     generally accepted accounting  principles practiced in the US. The UK Pound
     exchange  rate as of December  31, 1997 and 1996 was US $1.65 and US $1.71,
     respectively.

     Basis of Consolidation
     The consolidated  financial  statements include the accounts of the Company
     and all wholly owned subsidiaries.  All significant  intercompany  accounts
     and transactions among the consolidated entities have been eliminated.

     Management's Use of Estimates
     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that affect the reported amounts of assets and liabilities and
     disclosure  of  contingent  assets  and  liabilities  at  the  date  of the
     financial  statements  and the  reported  amounts of revenues  and expenses
     during  the  reporting  period.  Actual  results  could  differ  from those
     estimates.

     Fair Values
     The estimated fair value amounts  presented in these notes to  consolidated
     financial  statements  have been  determined by the Company using available
     market  information and appropriate  methodologies.  However,  considerable
     judgment is required in  interpreting  market data to develop the estimates
     of  fair  value.  The  estimates   presented  herein  are  not  necessarily
     indicative  of the  amounts  that the  Company  could  realize in a current
     market exchange.  The use of different market assumptions and/or estimation
     methodologies  may have a  material  effect  on the  estimated  fair  value
     amounts.  Such fair  value  estimates  are based on  pertinent  information
     available to management as of December 31, 1997 and 1996, and have not been
     comprehensively  revalued  for  purposes  of these  consolidated  financial
     statements  since such dates.  A reasonable  estimate of the amounts due to
     affiliates  and long-term  debt due to  shareholder  is not  practicable to
     obtain  because of the related  party nature of these items and the lack of
     quoted market prices.

     Cash Equivalents and Short-term Investments
     Cash equivalents consist principally of commercial paper, time deposits and
     money market funds with  maturities of three months or less when purchased.
     Short-term  investments  as of December  31, 1996  consist  principally  of
     commercial paper and corporate  floating rate notes with maturities greater
     than three months when  purchased.  The carrying  amounts of the  Company's
     cash  equivalents and short-term  investments,  classified as available for
     sale securities, approximate their fair values.

     Investments in Affiliates
     Investments  in  entities  in which the Company has the ability to exercise
     significant  influence  over the operating  and  financial  policies of the
     investee  are  accounted  for  under  the  equity  method.   Equity  method
     investments  are  recorded at original  cost and adjusted  periodically  to
     recognize the Company's proportionate share of the investees' net income or
     losses  after the date of  investment,  additional  contributions  made and
     dividends   received.   The  differences  between  the  Company's  recorded
     investments  and its  proportionate  interests  in the  book  value  of the
     investees' net

                                     - 37 -

<PAGE>
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)

     assets are being  amortized to equity in net losses of affiliates  over the
     remaining original lives of the related franchises of eight years.

     Prematurity Period
     The Company  accounts for costs,  expenses and revenues  applicable  to the
     construction  and  operation  of its cable  telecommunications  systems  in
     Teesside and Cambridge Cable under the provisions of Statement of Financial
     Accounting  Standards  ("SFAS")  No.  51,  "Financial  Reporting  by  Cable
     Television Companies."

     Under SFAS No. 51, during the period while the systems are partially  under
     construction and partially in service (the "Prematurity Period"),  costs of
     cable  telecommunications  plant,  including  materials,  direct  labor and
     construction overhead are capitalized. Subscriber-related costs and general
     and  administrative  costs are  expensed  as  incurred.  Costs  incurred in
     anticipation  of  servicing  a fully  operating  system  that will not vary
     regardless  of  the  number  of  subscribers  are  partially  expensed  and
     partially  capitalized,  based upon the  percentage  of  average  actual or
     estimated  subscribers,  whichever  is  greater,  to the  total  number  of
     subscribers expected at the end of the Prematurity Period (the "Fraction").

     During the  Prematurity  Period,  depreciation  and  amortization of system
     assets is determined by multiplying the  depreciation  and  amortization of
     the total capitalized  system assets expected at the end of the Prematurity
     Period by the Fraction. At the end of the Prematurity Period,  depreciation
     and  amortization of system assets is based on the remaining  undepreciated
     cost at that date.

     As of December 31, 1997, two of the Company's  five  franchise  areas which
     are  under  construction  have  completed  their  Prematurity  Period.  The
     remaining Prematurity Periods are expected to terminate at various dates in
     1998 and 1999.

     Property and Equipment
     Property and  equipment,  which consists  principally of system assets,  is
     shown at historical cost less accumulated  depreciation.  Improvements that
     extend asset lives are capitalized;  other repairs and maintenance  charges
     are expensed as  incurred.  The cost and related  accumulated  depreciation
     applicable  to assets sold or retired are removed from the accounts and the
     gain or loss on  disposition  is recognized as a component of  depreciation
     expense.

     System assets

     Prior to the  Prematurity  Period,  no  depreciation  is provided on system
     assets.  During  the  Prematurity  Period,   depreciation  is  provided  in
     accordance with SFAS No. 51.

     Depreciation of system assets is provided by the straight-line  method over
     estimated useful lives as follows:

                  Plant                                     15-40 years
                  Network                                      15 years
                  Subscriber equipment                       6-10 years
                  Switch                                       10 years
                  Computers                                     4 years

     Non-system assets

     Depreciation of non-system assets is provided by the  straight-line  method
     over estimated useful lives as follows:

                  Buildings                                    40 years
                  Fixtures, fittings and equipment              5 years
                  Vehicles                                      4 years
                  Computers                                     4 years

                                     - 38 -

<PAGE>


COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


     Leased Assets
     Assets held under capital  leases are treated as if they had been purchased
     outright and the  corresponding  liability  is included in long-term  debt.
     Capital lease payments  include  principal and interest,  with the interest
     portion  being  expensed.  Payments on  operating  leases are expensed on a
     straight-line basis over the lease term.

     Deferred Charges
     Deferred  charges  consist   primarily  of  franchise   acquisition   costs
     attributable  to  obtaining,   developing  and  maintaining  the  franchise
     licenses of Teesside and Cambridge Cable,  debt acquisition  costs relating
     to the sale of approximately $517.3 million principal amount at maturity of
     the  Company's  11.20%  Senior  Discount  Debentures  Due 2007  (the  "2007
     Discount  Debentures"  - see Note 7) and goodwill  arising from the SingTel
     Transaction (see Note 4). Franchise  acquisition  costs are being amortized
     on a straight-line  basis over the remaining  original lives of the related
     franchises of 12 to 15 years. Debt acquisition costs are being amortized on
     a straight-line  basis over the term of the 2007 Discount  Debentures of 12
     years.  Goodwill  is being  amortized  on a  straight-line  basis  over the
     remaining original lives of the related franchises of 11 years.

     Valuation of Long-Lived Assets
     The Company  periodically  evaluates the  recoverability  of its long-lived
     assets,  including  property  and  equipment  and deferred  charges,  using
     objective  methodologies.  Such methodologies  include evaluations based on
     the cash flows generated by the underlying assets or other  determinants of
     fair value.

     Revenue Recognition
     Service income is recognized as service is provided. Credit risk is managed
     by disconnecting services to subscribers who are delinquent.

     Stock-Based Compensation
     Effective  January 1, 1996, the Company  adopted the provisions of SFAS No.
     123, "Accounting for Stock-Based  Compensation," which encourages, but does
     not  require,   companies  to  record  compensation  cost  for  stock-based
     compensation  plans at fair  value.  The Company has elected to continue to
     account  for   stock-based   compensation  in  accordance  with  Accounting
     Principles   Board  Opinion  No.  25,   "Accounting  for  Stock  Issued  to
     Employees,"  and related  interpretations,  as  permitted  by SFAS No. 123.
     Compensation  expense for stock options is measured as the excess,  if any,
     of the quoted market price of the Company's stock at the date of grant over
     the amount an employee must pay to acquire the stock.  Compensation expense
     for stock  appreciation  rights is  recorded  annually  based on changes in
     quoted market prices of the Company's  stock or other  determinants of fair
     value at the end of the year (see Note 8).

     Income Taxes
     The Company is exempt from US federal, state and local income taxes. At the
     present time, no income,  profit, capital or capital gains taxes are levied
     in Bermuda and, accordingly,  no provision for such taxes has been recorded
     by the  Company.  In the event that such taxes are levied,  the Company has
     received an undertaking from the Bermuda  Government  exempting it from all
     such taxes until March 2016.

     The Company's wholly owned  subsidiaries  recognize deferred tax assets and
     liabilities for temporary differences between the financial reporting basis
     and the tax basis of their assets and liabilities and expected  benefits of
     utilizing net operating loss carryforwards. The impact on deferred taxes of
     changes in tax rates and laws,  if any,  applied to the years  during which
     temporary  differences  are  expected to be settled,  are  reflected in the
     financial statements in the period of enactment.

     Derivative Financial Instruments
     The Company uses  derivative  financial  instruments,  principally  foreign
     exchange  option  contracts  ("FX  Options"),  to manage  its  exposure  to
     fluctuations in foreign  currency  exchange  rates.  Written FX Options are
     marked-to-market on a current basis in the Company's consolidated statement
     of operations (see Note 6).

                                     - 39 -

<PAGE>


COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)

     Those  instruments  that have been  entered  into by the  Company  to hedge
     exposure to foreign currency exchange rate risks are periodically  examined
     by the Company to ensure that the  instruments  are matched with underlying
     liabilities,  reduce the  Company's  risks  relating  to  foreign  currency
     exchange  rates,  and,  through  market  value  and  sensitivity  analysis,
     maintain a high correlation to the underlying value of the hedged item. For
     those instruments that do not meet the above criteria,  variations in their
     fair  value  are  marked-to-market  on a  current  basis  in the  Company's
     consolidated statement of operations.

     The Company does not hold or issue any derivative financial instruments for
     trading  purposes and is not a party to leveraged  instruments (see Notes 6
     and 7). The credit risks associated with the Company's derivative financial
     instruments  are  controlled  through the  evaluation and monitoring of the
     creditworthiness of the counterparties. Although the Company may be exposed
     to losses in the event of nonperformance by the counterparties, the Company
     does not expect such losses, if any, to be significant.

     Net Loss Per Share
     In February 1997, the Financial  Accounting Standards Board ("FASB") issued
     SFAS No.  128,  "Earnings  per  Share,"  which was  adopted by the  Company
     effective  for the  year  ended  December  31,  1997,  as  required  by the
     statement.  For the years  ended  December  31,  1997,  1996 and 1995,  the
     Company's  potential common shares have an antidilutive  effect on the loss
     per  share  and,  therefore,  have not been used in  determining  the total
     weighted  average  number of common  shares  outstanding.  Diluted loss per
     share for 1997, 1996 and 1995 is antidilutive and, therefore,  has not been
     presented.

     Reclassifications
     Certain  reclassifications  have been made to the prior years' consolidated
     financial statements to conform to those classifications used in 1997.

3.   TEESSIDE ACQUISITION

     In June 1994,  the Company  acquired all of the  outstanding  shares of two
     companies  that  owned   Teesside,   which  comprise  an  area   containing
     approximately   254,000  homes.   The   construction  of  Teesside's  cable
     telecommunications network commenced in the third quarter of 1994. Teesside
     added its initial cable and telephony subscribers in June 1995.

4.   SINGTEL TRANSACTION

     In  March  1996,  the  Company  completed  the  acquisition  (the  "SingTel
     Transaction") of Singapore Telecom International Pte. Limited's ("Singapore
     Telecom") 50% interest in Cambridge Cable, pursuant to the terms of a Share
     Exchange  Agreement  executed by the parties in December  1995. In exchange
     for Singapore  Telecom's 50% interest in Cambridge  Cable and certain loans
     made to Cambridge Cable, with accrued interest thereon,  the Company issued
     approximately   8.9  million  of  its  Class  A  Common   Shares  and  paid
     approximately  (UK  Pound)11.8  million to Singapore  Telecom.  The Company
     accounted  for the SingTel  Transaction  under the  purchase  method.  As a
     result of the SingTel Transaction, the Company owns 100% of Cambridge Cable
     and Cambridge Cable was consolidated  with the Company  effective March 31,
     1996.


                                     - 40 -

<PAGE>


COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)

     The following  unaudited pro forma information for the years ended December
     31,  1996 and 1995 has been  presented  as if the SingTel  Transaction  had
     occurred on January 1, 1995. This unaudited pro forma  information is based
     on historical results of operations  adjusted for acquisition costs and, in
     the opinion of management,  is not  necessarily  indicative of what results
     would have been had the Company owned 100% of Cambridge Cable since January
     1, 1995 (in thousands, except per share data).
<TABLE>
<CAPTION>
                                                                                 Year Ended December 31,
                                                                                1996              1995
<S>                                                                     <C>                <C>   
              Revenues........................................          (UK Pound)38,651   (UK Pound)22,859

              Net loss........................................                   (42,300)           (37,616)

              Net loss per share..............................                      (.84)              (.75)
</TABLE>

5.   INVESTMENTS IN AFFILIATES

     The Company has  historically  invested in three  affiliates  (the  "Equity
     Investees,"  which term excludes  Cambridge  Cable as of, and subsequent to
     March 31, 1996 - see Note 4): Birmingham Cable,  Cable London and Cambridge
     Cable.  The  Equity  Investees  operate  integrated  cable  communications,
     residential  telephony  and  business  telecommunications  systems in their
     respective  major  metropolitan  areas  under  exclusive  cable  television
     licenses and non-exclusive  telecommunications licenses. As of December 31,
     1997,  the  Company's  ownership  interest  in the Equity  Investees  is as
     follows:

                Birmingham Cable................................27.5%
                Cable London....................................50.0%

     The Company also has a 16.4% interest in Cable Programme Partners-1 Limited
     Partnership  ("CPP-1") which  previously  developed and  distributed  cable
     programming  in the UK.  During  1995,  CPP-1 sold its only channel and has
     wound down its  operations  to a minimal  level of  activity.  The carrying
     value of the Company's investment in CPP-1 has been reduced to zero and the
     Company has no future funding commitments to CPP-1.

     Included in investments in affiliates as of December 31, 1997 and 1996, are
     loans to Cable London of (UK Pound)28.5  million and (UK Pound)22.5 million
     and accrued  interest of (UK Pound)6.0  million and (UK Pound)3.6  million,
     respectively. The loans accrue interest at a rate of 2% above the published
     base lending rate of Barclays Bank PLC (9.25% effective rate as of December
     31,  1997) and are  subordinate  to Cable  London's  revolving  bank credit
     facility.  Of these loans,  (UK Pound)21.0  million as of December 31, 1997
     and 1996 are  convertible  into  ordinary  shares of Cable  London at a per
     share conversion  price of (UK Pound)2.00.  Also included in investments in
     affiliates  as of December  31, 1997 are loans to  Birmingham  Cable of (UK
     Pound)1.9 million and accrued interest of (UK Pound)133,000. The Birmingham
     Cable loans accrue interest at a fixed rate of 7.80% and are subordinate to
     Birmingham  Cable's credit  facility.  Loans to Cambridge Cable and related
     accrued  interest have been eliminated in  consolidation  subsequent to the
     SingTel Transaction (see Note 4).

     In  February  1995,  a  subsidiary  of  Birmingham   Cable  issued  175,000
     cumulative (UK Pound)1.00 redeemable five year term preference shares for a
     paid up value of (UK Pound)175.0 million. Also in February 1995, Birmingham
     Cable entered into a (UK  Pound)175.0  million five year  revolving  credit
     facility (the  "Birmingham  Facility") which provided for conversion into a
     five  year term loan on March 31,  2000.  In March  1997,  the terms of the
     Birmingham Facility were amended to extend the maturity of the term loan to
     December 31, 2005 and to amend the  required  cash flow levels (as defined)
     and certain other terms.  Interest rates on the Birmingham  Facility are at
     the London Interbank Offered Rate ("LIBOR") plus 5/8% to 2 1/4%.

     In July 1997,  the preference  shareholder  exercised its option to require
     Birmingham Cable to purchase its shareholding.  Birmingham Cable funded the
     redemption of the  preference  shares with the proceeds from the Birmingham
     Facility  and  restricted  cash and settled  its five year (UK  Pound)175.0
     million  interest  rate  exchange  agreement  with  Barclays  Bank PLC. The
     balance  of the  Birmingham  Facility  will be  used,  subject  to  certain
     restrictions,  for capital  expenditures  and working capital  requirements
     relating to the  build-out of its  systems.  The  preference  shares had an
     effective  dividend rate,  including Advanced  Corporation Tax ("ACT"),  of
     8.00%.

                                     - 41 -

<PAGE>

COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)

     The  Birmingham  Facility  contains   restrictive   covenants  which  limit
     Birmingham  Cable's ability to enter into  arrangements for the acquisition
     and sale of property and equipment, investments, mergers and the incurrence
     of additional debt. Certain of these covenants require that certain minimum
     build requirements, financial ratios and cash flow levels be maintained and
     contain  restrictions  on  dividend  payments.   Birmingham  Cable's  three
     principal shareholders' (including the Company) right to receive consulting
     fee payments from Birmingham Cable has been subordinated to the banks under
     the Birmingham Facility. The payment of consulting fees is restricted until
     Birmingham  Cable meets certain  financial ratio tests under the Birmingham
     Facility.   Birmingham  Cable  has  pledged  the  shares  of  its  material
     subsidiaries to secure the Birmingham  Facility.  Upon a change of control,
     all amounts due under the Birmingham  Facility  become  immediately due and
     payable.  The  consummation  of the NTL  Transaction  will not  result in a
     change of control as defined in the Birmingham Facility.

     In May 1997, Cable London entered into a (UK Pound)170.0  million revolving
     credit facility (the "London  Revolver") with various banks, which converts
     into a five year term loan on June 30, 2001.  Interest  rates on the London
     Revolver are at LIBOR plus 1/2% to 2 3/8%. In May 1997, Cable London repaid
     all amounts  outstanding  under its existing  credit facility with proceeds
     from  borrowings  under the  London  Revolver.  The  balance  of the London
     Revolver  will be  used,  subject  to  certain  restrictions,  for  capital
     expenditures and working capital requirements  relating to the build-out of
     its systems.

     The London  Revolver  contains  restrictive  covenants  which  limit  Cable
     London's ability to enter into arrangements for the acquisition and sale of
     property  and  equipment,   investments,  mergers  and  the  incurrence  of
     additional debt.  Certain of these covenants require that certain financial
     ratios and cash flow levels be maintained and contain certain  restrictions
     on  dividend  payments.  The  Company's  right to  receive  consulting  fee
     payments  from Cable  London has been  subordinated  to the banks under the
     London  Revolver.  The payment of consulting fees is restricted until Cable
     London meets certain  financial ratio tests under the London  Revolver.  In
     addition,  the Company's shares in Cable London have been pledged to secure
     the London  Revolver.  Upon a change of control,  all amounts due under the
     London Revolver become immediately due and payable. The consummation of the
     NTL  Transaction  will not  result in a change of control as defined in the
     London Revolver.

     Although the Company is not contractually  committed to make any additional
     capital  contributions  or  advances  to any of the  Equity  Investees,  it
     currently  intends to fund its share of the amounts  necessary  for capital
     expenditures  and to  finance  operating  deficits.  Failure to do so could
     dilute the Company's ownership interests in the Equity Investees.

                                     - 42 -

<PAGE>
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)

     Summarized  financial  information  for affiliates  accounted for under the
     equity method for 1997, 1996 and 1995, is as follows:
<TABLE>
<CAPTION>
                                              Birmingham          Cable          Cambridge
                                                 Cable            London          Cable (1)       CPP-1 (2)           Combined
                                             (UK Pound)000    (UK Pound)000   (UK Pound)000    (UK Pound)000       (UK Pound)000
<S>                                                  <C>               <C>       <C>              <C>                     <C>   
YEAR ENDED DECEMBER 31, 1997
Results of operations
     Service income...................      (UK Pound)67,166  (UK Pound)52,816  (UK Pound)        (UK Pound)      (UK Pound)119,982
     Operating, selling, general and
       administrative expenses........               (56,564)          (45,787)                                            (102,351)
     Depreciation and amortization....               (26,427)          (19,740)                                             (46,167)
     Operating loss...................               (15,825)          (12,711)                                             (28,536)
     Net loss.........................               (30,826)          (25,168)                                             (55,994)
     Company's equity in net loss.....                (8,616)          (12,743)                                             (21,359)

AT DECEMBER 31, 1997
Financial position
     Current assets...................                11,424            10,340                                               21,764
     Noncurrent assets................               248,611           185,353                                              433,964
     Current liabilities..............                22,293            22,902                                               45,195
     Noncurrent liabilities...........               165,413           173,038                                              338,451

YEAR ENDED DECEMBER 31, 1996
Results of operations
     Service income...................                52,472            40,091           6,401                               98,964
     Operating, selling, general and
       administrative expenses........               (44,476)          (39,135)         (6,366)                             (89,977)
     Depreciation and amortization....               (19,690)          (14,862)         (2,168)                             (36,720)
     Operating loss...................               (11,694)          (13,906)         (2,133)                             (27,733)
     Net loss.........................               (20,378)          (21,241)         (4,419)                             (46,038)
     Company's equity in net loss.....                (5,671)          (10,551)         (2,210)                             (18,432)

AT DECEMBER 31, 1996
Financial position
     Current assets...................                70,531            10,217                                               80,748
     Noncurrent assets................               255,115           159,906                                              415,021
     Current liabilities..............                33,628            85,183                                              118,811
     Noncurrent liabilities...........               188,863            60,831                                              249,694

YEAR ENDED DECEMBER 31, 1995
Results of operations
     Service income...................                39,004            30,277          20,585              1,088            90,954
     Operating, selling, general and
       administrative expenses........               (35,894)          (33,238)        (26,273)            (5,673)         (101,078)
     Depreciation and amortization....               (14,455)          (10,847)         (7,150)               (34)          (32,486)
     Operating loss...................               (11,345)          (13,808)        (12,838)            (4,619)          (42,610)
     Net loss.........................               (14,279)          (17,675)        (20,398)            (5,388)          (57,740)
     Company's equity in net loss.....                (3,922)           (8,657)        (10,200)              (898)          (23,677)
<FN>
---------------
     (1) 1996 results of operations  information  for Cambridge Cable is for the
         three months ended March 31, 1996 (see Note 4).
     (2) 1995 results of operations  information for CPP-1 is for the six months
         ended June 30, 1995.
</FN>
</TABLE>

                                     - 43 -

<PAGE>


COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)

6.   FOREIGN CURRENCY RISK MANAGEMENT

     The Company is exposed to market risk including changes in foreign currency
     exchange  rates.  To manage the volatility  relating to this exposure,  the
     Company  enters  into  various  derivative  transactions  pursuant  to  the
     Company's  policies  in areas such as  counterparty  exposure  and  hedging
     practices.  Positions are monitored using techniques including market value
     and sensitivity analyses.

     The  Company has  entered  into  certain FX Options as a normal part of its
     foreign currency risk management efforts.  During 1995, the Company entered
     into certain foreign exchange put option contracts ("FX Puts") which may be
     settled  only on  November  16,  2000.  These FX Puts are used to limit the
     Company's  exposure to the risk that the eventual cash outflows  related to
     net  monetary   liabilities   denominated  in  currencies  other  than  its
     functional   currency  (the  UK  Pound)   (principally  the  2007  Discount
     Debentures  - see Note 7) are  adversely  affected  by changes in  exchange
     rates.  As of December 31, 1997 and 1996,  the Company had (UK  Pound)250.0
     million  notional  amount of FX Puts to  purchase US dollars at an exchange
     rate of $1.35  per (UK  Pound)1.00  (the  "Ratio").  The FX Puts  provide a
     hedge,  to the extent the exchange rate falls below the Ratio,  against the
     Company's net monetary  liabilities  denominated  in US dollars since gains
     and losses  realized  on the FX Puts are offset  against  foreign  exchange
     gains or losses realized on the underlying net  liabilities.  Premiums paid
     for the FX Puts of (UK Pound)13.9  million are included in foreign exchange
     put options and other in the Company's  consolidated  balance sheet, net of
     related amortization.  These premiums are being amortized over the terms of
     the related  contracts of five years. As of December 31, 1997 and 1996, the
     FX Puts had carrying  values of (UK  Pound)8.0  million and (UK  Pound)10.7
     million,  respectively.  The  estimated  fair  value of the FX Puts was (UK
     Pound)3.2  million as of both  December 31, 1997 and 1996.  The  difference
     between the carrying amount and the estimated fair value of the FX Puts was
     not significant as of December 31, 1995.

     In 1995,  in order to  reduce  hedging  costs,  the  Company  sold  foreign
     exchange  call option  contracts  ("FX Calls") to exchange (UK  Pound)250.0
     million notional amount and received (UK Pound)3.4 million. These contracts
     may only be settled on their  expiration  dates.  Of these  contracts,  (UK
     Pound)200.0  million notional  amount,  with an exchange ratio of $1.70 per
     (UK  Pound)1.00,  expired  unexercised in November 1996 while the remaining
     contract,  with a (UK Pound)50.0  million  notional  amount and an exchange
     ratio of $1.62 per (UK Pound)1.00,  has a settlement date in November 2000.
     In the  fourth  quarter of 1996,  in order to  continue  to reduce  hedging
     costs, the Company sold additional FX Calls for (UK Pound)2.1  million,  to
     exchange (UK Pound)200.0  million  notional  amount at an average  exchange
     ratio of $1.75 per (UK Pound)1.00.  These contracts expired  unexercised in
     the fourth quarter of 1997. The FX Calls are  marked-to-market on a current
     basis in the Company's consolidated statement of operations.

     As of  December  31,  1997  and  1996,  the  estimated  fair  value  of the
     liabilities  related  to  the  FX  Calls,  as  recorded  in  the  Company's
     consolidated  balance  sheet,  was (UK Pound)2.7  million and (UK Pound)7.2
     million,  respectively.  Changes in fair value  between  measurement  dates
     relating  to the FX Calls  resulted  in  exchange  gains  of (UK  Pound)4.5
     million during the year ended December 31, 1997 and exchange  losses of (UK
     Pound)1.3  million during the year ended December 31, 1996 in the Company's
     consolidated  statement of operations.  There were not significant exchange
     gains or losses relating to these contracts for the year ended December 31,
     1995.

7.   LONG-TERM DEBT

     2007 Discount Debentures
     In November 1995, the Company received net proceeds of approximately $291.1
     million  ((UK  Pound)186.9  million)  from the  sale of its  2007  Discount
     Debentures in a public  offering  ($517.3  million  principal at maturity).
     Interest  accretes  on the 2007  Discount  Debentures  at 11.20%  per annum
     compounded semi-annually from November 15, 1995 to November 15, 2000, after
     which date  interest  will be paid in cash on each May 15 and  November  15
     through  November  15,  2007.  The  accreted  value  of the  2007  Discount
     Debentures was (UK Pound)229.2  million and (UK  Pound)198.1  million as of
     December 31, 1997 and 1996, respectively.

     The 2007 Discount Debentures contain restrictive  covenants which limit the
     Company's  ability  to enter  into  arrangements  for the  sale of  assets,
     mergers,  the  incurrence of additional  debt and the payment of dividends.
     The

                                     - 44 -
<PAGE>


COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)

     Company was in compliance  with such  restrictive  covenants as of December
     31, 1997.  Consummation of the NTL  Transaction  (see Note 1) is subject to
     consent of the Company's bondholders.

     UK Holdings Credit Facility
     On December 23, 1997, UK Holdings  entered into a loan  agreement  (the "UK
     Holdings  Agreement") with a consortium of banks to provide financing under
     a credit  facility (the "UK Holdings  Credit  Facility") up to a maximum of
     (UK  Pound)200.0  million.  Under the terms of the UK  Holdings  Agreement,
     borrowings under the UK Holdings Credit Facility are guaranteed by Teesside
     and Cambridge Cable.

     On January 14, 1998,  UK Holdings  borrowed (UK  Pound)75.0  million  under
     Tranche A of the UK Holdings Credit  Facility.  Of this initial  borrowing,
     (UK  Pound)50.4  million  was paid to the  Company  as a  dividend  and (UK
     Pound)17.8  million  was  used to fund  capital  expenditures  and  working
     capital  requirements  at Cambridge Cable and Teesside.  Amounts  available
     under the UK  Holdings  Credit  Facility  will be reduced  each  quarter in
     varying amounts  beginning March 31, 2000 and continuing  through  December
     31, 2000.  The UK Holdings  Credit  Facility  bears  interest at a rate per
     annum equal to LIBOR plus 1/2% to 2 1/4%.

     The UK Holdings Credit Facility contains restrictive  covenants which limit
     UK Holdings'  ability to enter into  arrangements  for the  acquisition and
     sale of property and equipment,  investments, mergers and the incurrence of
     additional debt.  Certain of these covenants require that certain financial
     ratios and cash flow levels be maintained and contain certain  restrictions
     on  dividend  payments.  The  Company's  right to  receive  consulting  fee
     payments from  Cambridge  Cable and Teesside has been  subordinated  to the
     banks under the UK Holdings  Credit  Facility.  In addition,  the Company's
     shares in UK Holdings  have been  pledged to secure the UK Holdings  Credit
     Facility.

     The consummation of the NTL Transaction will result in a change in control,
     as defined in the UK Holdings  Credit  Facility.  Upon a change in control,
     all amounts  outstanding  under the UK Holdings Credit Facility will become
     immediately due and payable.

     Other
     As of December 31, 1997 and 1996,  Cambridge Cable has two outstanding bank
     loans totaling (UK Pound)505,000 and (UK Pound)533,000, respectively, which
     are included in long-term  debt.  These bank loans are secured by Cambridge
     Cable's  land and  buildings  in  Cambridge  and Bishop  Stortford  and are
     payable in quarterly installments through April 2000 and bear interest at a
     weighted  average fixed rate of 9.35%.  Also included in long-term debt are
     capital lease obligations of Cambridge Cable and Teesside (see Note 12).

     Maturities of long-term debt outstanding,  including long-term debt, due to
     shareholder  (see Note 9), as of December 31, 1997 for the four years after
     1998 are as follows (in (UK Pound)000's):

                       1999               (UK Pound)12,658
                       2000                            665
                       2001                            528
                       2002                            498

     The Company's long-term debt,  excluding long-term debt due to shareholder,
     had estimated fair values of (UK  Pound)259.6  million and (UK  Pound)219.7
     million as of December 31, 1997 and 1996, respectively.  The estimated fair
     value of the  Company's  publicly  traded  debt is based on  quoted  market
     prices for that debt.  Interest  rates that are currently  available to the
     Company for issuance of debt with similar  terms and  remaining  maturities
     are used to  estimate  fair value for debt issues for which  quoted  market
     prices are not available.

8.   STOCK OPTION/SAR PLANS

     The Company  implemented a Stock  Appreciation  Rights ("SARs") plan during
     1995 for  certain  outside  directors  under  which  the  terms of the SARs
     granted  are  determined  by the  Compensation  Committee  of the  Board of
     Directors (the "SAR Plan").  Under the SAR Plan, eligible  participants are
     entitled to receive a cash  payment  from the Company  equal to 100% of the
     excess,  if any, of the fair market value of a share of the Company's Class
     A

                                     - 45 -
<PAGE>
COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)

     Common  Shares at the time of exercise over the fair market value of such a
     share at the grant date.  Under the SAR Plan, a total of 50,000 SARs may be
     granted.  The SARs have a term of ten years  from the date of grant and are
     immediately exercisable. No SARs were granted in 1997. A total of 6,000 and
     15,000  SARs were  granted in 1996 and 1995,  respectively  and 14,000 SARs
     were outstanding at December 31, 1997, all  exercisable.  The fair value of
     the Company's Class A Common Stock at the grant date of the SARs was $12.63
     and $16.25 for 1996 and 1995  grants,  respectively.  Compensation  expense
     recorded  during the year ended December 31, 1996 was not  significant.  No
     compensation  expense was  recognized  during the years ended  December 31,
     1997 and December  31, 1995 as the exercise  price of the SARs was not less
     then the fair value of a share of the Company's Class A Common Shares.

     The  Company  implemented  a  qualified  stock  option plan during 1995 for
     certain  employees,  officers and directors,  under which the option prices
     and other terms are determined by the  Compensation  Committee of the Board
     of Directors  (the  "Option  Plan").  Under the Option Plan,  not more than
     250,000 of the Company's  Class A Common  Shares may be issued  pursuant to
     the plan upon  exercise of  qualified  stock  options.  All options must be
     granted within ten years from the date of adoption of the Option Plan, with
     options  becoming  exercisable  over four years  from the date of grant.  A
     total of 20,250 options,  with an exercise price of $12.63, were granted in
     1996 and are  outstanding  (none  exercisable)  at December  31,  1997.  No
     options  were  granted in 1997 or 1995.  No  compensation  expense has been
     recognized  under the Option Plan as the  exercise  price of the grants was
     not less than the fair market  value of the shares at the grant  date.  The
     fair value of the options granted in 1996 was not significant.

9.   RELATED PARTY TRANSACTIONS

     Comcast U.K. Consulting, Inc. ("UK Consulting"),  a wholly owned subsidiary
     of the Company,  earns  consulting fee income under  consulting  agreements
     with the Equity Investees.  The consulting fee income is generally based on
     a percentage  of gross  revenues or a fixed amount per dwelling unit in the
     Equity Investees' franchise areas.

     The Company's  right to receive  consulting  fee payments  from  Birmingham
     Cable and Cable  London  has been  subordinated  to the banks  under  their
     credit  facilities.   Accordingly,  a  portion  of  these  fees  have  been
     classified  as long-term  receivables  and are included in  investments  in
     affiliates in the Company's  consolidated  balance sheet. In addition,  the
     Company's  shares in Cable  London  have  been  pledged  to secure  amounts
     outstanding under the London Revolver.

     Management fee expense is incurred under agreements  between the Company on
     the one hand,  and Comcast,  the  Company's  controlling  shareholder,  and
     Comcast UK Cable  Partners  Consulting,  Inc.  ("Comcast  Consulting"),  an
     indirect wholly owned subsidiary of Comcast, on the other,  whereby Comcast
     and Comcast Consulting provide consulting  services to the Equity Investees
     on behalf of the  Company and  management  services  to the  Company.  Such
     management  fees are based on Comcast's  and Comcast  Consulting's  cost of
     providing  such  services.  As of  December  31,  1997  and  1996,  due  to
     affiliates consists primarily of this management fee and operating expenses
     paid by Comcast and its affiliates on behalf of the Company.

     Investment income includes (UK Pound)2.5 million, (UK Pound)2.9 million and
     (UK  Pound)5.0   million  of  interest  income  in  1997,  1996  and  1995,
     respectively,  relating to the loans to Birmingham Cable,  Cable London and
     Cambridge Cable described in Note 5.

     Long-term  debt,  due to  shareholder  consists  of 9%  Subordinated  Notes
     payable to Holdings (the "Notes")  which are due in 1999.  During the years
     ended December 31, 1997, 1996 and 1995,  interest  expense on the Notes was
     (UK Pound)950,000, (UK Pound)870,000 and (UK Pound)800,000, respectively.

     In management's  opinion,  the foregoing  transactions were entered into on
     terms no more or less favorable than those with non-affiliated parties.

10.  INCOME TAXES

     The Company's wholly owned  subsidiaries  have a deferred tax asset arising
     from the carryforward of net operating  losses and the differences  between
     the book and tax basis of property. However, a valuation allowance has been
     recorded to fully  reserve the  deferred  tax asset as its  realization  is
     uncertain.

                                     - 46 -

<PAGE>

COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)

     Significant  components  of  deferred  income  taxes are as follows (in (UK
     Pound)000's):
<TABLE>
<CAPTION>
                                                                                   December 31,
                                                                               1997                1996
<S>                                                                     <C>                  <C>  
         Net operating loss carryforwards
           (carried forward indefinitely)............................  (UK Pound)14,382     (UK Pound)13,485
         Differences between book and tax
           basis of property.........................................             7,959                1,024
         Other.......................................................               321                  170
         Less: Valuation allowance...................................           (22,662)             (14,679)
                                                                       ----------------     ----------------
                                                                       (UK Pound)           (UK Pound)
                                                                       ================     ================
</TABLE>

11.  STATEMENT OF CASH FLOWS - SUPPLEMENTAL INFORMATION

     The  Company  made  cash  payments  for  interest  of   approximately   (UK
     Pound)559,000  and (UK  Pound)418,000  during the years ended  December 31,
     1997 and 1996,  respectively.  There were no cash  interest  payments  made
     during the year ended December 31, 1995.

     The Company's wholly owned subsidiaries  incurred capital lease obligations
     of (UK  Pound)2.1  million,  (UK  Pound)1.2  million and (UK  Pound)490,000
     during the years ended December 31, 1997, 1996 and 1995, respectively.

12.  COMMITMENTS AND CONTINGENCIES

     Certain of the Company's  facilities and equipment are held under operating
     or capital leases which expire through 2008.

     A summary  of assets  held  under  capital  lease  are as  follows  (in (UK
     Pound)000's):
<TABLE>
<CAPTION>
                                                                                December 31,
                                                                           1997              1996
<S>                                                                    <C>                <C>  
         Land, buildings and equipment...............................  (UK Pound)10,735  (UK Pound)8,605
         Less: Accumulated depreciation..............................            (3,165)            (834)
                                                                       ----------------  ---------------
                                                                       (UK Pound) 7,570  (UK Pound)7,771
                                                                       ================  ===============
</TABLE>

     Future minimum rental payments under lease  commitments  with an initial or
     remaining  term of more than one year of  December  31, 1997 are as follows
     (in (UK Pound)000's):
<TABLE>
<CAPTION>
                                                                          Capital          Operating
                                                                          leases            leases
<S>                                                                     <C>              <C>  
         1998........................................................  (UK Pound)2,191  (UK Pound)1,580
         1999........................................................            1,753              969
         2000........................................................              902              283
         2001........................................................              706               63
         2002........................................................              629               63
         Thereafter..................................................            1,731               36
                                                                       ---------------  ---------------
         Total minimum rental commitments............................  (UK Pound)7,912  (UK Pound)2,994
                                                                                        ===============
         Less: Amount representing interest..........................           (1,874)
                                                                       --------------- 
         Present value of minimum rental commitments.................            6,038
         Less: Current portion of capital lease obligations..........           (1,660)
                                                                       --------------- 
         Long-term portion of capital lease obligations..............  (UK Pound)4,378
                                                                       ===============
</TABLE>

                                     - 47 -
<PAGE>

COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Concluded)

     Operating  lease  expense for the years ended  December 31, 1997,  1996 and
     1995  was  (UK   Pound)1.7   million,   (UK   Pound)1.5   million  and  (UK
     Pound)328,000, respectively.

     The Company is subject to legal  proceedings  and claims which arise in the
     ordinary course of its business.  In the opinion of management,  the amount
     of ultimate  liability  with respect to these  actions will not  materially
     affect the  financial  position,  results of operations or liquidity of the
     Company.

13.  QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
                                                    First          Second            Third           Fourth               Total
                                                   Quarter       Quarter (1)        Quarter        Quarter (2)            Year
                                                                  ((UK Pound)000, except per share data)
     1997
<S>                                          <C>              <C>               <C>              <C>              <C>     
     Revenues.............................  (UK Pound)12,351 (UK Pound)13,350  (UK Pound)14,241 (UK Pound)16,720 (UK Pound)56,662
     Operating loss.......................            (6,543)          (6,364)           (5,679)          (4,018)         (22,604)
     Equity in net losses of affiliates...            (5,152)          (5,162)           (5,195)          (5,850)         (21,359)
     Net loss.............................           (20,540)         (13,108)          (20,682)         (13,026)         (67,356)
     Net loss per share...................              (.41)            (.26)             (.41)            (.26)           (1.34)

     1996

     Revenues.............................   (UK Pound)2,334  (UK Pound)9,452  (UK Pound)10,090 (UK Pound)10,552 (UK Pound)32,428
     Operating loss.......................            (3,765)          (6,128)           (7,398)          (7,262)         (24,553)
     Equity in net losses of affiliates...            (5,698)          (3,942)           (4,166)          (4,626)         (18,432)
     Net loss.............................           (11,987)         (11,292)          (14,571)          (2,725)         (40,575)
     Net loss per share...................              (.28)            (.22)             (.30)            (.04)            (.84)
---------------
<FN>
(1) The Company began consolidating Cambridge Cable effective March 31, 1996.

(2)  The fourth  quarter of 1996 net loss  includes  (UK  Pound)12.9  million of
     foreign  currency  exchange rate gains  resulting from  fluctuations in the
     foreign currency exchange rate.
</FN>
</TABLE>

                                     - 48 -
<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareholders
Birmingham Cable Corporation Limited

We have audited the accompanying  consolidated balance sheet of Birmingham Cable
Corporation  Limited  (a  company   incorporated  in  the  United  Kingdom)  and
subsidiaries  as of  December  31, 1997 and 1996,  and the related  consolidated
statements of operations, shareholders' equity and of cash flows for each of the
three years in the period ended December 31, 1997.  These  financial  statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion,  such consolidated  financial  statements present fairly, in all
material  respects,  the  financial  position of  Birmingham  Cable  Corporation
Limited and  subsidiaries  as of December 31, 1997 and 1996,  and the results of
their  operations and their cash flows for each of the three years in the period
ended  December 31, 1997 in  conformity  with  accounting  principles  generally
accepted in the United States of America.




Deloitte & Touche

Birmingham, England
February 27, 1998 (March 16, 1998 as to Note 3)





                                     - 49 -

<PAGE>



BIRMINGHAM CABLE CORPORATION LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
(in (UK Pound)000's, except share data)

<TABLE>
<CAPTION>
                                                                                            December 31,
                                                                                   1997                      1996
ASSETS

CURRENT ASSETS
<S>                                                                        <C>                       <C>  
    Cash and cash equivalents.....................................        (UK Pound)2,254           (UK Pound)7,689
    Restricted cash...............................................                                           53,000
    Accounts receivable, less allowance for doubtful accounts of
       (UK Pound)4,834 and (UK Pound)2,360........................                  6,326                     4,809
    Interest receivable...........................................                                            2,016
    Other current assets..........................................                  2,844                     3,017
                                                                        -----------------         -----------------

          Total current assets....................................                 11,424                    70,531
                                                                        -----------------         -----------------

RESTRICTED CASH...................................................                                           22,000
                                                                        -----------------         -----------------

PROPERTY AND EQUIPMENT............................................                310,111                   269,665
    Accumulated depreciation......................................                (74,214)                  (49,961)
                                                                        -----------------         -----------------
    Property and equipment, net...................................                235,897                   219,704
                                                                        -----------------         -----------------

DEFERRED CHARGES..................................................                 18,112                    16,890
    Accumulated amortization......................................                 (5,398)                   (3,479)
                                                                        -----------------         -----------------
    Deferred charges, net.........................................                 12,714                    13,411
                                                                        -----------------         -----------------

                                                                        (UK Pound)260,035         (UK Pound)325,646
                                                                        =================         =================

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
    Accounts payable and accrued expenses.........................       (UK Pound)18,997          (UK Pound)24,381
    Accrued interest..............................................                  1,611                     7,398
    Current portion of capital lease obligations..................                  1,685                     1,849
                                                                        -----------------         -----------------

          Total current liabilities...............................                 22,293                    33,628
                                                                        -----------------         -----------------

LONG-TERM DEBT....................................................                140,000
                                                                        -----------------         -----------------

CAPITAL LEASE OBLIGATIONS, less current portion...................                 13,539                    11,625
                                                                        -----------------         -----------------

LONG-TERM DEBT, due to shareholders...............................                  7,492
                                                                        -----------------         -----------------

OTHER LIABILITIES.................................................                  4,382                     2,238
                                                                        -----------------         -----------------

COMMITMENTS AND CONTINGENCIES

PREFERENCE SHARES.................................................                                          175,000
                                                                        -----------------         -----------------

SHAREHOLDERS' EQUITY
    Ordinary shares, (UK Pound)1.00 par value - authorized, 60,000,000
       shares; issued, 51,073,486.................................                 51,073                    51,073
    Additional capital............................................                112,399                   112,399
    Accumulated deficit...........................................                (91,143)                  (60,317)
                                                                        -----------------         -----------------
          Total shareholders' equity..............................                 72,329                   103,155
                                                                        -----------------         -----------------
                                                                        (UK Pound)260,035         (UK Pound)325,646
                                                                        =================         =================
</TABLE>

See notes to consolidated financial statements.

                                     - 50 -

<PAGE>

BIRMINGHAM CABLE CORPORATION LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS
(in (UK Pound)000's)

<TABLE>
<CAPTION>

                                                                             Year Ended December 31,
                                                                     1997             1996              1995
<S>                                                        <C>               <C>               <C>   
SERVICE INCOME............................................(UK Pound)67,166  (UK Pound)52,472  (UK Pound)39,004
                                                          ----------------  ----------------  ----------------

COSTS AND EXPENSES
   Operating .............................................          28,942            20,912            16,358
   Selling, general and administrative....................          27,622            23,564            19,536
   Depreciation and amortization..........................          26,427            19,690            14,455
                                                          ----------------  ----------------  ----------------
                                                                    82,991            64,166            50,349
                                                          ----------------  ----------------  ----------------

OPERATING LOSS............................................         (15,825)          (11,694)          (11,345)

INTEREST EXPENSE..........................................          17,500            17,202            13,993

INVESTMENT INCOME.........................................          (2,499)           (8,518)          (11,059)
                                                          ----------------  ----------------  ----------------

NET LOSS.................................................((UK Pound)30,826)((UK Pound)20,378)((UK Pound)14,279)
                                                          ================ =================  ================
</TABLE>

See notes to consolidated financial statements.

                                     - 51 -

<PAGE>

BIRMINGHAM CABLE CORPORATION LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS
(in (UK Pound)000's)
<TABLE>
<CAPTION>
                                                                              Year Ended December 31,
                                                                      1997             1996              1995
<S>                                                              <C>                <C>                <C>   
OPERATING ACTIVITIES
   Net loss.................................................... ((UK Pound)30,826) ((UK Pound)20,378) ((UK Pound)14,279)
   Adjustments to reconcile net loss to net cash (used in)
    provided by operating activities:
     Depreciation and amortization ............................            26,427             19,690             14,455
     Non-cash interest expense ................................               492
                                                                -----------------  -----------------  -----------------
                                                                           (3,907)              (688)               176
     Decrease (increase) in accounts receivable,
       interest receivable and other current assets ...........               672              4,939             (7,438)
     (Decrease) increase in accounts payable and
       accrued expenses, accrued interest and other liabilities            (9,027)            10,559              6,469
                                                                -----------------  -----------------  -----------------

         Net cash (used in) provided by operating activities ..           (12,262)            14,810               (793)
                                                                -----------------  -----------------  -----------------

FINANCING ACTIVITIES
   Proceeds from borrowings ...................................           140,000                               175,000
   Loans from shareholders ....................................             7,000
   Debt acquisition costs .....................................                                                  (2,977)
   Redemption of preference shares ............................          (175,000)
   Repayment of capital leases ................................            (2,316)            (1,161)              (220)
                                                                -----------------  -----------------  -----------------

         Net cash (used in) provided by financing activities ..           (30,316)            (1,161)           171,803
                                                                -----------------  -----------------  -----------------

INVESTING ACTIVITIES
   Restricted cash ............................................            75,000             39,000           (114,000)
   Capital expenditures .......................................           (36,635)           (56,492)           (47,999)
   Deferred charges ...........................................            (1,222)              (991)              (601)
                                                                -----------------  -----------------  -----------------

         Net cash provided by (used in) investing activities ..            37,143            (18,483)          (162,600)
                                                                -----------------  -----------------  -----------------

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ..............            (5,435)            (4,834)             8,410

CASH AND CASH EQUIVALENTS, beginning of year ..................             7,689             12,523              4,113
                                                                -----------------  -----------------  -----------------

CASH AND CASH EQUIVALENTS, end of year.........................   (UK Pound)2,254    (UK Pound)7,689   (UK Pound)12,523
                                                                =================  =================  =================
</TABLE>


See notes to consolidated financial statements.

                                     - 52 -
<PAGE>

BIRMINGHAM CABLE CORPORATION LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(in (UK Pound)000's)

<TABLE>
<CAPTION>
                                                       Ordinary         Additional       Accumulated
                                                        Shares            Capital          Deficit            Total
<S>                                               <C>              <C>               <C>                <C>    
BALANCE, JANUARY 1, 1995.....................     (UK Pound)51,073 (UK Pound)112,399 ((UK Pound)25,660) (UK Pound)137,812
     Net loss................................                                                  (14,279)           (14,279)
                                                  ---------------- ----------------- -----------------  -----------------

BALANCE, DECEMBER 31, 1995...................               51,073           112,399           (39,939)           123,533
     Net loss................................                                                  (20,378)           (20,378)
                                                  ---------------- ----------------- -----------------  -----------------

BALANCE, DECEMBER 31, 1996...................               51,073           112,399           (60,317)           103,155
     Net loss................................                                                  (30,826)           (30,826)
                                                  ---------------- ----------------- -----------------  -----------------

BALANCE, DECEMBER 31, 1997...................     (UK Pound)51,073 (UK Pound)112,399 ((UK Pound)91,143)  (UK Pound)72,329
                                                  ================ =================  ================   ================

</TABLE>

See notes to consolidated financial statements.


                                     - 53 -

<PAGE>

BIRMINGHAM CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

1.   BUSINESS

     Birmingham Cable Corporation  Limited, a company incorporated in the United
     Kingdom ("UK"), and subsidiaries (the "Company") is principally  engaged in
     the   development,   construction,   management   and  operation  of  cable
     telecommunications   systems.   The  Company   holds  two   franchises   in
     Birmingham/Solihull and Wythall, England.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of Accounting
     The Company  maintains its books and records in accordance  with accounting
     principles  generally  accepted  in  the  UK.  The  consolidated  financial
     statements  have  been  prepared  in  accordance  with  generally  accepted
     accounting  principles  as  practiced in the United  States  ("US") and are
     stated  in UK pounds  sterling  ("UK  Pound").  There  were no  significant
     differences  between  accounting  principles  followed  for UK purposes and
     generally accepted accounting  principles practiced in the US. The UK Pound
     exchange  rate as of December  31, 1997 and 1996 was US $1.65 and US $1.71,
     respectively.

     Basis of Consolidation
     The consolidated  financial  statements include the accounts of the Company
     and all wholly owned subsidiaries.  All significant  intercompany  accounts
     and transactions among the consolidated entities have been eliminated.

     Management's Use of Estimates
     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that affect the reported amounts of assets and liabilities and
     disclosure  of  contingent  assets  and  liabilities  at  the  date  of the
     financial  statements  and the  reported  amounts of revenues  and expenses
     during  the  reporting  period.  Actual  results  could  differ  from those
     estimates.

     Fair Values
     The estimated fair value amounts  presented in these notes to  consolidated
     financial  statements  have been  determined by the Company using available
     market  information and appropriate  methodologies.  However,  considerable
     judgment is required in  interpreting  market data to develop the estimates
     of  fair  value.  The  estimates   presented  herein  are  not  necessarily
     indicative  of the  amounts  that the  Company  could  realize in a current
     market exchange.  The use of different market assumptions and/or estimation
     methodologies  may have a  material  effect  on the  estimated  fair  value
     amounts.  Such fair  value  estimates  are based on  pertinent  information
     available to management as of December 31, 1997 and 1996, and have not been
     comprehensively  revalued  for  purposes  of these  consolidated  financial
     statements since such dates.

     Cash, Cash Equivalents and Restricted Cash
     Cash, cash equivalents and restricted cash as of December 31, 1996 included
     cash  held  on  deposit  as  part of a (UK  Pound)175.0  million  financing
     arrangement  entered  into  by the  Company  in  1995.  In July  1997  this
     arrangement was  restructured  and the restricted  cash was used,  together
     with proceeds from the Birmingham Facility, to redeem the preference shares
     (see Note 3).

     Prematurity Period
     The Company  accounts for costs,  expenses and revenues  applicable  to the
     construction  and operation of its cable  telecommunications  systems under
     the provisions of Statement of Financial Accounting Standards ("SFAS") No.
     51, "Financial Reporting by Cable Television Companies."

     Under SFAS No. 51, during the period while the systems are partially  under
     construction and partially in service (the "Prematurity Period"),  costs of
     cable  telecommunications  plant,  including  materials,  direct  labor and
     construction overhead are capitalized. Subscriber-related costs and general
     and  administrative  costs are  expensed  as  incurred.  Costs  incurred in
     anticipation  of  servicing  a fully  operating  system  that will not vary
     regardless  of  the  number  of  subscribers  are  partially  expensed  and
     partially capitalized, based upon the percentage of average actual

                                     - 54 -

<PAGE>

BIRMINGHAM CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)

     or  estimated  subscribers,  whichever  is greater,  to the total number of
     subscribers expected at the end of the Prematurity Period (the "Fraction").

     During the  Prematurity  Period,  depreciation  and  amortization of system
     assets is determined by multiplying the  depreciation  and  amortization of
     the total capitalized  system assets expected at the end of the Prematurity
     Period by the Fraction. At the end of the Prematurity Period,  depreciation
     and  amortization of system assets is based on the remaining  undepreciated
     cost at that date.

     As of December 31, 1997,  all of the Company's  seven  discrete build areas
     have completed their Prematurity Period.

     Property and Equipment
     Property and  equipment,  which consists  principally of system assets,  is
     shown at historical cost less accumulated  depreciation.  Improvements that
     extend asset lives are capitalized;  other repairs and maintenance  charges
     are expensed as  incurred.  The cost and related  accumulated  depreciation
     applicable  to assets sold or retired are removed from the accounts and the
     gain or loss on  disposition  is recognized as a component of  depreciation
     expense.

     System assets

     Prior to the  Prematurity  Period,  no  depreciation  is provided on system
     assets.  During  the  Prematurity  Period,   depreciation  is  provided  in
     accordance with SFAS No. 51.

     Depreciation of system assets is provided by the straight-line  method over
     estimated useful lives as follows:

                  Plant                                     15-40 years
                  Network                                      15 years
                  Subscriber equipment                       6-10 years
                  Switch                                       10 years
                  Computers                                     4 years

     Non-system assets

     Depreciation of non-system assets is provided by the  straight-line  method
     over estimated useful lives as follows:

                  Buildings                                    40 years
                  Leasehold buildings                     term of lease
                  Fixtures, fittings and equipment              5 years
                  Computers                                     4 years
                  Vehicles                                      4 years

     Leased Assets
     Assets held under capital  leases are treated as if they had been purchased
     outright  and the  corresponding  liability  is included  in capital  lease
     obligations.  Capital lease payments include  principal and interest,  with
     the interest  portion  being  expensed.  Payments on  operating  leases are
     expensed on a straight-line basis over the lease term.

     Deferred Charges
     Deferred charges consist primarily of franchise acquisition and development
     costs directly  attributable  to obtaining,  developing and maintaining the
     franchise licenses.  Franchise  acquisition and development costs have been
     allocated evenly between each build area and are amortized,  by build area,
     on a  straight-line  basis,  over the lives of the  franchises  of 15 to 23
     years.

     Valuation of Long-Lived Assets
     The Company  periodically  evaluates the  recoverability  of its long-lived
     assets,  including  property  and  equipment  and deferred  charges,  using
     objective  methodologies.  Such methodologies  include evaluations based on
     the cash flows generated by the underlying assets or other  determinants of
     fair value.

                                     - 55 -

<PAGE>
BIRMINGHAM CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)

     Revenue Recognition
     Service income is recognized as service is provided. Credit risk is managed
     by disconnecting services to subscribers who are delinquent.

     Income Taxes
     The Company  recognizes  deferred tax assets and  liabilities for temporary
     differences  between the financial reporting basis and the tax basis of the
     Company's  assets and  liabilities  and expected  benefits of utilizing net
     operating  loss  carryforwards.  The impact on deferred taxes of changes in
     tax rates and laws,  if any,  applied to the years during  which  temporary
     differences  are expected to be settled,  are  reflected  in the  financial
     statements in the period of enactment.

     Derivative Financial Instruments
     The Company uses interest rate exchange agreements ("Swaps"), to manage its
     exposure to fluctuations  in interest rates.  Swaps are matched with either
     fixed or variable  rate debt and  periodic  cash  payments are accrued on a
     settlement basis as an adjustment to interest expense.

     Those  instruments  that have been  entered  into by the  Company  to hedge
     exposure to interest rate risks are periodically examined by the Company to
     ensure that the instruments are matched with underlying liabilities, reduce
     the Company's  risks relating to interest  rates and,  through market value
     and  sensitivity  analysis,  maintain a high  correlation  to the  interest
     expense or underlying value of the hedged item.

     The Company does not hold or issue any derivative financial instruments for
     trading purposes and is not a party to any leveraged  instruments (see Note
     3). The credit risks  associated  with the Company's  derivative  financial
     instruments  are  controlled  through the  evaluation and monitoring of the
     creditworthiness of the counterparties. Although the Company may be exposed
     to losses in the event of nonperformance by the counterparties, the Company
     does not expect such losses, if any, to be significant.

     Reclassifications
     Certain  reclassifications  have been made to the prior years' consolidated
     financial statements to conform to those classifications used in 1997.

3.   LONG-TERM DEBT AND PREFERENCE SHARES

     In February 1995, a subsidiary of the Company issued 175,000 cumulative (UK
     Pound)1.00  redeemable five year term preference shares for a paid up value
     of (UK Pound)175.0 million. Also in February 1995, the Company entered into
     a  (UK  Pound)175.0  million  five  year  revolving  credit  facility  (the
     "Birmingham  Facility") which provided for conversion into a five year term
     loan on March 31, 2000. In March 1997, the terms of the Birmingham Facility
     were  amended to extend the  maturity of the term loan to December 31, 2005
     and to amend the required  cash flow levels (as defined) and certain  other
     terms.  Interest  rates  on the  Birmingham  Facility  are  at  the  London
     Interbank Offered Rate ("LIBOR") plus 5/8% to 2 1/4%.

     In July 1997,  the preference  shareholder  exercised its option to require
     the Company to purchase its shareholding. The Company funded the redemption
     of the preference shares with the proceeds from the Birmingham Facility and
     restricted cash and settled its five year (UK Pound)175.0  million interest
     rate  exchange  agreement  with  Barclays  Bank  PLC.  The  balance  of the
     Birmingham  Facility  will be used,  subject to certain  restrictions,  for
     capital  expenditures  and  working  capital  requirements  relating to the
     build-out of its systems.  The preference shares had an effective  dividend
     rate, including Advanced Corporation Tax ("ACT"), of 8.00%.

     The Birmingham  Facility  contains  restrictive  covenants  which limit the
     Company's  ability to enter into  arrangements for the acquisition and sale
     of property  and  equipment,  investments,  mergers and the  incurrence  of
     additional  debt.  Certain of these covenants  require that certain minimum
     build requirements, financial ratios and cash flow levels be maintained and
     contain  restrictions on dividend  payments.  The Company's three principal
     shareholders' right to receive consulting fee payments from the Company has
     been subordinated to the banks under the Birmingham  Facility.  The payment
     of consulting fees is restricted until the Company meets certain  financial
     ratio tests under the

                                     - 56 -
<PAGE>

BIRMINGHAM CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)

     Birmingham  Facility.  The Company  has pledged the shares of its  material
     subsidiaries to secure the Birmingham  Facility.  Upon a change of control,
     all amounts due under the Birmingham  Facility  become  immediately due and
     payable.  On February 4, 1998,  Comcast UK Cable Partners Limited ("Comcast
     UK"), one the Company's principal  shareholders,  entered into a definitive
     agreement  to  amalgamate  (the  "NTL  Transaction")  with a  wholly  owned
     subsidiary of NTL  Incorporated.  The  consummation  of the NTL Transaction
     will not  result  in a change  of  control  as  defined  in the  Birmingham
     Facility.

     The  Company  enters  into  Swaps as a normal  part of its risk  management
     efforts to limit its exposure to adverse  fluctuations  in interest  rates.
     Using Swaps, the Company agrees to exchange,  at specified  intervals,  the
     difference  between  fixed and  variable  interest  amounts  calculated  by
     reference  to an agreed  upon  notional  amount.  In  conjunction  with the
     Birmingham  Facility,  a subsidiary  of the Company and  Barclays  Bank PLC
     entered  into a  five  year  (UK  Pound)175.0  million  Swap,  whereby  the
     subsidiary  receives  fixed  interest at a rate of 8.83% and pays  floating
     rate interest at the six month LIBOR. The (UK Pound)175.0  million Swap was
     settled in July 1997 along with the  redemption  of the  preference  shares
     (see above). In addition, a subsidiary of the Company entered into a second
     series of five year Swaps  with  three  banks.  Under the  agreements,  the
     subsidiary  pays fixed rate  interest at 9.20% and receives  floating  rate
     interest at six month LIBOR, based upon the outstanding  notional amount of
     the  Swaps.  As  of  December  31,  1997  and  1996,  the  notional  amount
     outstanding on the second series of Swaps was (UK  Pound)149.0  million and
     (UK  Pound)106.0  million,  respectively,  and increased to (UK Pound)160.0
     million  on  January  2,  1998.  The  notional  amounts  of  interest  rate
     agreements  are used to measure  interest to be paid or received and do not
     represent the amount of exposure to credit loss.  While Swaps  represent an
     integral part of the Company's interest rate risk management program, their
     incremental  effect on interest  expense for the years ended  December  31,
     1997, 1996 and 1995 was not significant. The estimated amount to settle the
     Company's  Swaps was a liability of (UK Pound)7.5  million and a receivable
     of (UK Pound)168,000 as of December 31, 1997 and 1996, respectively.

     On March 16, 1998, the Company's  shareholders loaned (UK Pound)7.0 million
     to the Company in the form of Junior  Subordinated  Debt, as defined in the
     Birmingham  Facility.  The proceeds from this borrowing were used to settle
     the Swaps described above. Additionally,  on March 16, 1998 a subsidiary of
     the Company entered into a (UK Pound)160.0 million notional amount two year
     Swap with three banks.  Under the terms of this Swap, the  subsidiary  pays
     fixed rate  interest at 7.23% and receives  floating  rate  interest at six
     month LIBOR, based upon the notional amount.

     Maturities of long-term  debt  outstanding  as of December 31, 1997 for the
     four years after 1998 are as follows ((UK Pound)000's):

                          1999               (UK Pound)
                          2000                          7,000
                          2001                         14,000
                          2002                         21,000

     The  differences  between the carrying  amounts and estimated fair value of
     the Company's  long-term  debt was not  significant as of December 31, 1997
     and 1996.  Interest  rates that are currently  available to the Company for
     debt with similar terms and remaining  maturities are used to estimate fair
     value for debt issues for which quoted market prices are not available.

4.   LONG-TERM DEBT, DUE TO SHAREHOLDERS

     As  of  December  31,  1997,  the  Company  had   outstanding   loans  from
     shareholders of (UK Pound)7.0  million and accrued  interest thereon of (UK
     Pound)492,000. The loans from shareholders bear interest at a fixed rate of
     7.8% and are payable on demand. Under the terms of the Birmingham Facility,
     however,  principal and interest on the loans from  shareholders  cannot be
     paid  until the  Birmingham  Facility  is  repaid.  Thus,  the  loans  from
     shareholders and accrued interest thereon have been classified as long-term
     in the Company's  consolidated  balance sheet. A reasonable estimate of the
     fair  value of the loans from  shareholders  is not  practicable  to obtain
     because of the related  party  nature of these items and the lack of quoted
     market prices.

                                     - 57 -

<PAGE>

BIRMINGHAM CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)


5.   RELATED PARTY TRANSACTIONS

     The Company has consulting  agreements with Comcast U.K.  Consulting,  Inc.
     ("Comcast Consulting") and Telewest Communications Group Ltd., subsidiaries
     of two of the  Company's  principal  shareholders,  Comcast UK and Telewest
     Communications  plc  ("Telewest"),  respectively.  The  Company  also has a
     consulting  agreement with General  Cable,  the Company's  other  principal
     shareholder. The Company pays a fee to Telewest each year as a contribution
     to the operating  expenses and capital  expenditures of Telewest's  Network
     Service  Center,  which  provides  telephony  support to the  Company.  The
     Company has a  telephony  interconnect  agreement  with  Telewest,  whereby
     certain telephony traffic is routed via Telewest.  These interconnect costs
     are included in "other" below.

     A summary of related party charges  included in the Company's  consolidated
     financial statements is as follows (in (UK Pound)000's):
<TABLE>
<CAPTION>
                                                                          Year Ended December 31,
                                                                    1997              1996              1995
<S>                                                          <C>              <C>               <C>  
           Consulting fees                                    (UK Pound)1,511  (UK Pound)1,326   (UK Pound)1,070
           Network Service Center fees                                    711              814               680
           Other                                                        1,151              109                 6
                                                              ---------------  ---------------   ---------------
                                                              (UK Pound)3,373  (UK Pound)2,249   (UK Pound)1,756
                                                              ===============  ===============   ===============
</TABLE>

     As of December  31, 1997 and 1996,  accounts  payable and accrued  expenses
     include (UK  Pound)1.4  million and (UK  Pound)2.3  million,  respectively,
     payable to the Company's  three  principal  shareholders,  principally  for
     consulting fees and normal operating  expenses paid by the shareholders and
     their  affiliates  on behalf of the  Company.  As of December  31, 1997 and
     1996, other long-term  liabilities  includes (UK Pound)3.9  million and (UK
     Pound)1.3  million,   respectively,  of  consulting  fees  payable  to  the
     Company's three principal  shareholders as payment is restricted  under the
     Birmingham Facility.

     In management's  opinion,  the foregoing  transactions were entered into on
     terms  no more or less  favorable  than  those  with  non-affiliated  third
     parties.

6.   INCOME TAXES

     The Company has a deferred tax asset arising from the  carryforward  of net
     operating  losses  and the  differences  between  the book and tax basis of
     property. However, a valuation allowance has been recorded to fully reserve
     the deferred tax asset as its realization is uncertain.

     Significant  components  of the  Company's  deferred  income  taxes  are as
     follows (in (UK Pound)000's):

<TABLE>
<CAPTION>
                                                                                                 December 31,
                                                                                            1997             1996
<S>                                                                                      <C>              <C>  
         Net operating loss carryforwards (carried forward indefinitely)..............  (UK Pound)3,253  (UK Pound)3,218
         Differences between book and tax basis of property...........................            7,880            6,916
         Less: Valuation allowance....................................................          (11,133)         (10,134)
                                                                                        ---------------   --------------
                                                                                        (UK Pound)       (UK Pound)
                                                                                        ===============   ==============
</TABLE>


                                     - 58 -
<PAGE>

BIRMINGHAM CABLE CORPORATION LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Concluded)


     In connection with the Birmingham Facility and the related preference share
     arrangement  (see  Note 3),  the  Company  is  obligated  to pay ACT on all
     preference  share  dividends.  Related ACT for 1997,  1996 and 1995 was (UK
     Pound)1.4  million,  (UK  Pound)2.8  million  and  (UK  Pound)2.5  million,
     respectively, and has been classified as a component of interest expense in
     the  Company's  consolidated  statement of  operations.  ACT may be carried
     forward  indefinitely  to offset  potential  future tax  liabilities of the
     Company.

7.   STATEMENT OF CASH FLOWS - SUPPLEMENTAL INFORMATION

     The Company made cash payments for interest and preferred  stock  dividends
     of approximately  (UK Pound)43.0  million,  (UK Pound)31.2  million and (UK
     Pound)11.3 million during the years ended December 31, 1997, 1996 and 1995,
     respectively.

     The Company  incurred capital lease  obligations of (UK Pound)4.1  million,
     (UK  Pound)5.0  million and (UK  Pound)4.6  million  during the years ended
     December 31, 1997, 1996 and 1995, respectively.

8.   COMMITMENTS AND CONTINGENCIES

     Certain of the Company's  facilities and equipment are held under operating
     or capital leases which expire through 2007.

     A summary of assets  held  under  capital  leases  are as  follows  (in (UK
     Pound)000's):
<TABLE>
<CAPTION>
                                                                               
                                                                                  December 31,
                                                                             1997              1996
<S>                                                                  <C>              <C>   
         System, fixtures, fittings, equipment and vehicles..........  (UK Pound)18,991 (UK Pound)14,925
         Less: Accumulated depreciation..............................            (5,779)          (3,556)
                                                                       ----------------  ---------------
                                                                       (UK Pound)13,212 (UK Pound)11,369
                                                                       ================  ===============
</TABLE>

     Future minimum rental payments under lease  commitments  with an initial or
     remaining term of more than one year as of December 31, 1997 are as follows
     (in (UK Pound)000's):
<TABLE>
<CAPTION>
                                                                          Capital          Operating
                                                                          leases            leases
<S>                                                                    <C>                <C>
         1998........................................................  (UK Pound)2,699    (UK Pound)156
         1999........................................................            2,801              156
         2000........................................................            2,778              156
         2001........................................................            2,300              157
         2002........................................................            1,719              154
         Thereafter..................................................            7,710            1,805
                                                                       ---------------   --------------
         Total minimum rental commitments............................           20,007  (UK Pound)2,584
                                                                                         ==============
         Less: Amount representing interest..........................           (4,783)
                                                                       --------------- 
         Present value of minimum rental commitments.................           15,224
         Less: Current portion of capital lease obligations..........           (1,685)
                                                                       --------------- 
         Long-term portion of capital lease obligations.............. (UK Pound)13,539
                                                                       ===============
</TABLE>

     Operating  lease  expense for the years ended  December 31, 1997,  1996 and
     1995  was (UK  Pound)169,000,  (UK  Pound)428,000  and  (UK  Pound)947,000,
     respectively.

     Included within accounts  payable and accrued  expenses and other long-term
     liabilities as of December 31, 1997 and 1996 is (UK  Pound)570,000  and (UK
     Pound)665,000,  respectively,  which represents the obligation  incurred by
     the Company in connection with the termination of a contractual  obligation
     under an  agreement  with the local  authority  to service and maintain the
     Company's   satellite  master  antenna  television   installations  in  the
     franchise  area.  This  liability  is  noninterest   bearing  and  will  be
     discharged by the payment of (UK  Pound)95,000  annually  through 2003. The
     effect of  discounting  the liability is not  significant  to the Company's
     financial position or results of operations.

                                     - 59 -
<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareholders
Cable London PLC

We have audited the accompanying  consolidated balance sheet of Cable London PLC
(a company  incorporated in the United Kingdom) and  subsidiaries as of December
31,  1997 and 1996,  and the  related  consolidated  statements  of  operations,
shareholders'  (deficiency) equity and of cash flows for each of the three years
in the period ended  December  31,  1997.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion,  such consolidated  financial  statements present fairly, in all
material  respects,  the financial position of Cable London PLC and subsidiaries
as of December 31, 1997 and 1996, and the results of their  operations and their
cash flows for each of the three years in the period ended December 31, 1997. in
conformity with accounting principles generally accepted in the United States of
America.


Deloitte & Touche

London, England
February 27, 1998



                                     - 60 -

<PAGE>

CABLE LONDON PLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
(in (UK Pound)000's, except share data)
<TABLE>
<CAPTION>
                                                                                        December 31,
                                                                                  1997                1996
ASSETS

CURRENT ASSETS
<S>                                                                   <C>                 <C>  
    Cash..........................................................     (UK Pound)2,718     (UK Pound)3,213
    Accounts receivable, less allowance for doubtful accounts of
       (UK Pound)1,762 and (UK Pound)1,465........................               4,792               3,670
    Other current assets..........................................               2,830               3,334
                                                                       ---------------    ----------------

          Total current assets....................................              10,340              10,217
                                                                       ---------------    ----------------

PROPERTY AND EQUIPMENT............................................             235,786             192,630
    Accumulated depreciation......................................             (55,292)            (36,480)
                                                                       ---------------    ----------------
    Property and equipment, net...................................             180,494             156,150
                                                                       ---------------    ----------------

DEFERRED CHARGES..................................................               8,073               6,986
    Accumulated amortization......................................              (3,214)             (3,230)
                                                                       ---------------    ----------------
    Deferred charges, net.........................................               4,859               3,756
                                                                       ---------------    ----------------

                                                                     (UK Pound)195,693   (UK Pound)170,123
                                                                      ================    ================
LIABILITIES AND SHAREHOLDERS' (DEFICIENCY) EQUITY

CURRENT LIABILITIES
    Accounts payable and accrued expenses.........................    (UK Pound)19,972    (UK Pound)21,705
    Other current liabilities.....................................               2,172               3,117
    Current portion of long-term debt and capital lease obligations                758              60,361
                                                                       ---------------    ----------------

          Total current liabilities...............................              22,902              85,183
                                                                       ---------------    ----------------

LONG-TERM DEBT, less current portion..............................              89,727                 718
                                                                       ---------------    ----------------

CAPITAL LEASE OBLIGATIONS, less current portion...................              11,751               7,869
                                                                       ---------------    ----------------

CONVERTIBLE DEBT AND LOANS FROM SHAREHOLDERS......................              69,017              52,244
                                                                       ---------------    ----------------

OTHER LIABILITIES.................................................               2,543
                                                                       ---------------    ----------------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' (DEFICIENCY) EQUITY
    Ordinary shares, (UK Pound).10 par value - authorized, 
      100,000,000 shares; issued, 55,572,916 and 55,125,690.......               5,557               5,513
    Additional capital............................................              97,254              96,486
    Accumulated deficit...........................................            (103,058)            (77,890)
                                                                       ---------------    ----------------

          Total shareholders' (deficiency) equity.................                (247)             24,109
                                                                       ---------------    ----------------

                                                                     (UK Pound)195,693   (UK Pound)170,123
                                                                      ================    ================
</TABLE>

See notes to consolidated financial statements.

                                     - 61 -

<PAGE>

CABLE LONDON PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS
(in (UK Pound)000's)
<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                                     1997             1996              1995
<S>                                                       <C>               <C>               <C>   
SERVICE INCOME............................................(UK Pound)52,816  (UK Pound)40,091  (UK Pound)30,277
                                                         ----------------- ----------------- -----------------

COSTS AND EXPENSES
   Operating..............................................          22,084            17,978            14,622
   Selling, general and administrative....................          23,703            21,157            18,616
   Depreciation and amortization..........................          19,740            14,862            10,847
                                                         ----------------- ----------------- -----------------
                                                                    65,527            53,997            44,085
                                                         ----------------- ----------------- -----------------

OPERATING LOSS............................................         (12,711)          (13,906)          (13,808)

INTEREST EXPENSE..........................................          12,692             7,556             4,133

INVESTMENT INCOME.........................................            (235)             (221)             (266)
                                                         ----------------- ----------------- -----------------

NET LOSS.................................................((UK Pound)25,168)((UK Pound)21,241)((UK Pound)17,675)
                                                         ================= ================= =================
</TABLE>



See notes to consolidated financial statements.

                                     - 62 -

<PAGE>

CABLE LONDON PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS
(in (UK Pound)000's)
<TABLE>
<CAPTION>
                                                                              Year Ended December 31,
                                                                      1997             1996              1995
<S>                                                            <C>                 <C>                 <C>   
OPERATING ACTIVITIES
   Net loss...................................................((UK Pound)25,168)  ((UK Pound)21,241)  ((UK Pound)17,675)
   Adjustments to reconcile net loss to net cash
    (used in) provided by operating activities:
     Depreciation and amortization ...........................           19,740              14,862              10,847
     Non-cash interest expense ...............................            4,773               3,355               3,311
                                                                ---------------     ---------------     ---------------
                                                                           (655)             (3,024)             (3,517)
     Increase in accounts receivable and
       other current assets ..................................             (618)             (2,428)               (214)
     (Decrease) increase in accounts payable
      and accrued expenses, other current liabilities
      and other liabilities ..................................             (135)              7,508               3,992
                                                                ---------------     ---------------     ---------------

         Net cash (used in) provided by operating activities..           (1,408)              2,056                 261
                                                                ---------------     ---------------     ---------------

FINANCING ACTIVITIES
   Proceeds from borrowings ..................................           94,029              40,000              38,000
   Debt acquisition costs ....................................           (1,704)                                   (493)
   Loans from shareholders ...................................           12,000               3,000
   Repayments of debt ........................................          (65,031)                (33)                (30)
   Repayment of capital leases ...............................             (537)                (21)
   Issuances of shares .......................................              812
                                                                ---------------     ---------------     ---------------

         Net cash provided by financing activities ...........           39,569              42,946              37,477
                                                                ---------------     ---------------     ---------------

INVESTING ACTIVITIES
   Capital expenditures ......................................          (38,656)            (46,082)            (36,780)
   Deferred charges and other ................................                                                     (834)
                                                                ---------------     ---------------     ---------------

         Net cash used in investing activities ...............          (38,656)            (46,082)            (37,614)
                                                                ---------------     ---------------     ---------------

(DECREASE) INCREASE IN CASH ..................................             (495)             (1,080)                124

CASH, beginning of year ......................................            3,213               4,293               4,169
                                                                ---------------     ---------------     ---------------

CASH, end of year.............................................  (UK Pound)2,718     (UK Pound)3,213     (UK Pound)4,293
                                                                ===============     ===============     ===============
</TABLE>

See notes to consolidated financial statements.

                                     - 63 -
<PAGE>

CABLE LONDON PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS' (DEFICIENCY) EQUITY
(in (UK Pound)000's)

<TABLE>
<CAPTION>
                                                     Ordinary         Additional           Accumulated
                                                      Shares            Capital              Deficit            Total
<S>                                               <C>              <C>               <C>                 <C>   
BALANCE, JANUARY 1, 1995.....................    (UK Pound)5,513  (UK Pound)96,486   ((UK Pound)38,974) (UK Pound)63,025
     Net loss................................                                                  (17,675)          (17,675)
                                                  --------------   ---------------   -----------------     -------------

BALANCE, DECEMBER 31, 1995...................              5,513            96,486             (56,649)           45,350
     Net loss................................                                                  (21,241)          (21,241)
                                                  --------------   ---------------   -----------------     -------------

BALANCE, DECEMBER 31, 1996...................              5,513            96,486             (77,890)           24,109
     Shares issued...........................                 44               768                                   812
     Net loss................................                                                  (25,168)          (25,168)
                                                  --------------   ---------------   -----------------     -------------

BALANCE, DECEMBER 31, 1997...................    (UK Pound)5,557  (UK Pound)97,254  ((UK Pound)103,058)   ((UK Pound)247)
                                                  ==============   ===============   =================     =============
</TABLE>


See notes to consolidated financial statements.




                                     - 64 -

<PAGE>

CABLE LONDON PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

1.   BUSINESS

     Cable London PLC, a company  incorporated in the United Kingdom ("UK"), and
     subsidiaries  (the  "Company") is principally  engaged in the  development,
     construction, management and operation of cable telecommunications systems.
     The   Company   holds   four   franchises   covering   Camden,    Haringey,
     Hackney/Islington and Enfield, England.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of Accounting
     The Company  maintains its books and records in accordance  with accounting
     principles  generally  accepted  in  the  UK.  The  consolidated  financial
     statements  have  been  prepared  in  accordance  with  generally  accepted
     accounting  principles  as  practiced in the United  States  ("US") and are
     stated  in UK pounds  sterling  ("UK  Pound").  There  were no  significant
     differences  between  accounting  principles  followed  for UK purposes and
     generally accepted accounting  principles practiced in the US. The UK Pound
     exchange  rate as of December  31, 1997 and 1996 was US $1.65 and US $1.71,
     respectively.

     Basis of Consolidation
     The consolidated  financial  statements include the accounts of the Company
     and all wholly owned subsidiaries.  All significant  intercompany  accounts
     and transactions among the consolidated entities have been eliminated.

     Management's Use of Estimates
     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that affect the reported amounts of assets and liabilities and
     disclosure  of  contingent  assets  and  liabilities  at  the  date  of the
     financial  statements  and the  reported  amounts of revenues  and expenses
     during  the  reporting  period.  Actual  results  could  differ  from those
     estimates.

     Fair Values
     The estimated fair value amounts  presented in these notes to  consolidated
     financial  statements  have been  determined by the Company using available
     market  information and appropriate  methodologies.  However,  considerable
     judgment is required in  interpreting  market data to develop the estimates
     of  fair  value.  The  estimates   presented  herein  are  not  necessarily
     indicative  of the  amounts  that the  Company  could  realize in a current
     market exchange.  The use of different market assumptions and/or estimation
     methodologies  may have a  material  effect  on the  estimated  fair  value
     amounts.  Such fair  value  estimates  are based on  pertinent  information
     available to management as of December 31, 1997 and 1996, and have not been
     comprehensively  revalued  for  purposes  of these  consolidated  financial
     statements since such dates.

     Prematurity Period
     The Company  accounts for costs,  expenses and revenues  applicable  to the
     construction  and operation of its cable  telecommunications  systems under
     the provisions of Statement of Financial Accounting Standards ("SFAS") No.
     51, "Financial Reporting by Cable Television Companies."

     Under SFAS No. 51, during the period while the systems are partially  under
     construction and partially in service (the "Prematurity Period"),  costs of
     cable  telecommunications  plant,  including  materials,  direct  labor and
     construction overhead are capitalized. Subscriber-related costs and general
     and  administrative  costs are  expensed  as  incurred.  Costs  incurred in
     anticipation  of  servicing  a fully  operating  system  that will not vary
     regardless  of  the  number  of  subscribers  are  partially  expensed  and
     partially  capitalized,  based  on the  percentage  of  average  actual  or
     estimated  subscribers,  whichever  is  greater,  to the  total  number  of
     subscribers expected at the end of the Prematurity Period (the "Fraction").

     During the  Prematurity  Period,  depreciation  and  amortization of system
     assets is determined by multiplying the  depreciation  and  amortization of
     the total capitalized  system assets expected at the end of the Prematurity
     Period by the Fraction. At the end of the Prematurity Period,  depreciation
     and  amortization of system assets is based on the remaining  undepreciated
     cost at that date.

                                     - 65 -

<PAGE>


CABLE LONDON PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)

     As of December 31, 1997,  three of the Company's four franchise  areas have
     completed their Prematurity  Period.  The remaining  Prematurity  Period is
     expected to terminate in 1998.

     Property and Equipment
     Property and  equipment,  which consists  principally of system assets,  is
     shown at historical cost less accumulated  depreciation.  Improvements that
     extend asset lives are capitalized;  other repairs and maintenance  charges
     are expensed as  incurred.  The cost and related  accumulated  depreciation
     applicable  to assets sold or retired are removed from the accounts and the
     gain or loss on  disposition  is recognized as a component of  depreciation
     expense.

     System assets

     Prior to the  Prematurity  Period,  no  depreciation  is provided on system
     assets.  During  the  Prematurity  Period,   depreciation  is  provided  in
     accordance with SFAS No. 51.

     Depreciation of system assets is provided by the straight-line  method over
     estimated useful lives as follows:

                  Plant                                        40 years
                  Network                                      15 years
                  Subscriber equipment                        6-8 years
                  Switch                                       10 years
                  Computers                                     4 years

     Non-system assets

     Depreciation of non-system assets is provided by the  straight-line  method
     over estimated useful lives as follows:

                  Leased buildings                             40 years
                  Fixtures, fittings and equipment              5 years
                  Computers                                     4 years
                  Vehicles                                      3 years

     Leased Assets
     Assets held under capital  leases are treated as if they had been purchased
     outright  and the  corresponding  liability  is included  in capital  lease
     obligations.  Capital lease payments include  principal and interest,  with
     the interest  portion  being  expensed.  Payments on  operating  leases are
     expensed on a straight-line basis over the lease term.

     Deferred Charges
     Deferred charges consist primarily of franchise acquisition and development
     costs directly  attributable  to obtaining,  developing and maintaining the
     franchise  licenses and debt  acquisition  costs incurred by the Company in
     entering into the London Revolver (see Note 3).  Franchise  acquisition and
     development costs are being amortized on a straight-line basis over periods
     from two to fifteen years.  Debt acquisition costs are being amortized on a
     straight-line basis over the term of the London Revolver of nine years.

     Valuation of Long-Lived Assets
     The Company  periodically  evaluates the  recoverability  of its long-lived
     assets,  including  property  and  equipment  and deferred  charges,  using
     objective  methodologies.  Such methodologies  include evaluations based on
     the cash flows generated by the underlying assets or other  determinants of
     fair value.

     Revenue Recognition
     Service income is recognized as service is provided. Credit risk is managed
     by disconnecting services to subscribers who are delinquent.

     Income Taxes
     The Company  recognizes  deferred tax assets and  liabilities for temporary
     differences  between the financial reporting basis and the tax basis of the
     Company's  assets and  liabilities  and expected  benefits of utilizing net
     operating  loss  carryforwards.  The impact on deferred taxes of changes in
     tax rates and laws, if any, applied to the years during

                                     - 66 -

<PAGE>

CABLE LONDON PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)

     which temporary  differences  are expected to be settled,  are reflected in
     the financial statements in the period of enactment.

     Derivative Financial Instruments
     The Company uses derivative financial instruments,  including interest rate
     exchange   agreements   ("Swaps")  and  interest  rate  collar   agreements
     ("Collars"), to manage its exposure to fluctuations in interest rates.

     Swaps and Collars are matched with either  fixed or variable  rate debt and
     periodic cash  payments are accrued on a settlement  basis as an adjustment
     to interest expense.

     Those  instruments  that have been  entered  into by the  Company  to hedge
     exposure to interest rate risks are periodically examined by the Company to
     ensure that the instruments are matched with underlying liabilities, reduce
     the Company's  risks relating to interest  rates and,  through market value
     and  sensitivity  analysis,  maintain a high  correlation  to the  interest
     expense or underlying value of the hedged item.

     The Company does not hold or issue any derivative financial instruments for
     trading purposes and is not a party to leveraged  instruments (see Note 3).
     The  credit  risks  associated  with  the  Company's  derivative  financial
     instruments  are  controlled  through the  evaluation and monitoring of the
     creditworthiness of the counterparties. Although the Company may be exposed
     to losses in the event of nonperformance by the counterparties, the Company
     does not expect such losses, if any, to be significant.

     Reclassifications
     Certain  reclassifications  have been made to the prior years' consolidated
     financial statements to conform to those classifications used in 1997.

3.   LONG-TERM DEBT

     In June 1995, the Company entered into a (UK Pound)60.0  million  revolving
     credit  facility (the "London  Facility")  with various  banks.  The London
     Facility had a two year term and an interest  rate at the London  Interbank
     Offered Rate  ("LIBOR")  plus 2 1/2%. In April 1997,  the amount  available
     under the London Facility was increased to (UK Pound)65.0 million.

     In May 1997, the Company entered into a (UK Pound)170.0  million  revolving
     credit facility (the "London  Revolver") with various banks, which converts
     into a five year term loan on June 30, 2001.  Interest  rates on the London
     Revolver are at LIBOR plus 1/2% to 2 3/8%. In May 1997,  the Company repaid
     all  amounts  outstanding  under the London  Facility  with  proceeds  from
     borrowings  under the London  Revolver.  The balance of the London Revolver
     will be used, subject to certain restrictions, for capital expenditures and
     working capital requirements relating to the build-out of its systems.

     The  London  Revolver  contains  restrictive   covenants  which  limit  the
     Company's  ability to enter into  arrangements for the acquisition and sale
     of property  and  equipment,  investments,  mergers and the  incurrence  of
     additional debt.  Certain of these covenants require that certain financial
     ratios and cash flow levels be maintained and contain certain  restrictions
     on dividend payments.  The Company's two principal  shareholders' rights to
     receive  consulting fee payments from the Company has been  subordinated to
     the banks  under the London  Revolver.  The payment of  consulting  fees is
     restricted until the Company meets certain  financial ratio tests under the
     London  Revolver.  In addition,  the Company's two principal  shareholders'
     shares in the Company have been pledged to secure the London Revolver. Upon
     a change of  control,  all  amounts  due under the London  Revolver  become
     immediately due and payable. On February 4, 1998, Comcast UK Cable Partners
     Limited ("Comcast UK"), one the Company's principal  shareholders,  entered
     into a definitive  agreement to amalgamate (the "NTL  Transaction")  with a
     wholly owned  subsidiary of NTL  Incorporated.  The consummation of the NTL
     Transaction will not result in a change of control as defined in the London
     Revolver.

                                     - 67 -

<PAGE>

CABLE LONDON PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)

     The  Company  enters  into Swaps and  Collars as a normal  part of its risk
     management  efforts  to limit  its  exposure  to  adverse  fluctuations  in
     interest rates.  Using Swaps, the Company agrees to exchange,  at specified
     intervals,  the  difference  between  fixed and variable  interest  amounts
     calculated  by reference to an agreed upon notional  amount.  Collars limit
     the Company's  exposure to and benefits from interest rate  fluctuations on
     variable  rate debt to within a certain  range of interest  rates.  In June
     1997,  the Company  entered into a series of four year interest  Swaps with
     three banks. Under the agreements,  the Company pays fixed rate interest at
     7.34% and receives floating rate interest at three month LIBOR,  based upon
     the outstanding  notional amount of the Swaps. As of December 31, 1997, the
     notional  amount  outstanding on the Swaps was (UK  Pound)44.5  million and
     increased to (UK Pound)49.5  million on January 7, 1998. Also in June 1997,
     the Company  entered into a Collar  which  limits the interest  rate on the
     notional amount to between 6% and 9%. As of December 31, 1997, the notional
     amount  outstanding on the Collar was (UK Pound)22.3  million and increased
     to (UK  Pound)24.8  million on January 7,  1998.  The  notional  amounts of
     interest rate  agreements  and interest rate collar  agreements are used to
     measure  interest to be paid or received and do not represent the amount of
     exposure to credit loss. While Swaps and Collars represent an integral part
     of the Company's interest rate risk management  program,  their incremental
     effect on  interest  expense for the year ended  December  31, 1997 was not
     significant.  The estimated amount to settle the Company's Swaps and Collar
     was (UK Pound)1.5 million as of December 31, 1997.

     Also  included  in  long-term  debt  is a  mortgage  note  payable  with an
     outstanding  balance  of (UK  Pound)753,000  and  (UK  Pound)755,000  as of
     December 31, 1997 and 1996,  respectively,  payable in monthly installments
     through 2002 which is secured by property of the Company. The mortgage note
     bears interest at a fixed rate of 9.79%.

     Maturities of long-term  debt  outstanding  as of December 31, 1997 for the
     four years after 1998 are as follows ((UK Pound)000's):

                      1999                (UK Pound)
                      2000
                      2001                          2,225
                      2002                          8,900

     The  differences  between the carrying  amounts and estimated fair value of
     the Company's  long-term  debt was not  significant as of December 31, 1997
     and 1996.  Interest  rates that are currently  available to the Company for
     debt with similar terms and remaining  maturities are used to estimate fair
     value for debt issues for which quoted market prices are not available.

4.   CONVERTIBLE DEBT AND LOANS FROM SHAREHOLDERS

     As of December 31, 1997 and 1996, the Company had  outstanding  convertible
     debt due to  shareholders of (UK Pound)42.0  million and outstanding  loans
     from  shareholders  of (UK  Pound)15.0  million and (UK Pound)3.0  million,
     respectively.  The  convertible  debt  and  loans  from  shareholders  bear
     interest  at 2% above the base  lending  rate of  Barclays  Bank PLC (9.25%
     effective rate as of December 31, 1997) and are payable on demand.  Accrued
     interest  on the  convertible  debt  and  loans  from  shareholders  is (UK
     Pound)12.0  million and (UK  Pound)7.2  million as of December 31, 1997 and
     1996, respectively.  Under the terms of the London Revolver,  principal and
     interest on the convertible debt and loans from shareholders cannot be paid
     until the London Revolver is repaid.  Accordingly,  the  convertible  debt,
     loans from shareholders and accrued interest thereon has been classified as
     long-term convertible debt and other in the Company's  consolidated balance
     sheet.  The  convertible  debt,  along with accrued  interest  thereon,  is
     convertible into the Company's ordinary shares at (UK Pound)2.00 per share.
     Interest  expense on the convertible  debt and loans from  shareholders was
     (UK  Pound)4.8  million,  (UK Pound)3.3  million and (UK Pound)3.2  million
     during the years ended December 31, 1997,  1996 and 1995,  respectively.  A
     reasonable  estimate of the convertible debt and loans from shareholders is
     not  practicable  to obtain  because of the related  party  nature of these
     items and the lack of quoted market prices.

                                     - 68 -

<PAGE>


CABLE LONDON PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Continued)

5.   RELATED PARTY TRANSACTIONS

     The Company has consulting  agreements with Comcast U.K.  Consulting,  Inc.
     ("Comcast Consulting") and Telewest Communications Group Ltd., subsidiaries
     of the  Company's  two  principal  shareholders,  Comcast  UK and  Telewest
     Communications  plc ("Telewest"),  respectively.  The Company pays a fee to
     Telewest each year as a contribution to the operating  expenses and capital
     expenditures of Telewest's Network Service Center, which provides telephony
     support to the Company.

     A summary of related party charges  included in the Company's  consolidated
     financial statements is as follows (in (UK Pound)000's):
<TABLE>
<CAPTION>
                                                        Year Ended December 31,
                                              1997              1996              1995
<S>                                    <C>                <C>               <C>
           Consulting fees              (UK Pound)1,077    (UK Pound)790   (UK Pound)  962
           Network Service Center fees              521              639               503
           Other                                    355              125                33
                                         --------------   --------------    --------------
                                        (UK Pound)1,953  (UK Pound)1,554   (UK Pound)1,498
                                         ==============   ==============    ==============
</TABLE>

     As of December  31, 1997 and 1996,  accounts  payable and accrued  expenses
     include (UK Pound)176,000 million and (UK Pound)1.6 million,  respectively,
     payable  to the  Company's  two  principal  shareholders,  principally  for
     consulting fees and normal operating  expenses paid by the shareholders and
     their  affiliates  on behalf of the Company.  As of December 31, 1997 other
     long-term liabilities includes (UK Pound)2.5 million of consulting fees and
     interest payable to the Company's two principal  shareholders as payment is
     restricted under the London Revolver.

     In management's  opinion,  the foregoing  transactions were entered into on
     terms  no more or less  favorable  than  those  with  non-affiliated  third
     parties.

6.   INCOME TAXES

     The Company has a deferred tax asset arising from the  carryforward  of net
     operating  losses  and the  differences  between  the book and tax basis of
     property. However, a valuation allowance has been recorded to fully reserve
     the deferred tax asset as its realization is uncertain.

     Significant  components  of the  Company's  deferred  income  taxes  are as
     follows (in (UK Pound)000's):
<TABLE>
<CAPTION>
                                                                                                    December 31,
                                                                                               1997             1996
<S>                                                                                    <C>                <C>   
         Net operating loss carryforwards (carried forward indefinitely)..............  (UK Pound)17,692 (UK Pound)15,852
         Differences between book and tax basis of property...........................            10,426            7,329
         Other........................................................................              (459)            (756)
         Less: Valuation allowance....................................................           (27,659)         (22,425)
                                                                                         ---------------  ---------------
                                                                                        (UK Pound)       (UK Pound)
                                                                                         ===============  ===============
</TABLE>

7.   STATEMENT OF CASH FLOWS - SUPPLEMENTAL INFORMATION

     The Company made cash payments for interest of approximately  (UK Pound)7.4
     million, (UK Pound)3.7 million and (UK Pound)691,000 during the years ended
     December 31, 1997, 1996 and 1995, respectively.

     The Company  incurred capital lease  obligations of (UK Pound)4.8  million,
     (UK  Pound)1.5  million and (UK  Pound)3.9  million  during the years ended
     December 31, 1997, 1996 and 1995, respectively.

                                     - 69 -

<PAGE>

CABLE LONDON PLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (Concluded)


8.   COMMITMENTS AND CONTINGENCIES

     Certain of the Company's  facilities and equipment are held under operating
     or capital leases which expire through 2007.

     A summary of assets  held  under  capital  leases  are as  follows  (in (UK
     Pound)000's):
<TABLE>
<CAPTION>

                                                                                December 31,
                                                                           1997              1996
<S>                                                                     <C>              <C>  
         System, fixtures, fittings, equipment and vehicles..........  (UK Pound)13,040 (UK Pound)8,219
         Less: Accumulated depreciation..............................            (2,836)         (1,523)
                                                                        ---------------  --------------
                                                                       (UK Pound)10,204 (UK Pound)6,696
                                                                        ===============  ==============
</TABLE>


     Future minimum rental payments under lease  commitments  with an initial or
     remaining term of more than one year as of December 31, 1997 are as follows
     (in (UK Pound)000's):
<TABLE>
<CAPTION>
                                                                          Capital          Operating
                                                                          leases            leases
<S>                                                                      <C>                <C>
         1998........................................................  (UK Pound)1,550    (UK Pound)902
         1999........................................................            2,036              496
         2000........................................................            2,078              181
         2001........................................................            2,313              148
         2002........................................................            1,457              146
         Thereafter..................................................            7,727              955
                                                                       ---------------   --------------
         Total minimum rental commitments............................           17,161  (UK Pound)2,828
                                                                                         ==============
         Less: Amount representing interest..........................           (4,678)
                                                                       --------------- 
         Present value of minimum rental commitments.................           12,483
         Less: Current portion of capital lease obligations..........             (732)
                                                                       --------------- 
         Long-term portion of capital lease obligations.............. (UK Pound)11,751
                                                                       ===============
</TABLE>

     Operating  lease  expense for the years ended  December 31, 1997,  1996 and
     1995  was (UK  Pound)919,000,  (UK  Pound)1.2  million  and  (UK  Pound)1.1
     million, respectively.


                                     - 70 -

<PAGE>

ITEM 9       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
             FINANCIAL DISCLOSURE

     Not applicable.


                                    PART III

ITEM 10      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The Company has no executive  officers.  Certain officers of Comcast Consulting,
however,  are deemed by the Company to be executive officers of the Company (the
"Designated Executive Officers") for purposes of US federal securities laws. The
current term of office of each of the officers  expires at the first  meeting of
the Board of  Directors  of the Company  following  the next  Annual  Meeting of
Shareholders,  or as soon thereafter as each of their successors is duly elected
and qualified.

The following  sets forth certain  information  about the  Designated  Executive
Officers and Directors of the Company and their ages and designated positions as
of February 28, 1998:

Ralph J.  Roberts,  77, was elected as Chairman of the Board of Directors of the
Company in September  1994. Mr. Roberts has served as a Director and Chairman of
the Board of Directors of Comcast for more than five years.  Mr. Roberts devotes
a major portion of his time to the business and affairs of Comcast.  Mr. Roberts
has  been  the  President  and a  Director  of Sural  Corporation  ("Sural"),  a
privately-held  investment company and Comcast's largest  shareholder,  for more
than five years. Mr. Roberts is the father of Brian L. Roberts.

Julian A.  Brodsky,  64, was elected to the Board of Directors of the Company in
September  1992.  Mr.  Brodsky has served as a Director and Vice Chairman of the
Board of Directors of Comcast for more than five years.  Mr.  Brodsky  devotes a
major  portion of his time to the business and affairs of Comcast.  Mr.  Brodsky
presently serves as the Treasurer and a Director of Sural. Mr. Brodsky is also a
Director of RBB Fund, Inc.

Brian L.  Roberts,  38, was elected to the Board of  Directors of the Company in
September 1992 and was elected  President in August 1995. Mr. Roberts has served
as  President  and a Director of Comcast for more than five years.  Mr.  Roberts
devotes a major portion of his time to the business and affairs of Comcast.  Mr.
Roberts  presently serves as Vice President and a Director of Sural. Mr. Roberts
has sole voting power over stock  representing a majority of voting power of all
Sural stock and, therefore,  effectively  controls Comcast and its subsidiaries.
Mr. Roberts is also a Director of At Home  Corporation.  Mr. Roberts is a son of
Mr. Ralph J. Roberts.

Lawrence S. Smith,  50, was elected to the Board of Directors in September 1994.
Mr. Smith was  designated  Executive  Vice President of the Company in June 1996
and Senior Vice  President-Accounting  and  Administration  of the Company  from
September 1994 to June 1996. Mr. Smith has served as Executive Vice President of
Comcast  since  December  1995  and  as  Senior  Vice  President-Accounting  and
Administration  of Comcast for more than five years prior to December  1995. Mr.
Smith is the Principal  Accounting Officer of the Company and Comcast. Mr. Smith
devotes a major portion of his time to the business and affairs of Comcast.  Mr.
Smith  is also a  Director  of  Teleport  Communications  Group,  Inc.  and is a
Partnership Board Representative of Sprint Spectrum Holding Company, L.P.

John R. Alchin,  49, was elected to the Board of Directors and designated Senior
Vice  President and Treasurer of the Company in September  1994.  Mr. Alchin has
served as  Treasurer  and Senior  Vice  President  of Comcast for more than five
years. Mr. Alchin is the Principal Financial Officer of the Company and Comcast.
Mr.  Alchin  devotes a major  portion of his time to the business and affairs of
Comcast. Mr. Alchin is also a Director of Teleport Communications Group, Inc.

Stanley L. Wang,  57, was  designated  Senior Vice  President  of the Company in
September  1992.  Mr. Wang has served as Senior Vice  President,  Secretary  and
General  Counsel of Comcast for more than five years.  Mr. Wang  devotes a major
portion of his time to the business and affairs of Comcast.

Jonathan  Perry,  58, was  elected to the Board of  Directors  of the Company in
September 1994.  Since February 1992, Mr. Perry has been the Executive  Chairman
of National Home Loans Holding plc - Residential  Mortgage Lender.  From 1990 to
1992,  Mr.  Perry  served as  Chairman  and Chief  Executive  of Ogilvy  Adams &
Rinehart Limited. From 1988 to 1990,

                                     - 71 -

<PAGE>

Mr. Perry formed and headed an independent  corporate  finance company,  Perry &
Associates, which provided financial advice to a selected number of domestic and
international  companies.  From  1966 to  1988,  Mr.  Perry  served  in  various
positions at Morgan Grenfell Group plc.

Howard H.  Newman,  50, was elected to the Board of  Directors of the Company in
December  1992.  Mr.  Newman has served as Managing  Director  of E.M.  Warburg,
Pincus & Co.,  LLC since  1987.  Mr.  Newman is a Director  of ADVO,  Inc.,  Cox
Insurance  Holdings,   Plc.,  Newfield  Exploration  Company  and  RenaissanceRe
Holdings Ltd.

Jeffrey A.  Harris,  42, was elected to the Board of Directors of the Company in
December  1992.  Mr.  Harris has served as Managing  Director  of E.M.  Warburg,
Pincus & Co., LLC since 1988.  Mr. Harris is a Director of Newfield  Exploration
Company, Knoll, Inc., and several privately held companies.

H. Brian  Thompson,  58, was elected to the Board of Directors of the Company in
September  1994.  Mr.  Thompson has been  Chairman of the Board of Directors and
Chief Executive Officer of LCI International, Inc. since July 1991. Mr. Thompson
previously served as Executive Vice President of MCI Communications  Corporation
("MCI") and held various other senior  management  positions at MCI from 1981 to
1991.  Mr.  Thompson is a Director of  Microdyne  Corporation  and Golden  Books
Family Entertainment Inc.

Section 16(a) Beneficial Ownership Reporting Compliance

Section  16(a) of the  Securities  Exchange  Act of 1934  (the  "Exchange  Act")
requires the Company's executive officers and directors and persons who own more
than ten  percent  of a  registered  class of the  Company's  equity  securities
(collectively, the "reporting persons") to file reports of ownership and changes
in ownership  with the  Securities  and Exchange  Commission  and to furnish the
Company  with  copies of these  reports.  Based on the  Company's  review of the
copies of these  reports  received by it, and written  representations  received
from reporting  persons,  the Company  believes that all filings  required to be
made by the reporting  persons during the year ended December 31, 1997 were made
on a timely basis.

ITEM 11      EXECUTIVE COMPENSATION

Compensation of Directors

Directors  of the Company who are not  employees  of  Comcast,  Warburg,  Pincus
Investors,  L.P. ("Warburg Pincus") or their respective  affiliates are entitled
to receive a fee of $20,000  per year,  $1,500  per Board of  Directors  meeting
attended,  $1,000 per committee meeting attended not in conjunction with a Board
of  Directors  meeting  and $2,000  per year for  serving  as  Chairperson  of a
committee.  The  Company  reimburses  all  directors  for  expenses  incurred in
performing their duties as directors.

Compensation of Designated Executive Officers

The Company does not employ any of its Designated  Executive Officers,  nor does
it compensate them for their services.

Comcast, through Comcast Consulting, provides all administrative services to the
Company  and  provides  management  and  consulting  services  to the  Operating
Companies.

The Company  pays  Comcast  and Comcast  Consulting  for  providing  management,
administrative  and other  services  to the  Company  and its  subsidiaries  and
investees  pursuant to various  management  agreements.  Total  management  fees
incurred  during  the years  ended  December  31,  1997,  1996 and 1995 were (UK
Pound)3.2   million,   (UK  Pound)3.0   million  and  (UK   Pound)3.1   million,
respectively.

ITEM 12      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Principal Shareholders

The  following  table sets forth certain  information  regarding the holdings of
each  shareholder  who was known to the Company to be the beneficial  owner,  as
defined  in Rule 13d-3 of the  Exchange  Act,  of more than 5% of the  Company's
Class A Common  Shares  or Class B Common  Shares at the  close of  business  on
February 28, 1998. So far as is known

                                     - 72 -

<PAGE>

to the Company,  the persons named in the table below as beneficially owning the
shares set forth therein have sole voting power and sole  investment  power with
respect to such shares, unless otherwise indicated.
<TABLE>
<CAPTION>
                                                                                           Amount            Percent       Percent
                                   Name and Address of                                  Beneficially            of           of
Title of Class                     Beneficial Owner(1)                                      Owned             Class         Vote
<S>                               <C>                                                   <C>                     <C>          <C> 
Class A Common Shares              Snyder Capital Management, L.P.(2)                    3,433,200               9.2%         2.1%
                                   350 California Street, Suite 1460
                                   San Francisco, CA 94104

                                   Warburg, Pincus Investors, L.P.(3)                   10,235,744              27.5%         6.2%
                                   E.M. Warburg, Pincus & Co., LLC
                                   Warburg, Pincus & Co.
                                   466 Lexington Avenue
                                   New York, NY  10017

Class B Common Shares              Comcast U.K. Holdings, Inc.(4)(5)                    12,872,605             100.0%        77.6%
                                   1500 Market Street
                                   35th Floor
                                   Philadelphia, PA 19102-2148
---------------
<FN>
(1)  "Beneficial  ownership" is defined  pursuant to regulations  promulgated by
     the  Securities and Exchange  Commission as having or sharing,  directly or
     indirectly,  voting power and/or investment power, which includes the power
     to dispose or direct the  disposition of the Class A Common Shares or Class
     B Common Shares indicated.
(2)  The  information  contained  in this table with  respect to Snyder  Capital
     Management,  L.P.,  Snyder Capital  Management,  Inc. and Alan Barry Snyder
     (collectively,  "Snyder")  is based upon a filing made on  Schedule  13G by
     Snyder, setting forth information as of February 19, 1998. The Schedule 13G
     indicates that Snyder has shared  dispositive power as to 3,208,900 shares,
     shared voting power as to 2,976,400 shares, and sole voting and dispositive
     power as to 224,300 shares.
(3)  Warburg,  Pincus & Co., a New York general  partnership ("WP"), is the sole
     general partner of Warburg Pincus,  a Delaware  limited  partnership.  E.M.
     Warburg,  Pincus & Co.,  LLC, a New York limited  liability  company  ("EMW
     LLC"), manages Warburg Pincus. The members of EMW LLC are substantially the
     same as the partners of WP. Lionel I. Pincus is the managing  partner of WP
     and the managing member of EMW LLC and may be deemed to control both WP and
     EMW LLC.  WP, as the sole  general  partner  of Warburg  Pincus,  has a 20%
     interest in the  profits of Warburg  Pincus.  Messrs.  Howard H. Newman and
     Jeffrey A. Harris,  directors of the Company,  are Managing  Directors  and
     members of EMW LLC and general partners of WP. As such, Messrs.  Newman and
     Harris each may be deemed to have an indirect  pecuniary  interest  (within
     the  meaning  of Rule 16a-1  under the  Exchange  Act) in an  indeterminate
     portion of the Class A Common Shares  beneficially  owned by Warburg Pincus
     and WP. Each of Messrs. Newman and Harris disclaims beneficial ownership of
     such  Class A Common  Shares  within the  meaning  of Rule 13d-3  under the
     Exchange Act.
(4)  Each  record  holder of Class B Common  Shares is entitled to ten votes per
     share which  constitutes  approximately  77.6% of the total voting power of
     all outstanding Common Shares of the Company. The 12,872,605 Class B Common
     Shares are convertible  into Class A Common Shares on a one-for-one  basis.
     100% of the Class B Common  Shares,  if converted to Class A Common Shares,
     would represent  approximately  25.7% of the voting power of Class A Common
     Shares.
(5)  Comcast U.K. Holdings,  Inc. is a direct wholly owned subsidiary of Comcast
     International  Holdings,  Inc.  ("CIH").  CIH  is  a  direct  wholly  owned
     subsidiary of Comcast.  At February 28, 1998,  Sural owned 1,845,037 shares
     of Comcast's Class A Common Stock and was the sole owner of Comcast's Class
     B Common Stock outstanding.  Mr. Brian L. Roberts, President and a director
     of Comcast  has sole  voting  power over stock  representing  a majority of
     voting  power of all Sural  stock.  Pursuant to Rule 13d-3 of the  Exchange
     Act, Mr. Roberts is deemed to be the beneficial  owner of Comcast's Class A
     Common  Stock  owned by  Sural.  Mr.  Robert's  beneficial  ownership  also
     includes 2,705 shares of Comcast's  Class A Common Stock owned directly and
     1,356  shares of Comcast's  Class A Common  Stock owned by his wife,  as to
     which shares he disclaims beneficial  ownership.  Furthermore,  pursuant to
     Rule 13d-3 of the Exchange Act, Mr.  Roberts is deemed to be the beneficial
     owner of Comcast's Class B Common Stock owned by Sural. Since each share of
     Comcast's Class B Common Stock is entitled to fifteen votes,  the shares of
     Comcast's  Class A Common Stock and Comcast's Class B Common Stock owned by
     Sural constitute  approximately  82% of the voting power of the two classes
     of Comcast's  voting common stock combined.  Comcast's Class B Common Stock
     is convertible  on a  share-for-share  basis into Comcast's  Class A Common
     Stock or Comcast's  Class A Special Common Stock.  If Sural were to convert
     Comcast's Class B Common Stock that it

                                     - 73 -

<PAGE>

     beneficially  owns into Comcast's  Class A Common Stock,  Mr. Roberts would
     beneficially  own  10,635,348  shares  of  Comcast's  Class A Common  Stock
     (approximately 26% of Comcast's Class A Common Stock).
</FN>
</TABLE>


Security Ownership of Management

The following table sets forth certain information  regarding the Class A Common
Shares  beneficially owned by each director and Designated  Executive Officer of
the Company who owns  shares,  and by all  directors  and  Designated  Executive
Officers  of the  Company as a group,  at the close of  business  on January 31,
1998.  Each of the persons named in the table below as  beneficially  owning the
shares set forth  therein has sole voting power and sole  investment  power with
respect to such shares, unless otherwise indicated.
<TABLE>
<CAPTION>
                                                                          Amount Beneficially
Name of Beneficial Owner                                                         Owned             Percent of Class
<S>                                                                              <C>                      <C>
John R. Alchin..........................................................         2,000                    (1)
Julian A. Brodsky.......................................................         1,000                    (1)
Brian L. Roberts........................................................         1,000                    (1)
Ralph J. Roberts........................................................         5,000                    (1)
H. Brian Thompson.......................................................         1,000                    (1)

All directors and Designated Executive Officers, as a
      group (10 persons)................................................        10,000                    (1)
---------------
<FN>
(1)  Less than one percent of the class.
</FN>
</TABLE>


The following table sets forth certain  information  regarding Comcast's Class A
Common Stock (one vote per share, par value $1.00 per share) and Comcast's Class
A  Special  Common  Stock  (generally  non-voting,  par value  $1.00 per  share)
beneficially  owned by each  director and  Designated  Executive  Officer of the
Company who owns shares, and by all directors and Designated  Executive Officers
of the Company as a group, at the close of business on January 31, 1998. Each of
the persons named in the table below as beneficially owning the shares set forth
therein has sole voting  power and sole  investment  power with  respect to such
shares, unless otherwise indicated.
<TABLE>
<CAPTION>
                                                Amount Beneficially Owned(1)                      Percent of Class(1)

                                                           Class A                                      Class A
Name of Beneficial Owner               Class A             Special             Class B      Class A     Special    Class B
<S>                                <C>                 <C>                   <C>             <C>         <C>        <C> 
John R. Alchin...............              -               301,280(3)                -         (2)         (2)        (2)
Julian A. Brodsky............        280,559(4)          2,076,640                   -         (2)         (2)        (2)
Brian L. Roberts.............      1,849,098(5)(6)       5,916,166(7)(8)     8,786,250(9)     5.8%        1.9%     100.0%
Ralph J. Roberts.............        319,070             5,475,505(10)         658,125        1.0%        1.7%       7.0%
Lawrence S. Smith............              -               358,448                   -         (2)         (2)        (2)
All directors and Designated
   Executive Officers, as a group
  (10 persons)...............      2,489,618            14,322,182           9,444,375         7.8%        4.4%     100.0%
                                    (4)(5)(6)           (3)(7)(8)(10)(11)           (9)
---------------
<FN>
(1)   With respect to each beneficial  owner,  the shares issuable upon exercise
      of his currently  exercisable  options and options  exercisable  within 60
      days of January 31, 1998 are deemed to be  outstanding  for the purpose of
      computing the percentage of the class of common stock owned.  Includes the
      following shares of Comcast's Class A Special and Class B common stock for
      which the named  individuals,  and all directors and Designated  Executive
      Officers  as  a  group  hold  currently  exercisable  options  or  options
      exercisable within 60 days of January 31, 1998: Mr. Alchin, 214,796 shares
      and none; Mr.  Brodsky,  1,186,568  shares and none; Mr. Brian L. Roberts,
      487,832  shares and none;  Mr.  Ralph J.  Roberts,  4,695,458  and 658,125
      shares;  Mr.  Smith,  317,681  shares  and  none;  and all  directors  and
      Designated Executive Officers as a group, 7,042,050 and 658,125 shares.
(2)   Less than one percent of the applicable class.
(3)   Includes  15 shares of Class A Special  Common  Stock owned in the Comcast
      Corporation  Retirement-Investment  Plan,  as to which shares he disclaims
      beneficial ownership.

                                     - 74 -

<PAGE>

(4)   Includes  33,431  shares  of Class A Common  Stock  owned by a  charitable
      foundation  of  which he and  members  of his  family  are  directors  and
      officers, as to which shares he disclaims beneficial ownership.
(5)   Includes  1,845,037  shares of Class A Common  Stock  owned by Sural.  See
      "Principal Shareholders" note (5) for further discussion.
(6)   Includes  1,356  shares of Class A Common  Stock owned by his wife,  as to
      which shares he disclaims beneficial ownership.
(7)   Includes  5,315,772 shares of Class A Special Common Stock owned by Sural.
      See "Principal Shareholders" note (5) for further discussion.
(8)   Includes  678 shares of Class A Special  Common  Stock  owned by his wife,
      21,024 shares owned in the Comcast Corporation Retirement-Investment Plan,
      and 10,000  shares  owned by a charitable  foundation  of which he and his
      wife are directors  and  officers,  as to all of which shares he disclaims
      beneficial ownership.
(9)   Includes  8,786,250  shares of Class B Common  Stock  owned by Sural.  See
      "Principal Shareholders" note (5) for further discussion.
(10)  Includes  10,000  shares  of  Class A  Special  Common  Stock  owned  by a
      charitable  foundation  of which he and his  wife are  trustees  and as to
      which shares he disclaims beneficial ownership.
(11)  Includes 15 shares of Class A Special  Common  Stock owned by a Designated
      Executive Officer other than those named above in the Comcast  Corporation
      Retirement-Investment  Plan,  as to which shares  beneficial  ownership is
      disclaimed.
</FN>
</TABLE>

ITEM 13      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See "Executive Compensation - Compensation of Designated Executive Officers."



                                     - 75 -

<PAGE>

                                     PART IV

ITEM 14      EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a) The following financial statements are included in Part II, Item 8:

              Comcast UK Cable Partners Limited and Subsidiaries
              Independent Auditors' Report...................................31
              Consolidated Balance Sheet--December 31, 1997 and 1996.........32
              Consolidated Statement of Operations--Years
               Ended December 31, 1997, 1996 and 1995........................33
              Consolidated Statement of Cash Flows--Years
               Ended December 31, 1997, 1996 and 1995........................34
              Consolidated Statement of Shareholders'
               Equity--Years Ended December 31, 1997, 1996 and 1995..........35
              Notes to Consolidated Financial Statements.....................36

              Birmingham Cable Corporation Limited and Subsidiaries
              Independent Auditors' Report...................................49
              Consolidated Balance Sheet--December 31, 1997 and 1996.........50
              Consolidated Statement of Operations--Years
               Ended December 31, 1997, 1996 and 1995........................51
              Consolidated Statement of Cash Flows--Years
               Ended December 31, 1997, 1996 and 1995........................52
              Consolidated Statement of Shareholders'
               Equity--Years Ended December 31, 1997, 1996 and 1995..........53
              Notes to Consolidated Financial Statements.....................54

              Cable London PLC and Subsidiaries
              Independent Auditors' Report...................................60
              Consolidated Balance Sheet--December 31, 1997 and 1996.........61
              Consolidated Statement of Operations--Years
               Ended December 31, 1997, 1996 and 1995........................62
              Consolidated Statement of Cash Flows--Years
               Ended December 31, 1997, 1996 and 1995........................63
              Consolidated Statement of Shareholders' (Deficiency)
               Equity--Years Ended December 31, 1997, 1996 and 1995..........64
              Notes to Consolidated Financial Statements.....................65

     (b) (i)  The following  financial  statement schedules required to be filed
              by Items 8 and 14(d) of Form 10-K are included in Part IV:

              Schedule  I  -  Condensed  Financial   Information  of  Registrant
              Unconsolidated (Parent Only)
              Schedule II - Valuation and Qualifying Accounts

              All other  schedules are omitted  because they are not applicable,
              not  required  or the  required  information  is  included  in the
              consolidated financial statements or notes thereto.

     (c) Reports on Form 8-K.

         (i)  The  Company  filed a Current  Report on Form 8-K under  Item 1 on
              October  27,  1997  relating  to  the  change  in  control  of the
              Registrant.

     (d) Exhibits required to be filed by Item 601 of Regulation S-K:

         2.l*       Reorganization  Agreement,  dated 19 September  1994,  among
                    Warburg,  Pincus Investors,  L.P., Bankers Trust Investments
                    PLC  ("Bankers  Trust"),  Comcast  Corporation  ("Comcast"),
                    Comcast U.K. Holdings, Inc.,  ("Holdings"),  the Company and
                    UK Cable Partners Limited ("UKCPL").

                                     - 76 -

<PAGE>



         2.2z       Agreement and Plan of Amalgamation dated 4 February 1998 
                    among NTL Incorporated, NTL (Bermuda) Limited and the
                    Company.
         3(i)+      Memorandum of Association of the Company.
         3(ii)+     Bye-laws of the Company.
         4.l+       Form of Certificate for Class A Common Shares, par value (UK
                    Pound)0.01 per share. 
         4.2*       Indenture dated as of 15 November 1995,  between the Company
                    and Bank of Montreal Trust Company,  as Trustee,  in respect
                    of the Company's 11.20% Senior Discount  Debentures Due 2007
                    (the "2007 Debentures").
         4.2ax      Form of  certificate  of the 2007  Debentures  (included  in
                    Exhibit 4.2).
         10.1+      Subscription  and Contribution  Agreement,  dated 26 October
                    1992, among Comcast, UKCPL, the Company,  Holdings,  Comcast
                    Cablevision of Birmingham,  Inc. ("Comcast  Birmingham") and
                    Comcast Cablevision of London, Inc.
         10.2+      Shareholders   Agreement,   dated  11  December   1992  (the
                    "Shareholders   Agreement"),   among  Holdings,  UKCPL,  the
                    Company and Comcast.
         10.3+      Delegation   Agreement,   dated  11   December   1992   (the
                    "Delegation Agreement"),  among LTK Consulting,  Comcast and
                    Comcast UK Consulting, Inc. ("Comcast Consulting").
         10.4+      NewCo Services Agreement, dated 11 December 1992 (the "NewCo
                    Services  Agreement"),  between  the  Company and Comcast UK
                    Cable Partners Consulting, Inc. ("UK Consulting").
         10.5++     Supplemental  Agreement,  dated  21  June  1995,  among  the
                    Company,  Comcast  Consulting,  Comcast,  Holdings,  Warburg
                    Pincus and UK  Consulting to the NewCo  Services  Agreement,
                    the Delegation Agreement and the Shareholders Agreement.
         10.6+      Memorandum of  Association  and Articles of  Association  of
                    Birmingham Cable Corporation Limited ("Birmingham Cable").
         10.7+      Co-ownership Agreement, dated 12 March 1990, between US West
                    International   Holdings,   Inc.  ("US  West")  and  Comcast
                    Birmingham.
         10.7a+     Letter,  dated  29  April  1992,  from US  West  to  Comcast
                    Birmingham relating to the Co-ownership Agreement.
         10.7b+     Letter, dated 6 May 1992, from US West to Comcast Birmingham
                    relating to the Co-ownership Agreement.
         10.8+      Subscription Agreement, dated 4 May 1989, between Birmingham
                    Cable and US West.
         10.8a+     Subscription Agreement,  dated 31 May 1989, among Birmingham
                    Cable,  US West,  Compagnie  Generale des Eaux ("CGE"),  The
                    Cable  Corporation  Limited  ("TCC") and the  Standard  Life
                    Insurance Company ("Standard Life").
         10.8b+     Supplemental  Subscription  Agreement,  dated 16 March 1990,
                    among  Birmingham  Cable, US West, CGE, TCC,  Standard Life,
                    Comcast Birmingham and General Cable PLC ("General Cable").
         10.8c+     Second Supplemental  Subscription Agreement,  dated 16 March
                    1990,  among Birmingham  Cable, US West, CGE, TCC,  Standard
                    Life, Comcast Birmingham and General Cable.
         10.8d+     Third  Supplemental  Subscription  Agreement,  dated  12 May
                    1992,  among Birmingham  Cable, US West, CGE, TCC,  Standard
                    Life,  Comcast  Birmingham,  General Cable and US West Cable
                    Programming Corporation.
         10.8e*     Agreement relating to Birmingham Cable, dated 30 March 1994,
                    among  General  Cable,  CGE,  Telewest   Communications  plc
                    ("Telewest"),  US  West,  United  Artists  Cable  Television
                    International  Holdings,  Inc., the Company,  Comcast,  TCC,
                    Birmingham  Cable,  Birmingham  Cable  Limited and  Standard
                    Life.
         10.9+      Management  Agreement,  dated 25 April 1990 (the "Management
                    Agreement"),   among  Birmingham  Cable,   Birmingham  Cable
                    Limited, US West and Comcast Birmingham.
         10.9a+     Assignment Agreement,  dated 27 August 1990, relating to the
                    Management Agreement.
         10.9b+     Assignment  and  Amendment  Agreement,  dated 5 August 1992,
                    relating to the Management Agreement.
         10.10+     Consultant  Agreement,  dated 17 July 1992, among Birmingham
                    Cable,  Birmingham Cable Limited and Telewest Communications
                    Group Limited.
         10.12+     Memorandum of  Association  and Articles of  Association  of
                    Cable London PLC ("Cable London").
         10.13+     Consultant  Agreement,  dated 16 August 1989,  between Cable
                    London and US West Cable Communications Limited.
         10.14+     Consultant  Agreement,  dated 17 August  1989  (the  "London
                    Consultant Agreement"), between Cable London and Comcast.

                                     - 77 -

<PAGE>

         10.14a+    Assignment  Agreement,  dated 14 September 1990, relating to
                    the London Consultant Agreement.
         10.15+     Subscription  Agreement,  dated 10 July  1989,  among  Cable
                    London,  US West,  Comcast,  Jerrold Samuel Nathan,  Malcolm
                    John Gee, Sally Margaret Davis and Steven Michael Kirk.
         10.16x     Share  Exchange  Agreement,  dated 4  December  1995,  among
                    Singapore  Telecom  International  Pte.  Limited,  Cambridge
                    Cable, the Company and Holdings.
         10.17+     Share Exchange  Agreement,  dated 5 May 1994, between Avalon
                    Telecommunications L.L.C. and the Company.
         10.18ss    1995 Stock Appreciation Rights Plan (1).
         10.19y     1995 Stock Option Plan (1).
         10.20      Loan Agreement for a (UK Pound)200,000,000  Credit Facility,
                    dated as of December  23,  1997,  among  Comcast UK Holdings
                    Limited and The Bank of New York and Banque  Paribas as Lead
                    Arrangers,  Barclays  Capital and The Royal Bank of Scotland
                    PLC as co-arrangers,  The Bank of New York as Agent, and the
                    Bank of New York as Security Trustee.
         21.1       List of subsidiaries of the Company.
         23.1       Consent of Deloitte & Touche LLP.
         23.2       Consent of Deloitte & Touche - Birmingham.
         23.3       Consent of Deloitte & Touche - London.
         27.1       Financial Data Schedule.
         99.1y      Consolidated   financial  statements  of  Cambridge  Holding
                    Company  Limited  (a  United  Kingdom   corporation  in  the
                    prematurity  stage) and subsidiaries as of and for the years
                    ended December 31, 1995 and 1994.
---------------
(1) Constitutes a management contract or compensatory plan or arrangement.
*    Incorporated by reference to the Company's  Registration  Statement on Form
     S-1 (file number 33-96932) declared effective November 9, 1995.
+    Incorporated by reference to the Company's  Registration  Statement on Form
     S-1 (file number 33-76160) declared effective September 20, 1994.
++   Incorporated  by reference to the Company's  Quarterly  Report on Form 10-Q
     for the quarter ended June 30, 1995 (file number 0-24792).
ss   Incorporated  by reference to the Company's  Quarterly  Report on Form 10-Q
     for the quarter ended March 31, 1995 (file number 0-24792).
x    Incorporated by reference to the Company's Current Report on Form 8-K dated
     January 22, 1996.
y    Incorporated  by reference to the Company's  Annual Report on Form 10-K for
     the year ended December 31, 1995 (file number 0-24792).

                                     - 78 -

<PAGE>
                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this Report to be signed on its
behalf by the undersigned, thereunto duly authorized on March 25, 1998.


                                    COMCAST UK CABLE PARTNERS LIMITED

                                    By:/s/ JOHN R. ALCHIN
                                       JOHN R. ALCHIN
                                       Senior Vice President and Treasurer
                                      (Principal Financial Officer); Director

Pursuant to the requirement of the Securities  Exchange Act of 1934, this Report
has been signed  below by the  following  persons in the  capacities  and on the
dates indicated.
<TABLE>
<CAPTION>
Signature                                   Title                                   Date
<S>                                        <C>                                     <C>
/s/ RALPH J. ROBERTS
RALPH J. ROBERTS                            Chairman of the Board of                March 25, 1998
                                            Directors; Director

/s/ BRIAN L. ROBERTS
BRIAN L. ROBERTS                            President (Principal                    March 25, 1998
                                            Executive Officer); Director

/s/ JULIAN A. BRODSKY
JULIAN A. BRODSKY                           Vice Chairman of the Board              March 25, 1998
                                            of Directors; Director

/s/ LAWRENCE S. SMITH
LAWRENCE S. SMITH                           Executive Vice President                March 25, 1998
                                            (Principal Accounting Officer);
                                            Director

/s/ JOHN R. ALCHIN
JOHN R. ALCHIN                              Senior Vice President and               March 25, 1998
                                            Treasurer (Principal Financial
                                            Officer); Director

/s/ JONATHAN PERRY
JONATHAN PERRY                              Director                                March 25, 1998

/s/ HOWARD H. NEWMAN
HOWARD H. NEWMAN                            Director                                March 25, 1998

/s/ JEFFREY A. HARRIS
JEFFREY A. HARRIS                           Director                                March 25, 1998

/s/ H. BRIAN THOMPSON
H. BRIAN THOMPSON                           Director                                March 25, 1998

/s/ JOHN R. ALCHIN
JOHN R. ALCHIN                              Authorized Representative               March 25, 1998
                                            in the United States
</TABLE>

                                     - 79 -
<PAGE>

               COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES

                 SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF

                     REGISTRANT UNCONSOLIDATED (PARENT ONLY)

                             CONDENSED BALANCE SHEET

                     (in (UK Pound)000's, except share data)
<TABLE>
<CAPTION>
                                                                                          December 31,
ASSETS                                                                             1997                1996
<S>                                                                       <C>                  <C>   
   Cash and cash equivalents.............................................  (UK Pound)27,874     (UK Pound)56,354
   Short-term investments................................................                                 61,466
   Other current assets..................................................                44                   15
                                                                           ----------------     ----------------
     Total current assets................................................            27,918              117,835
   Investments in affiliates.............................................            61,363               69,472
   Investments in and net amounts due from subsidiaries
     eliminated upon consolidation.......................................           312,508              250,513
   Deferred charges, net.................................................             5,234                6,439
   Foreign exchange put options, net.....................................             7,958               10,728
                                                                           ----------------     ----------------
                                                                          (UK Pound)414,981    (UK Pound)454,987
                                                                           ================     ================

LIABILITIES AND SHAREHOLDERS' EQUITY

   Accounts payable and accrued expenses.................................     (UK Pound)195        (UK Pound)381
   Foreign exchange call options.........................................                                  4,086
                                                                           ----------------     ----------------
     Total current liabilities...........................................               195                4,467
                                                                           ----------------     ----------------
   Long-term debt........................................................           229,150              198,087
                                                                           ----------------     ----------------
   Foreign exchange call options.........................................             2,688                3,079
                                                                           ----------------     ----------------
   Long-term debt, due to shareholder....................................            11,272               10,322
                                                                           ----------------     ----------------

   Shareholders' equity
     Preferred shares, (UK Pound).01 par value - authorized, 10,000,000
       shares; issued none...............................................
     Class A common shares, (UK Pound).01 par value - authorized, 
       50,000,000 shares; issued, 37,231,997.............................               372                  372
     Class B common shares, (UK Pound).01 par value - authorized, 
       50,000,000 shares; issued, 12,872,605.............................               129                  129
     Additional capital..................................................           358,548              358,548
     Accumulated deficit.................................................          (187,373)            (120,017)
                                                                           ----------------     ----------------
       Total shareholders' equity........................................           171,676              239,032
                                                                           ----------------     ----------------
                                                                          (UK Pound)414,981    (UK Pound)454,987
                                                                           ================     ================
</TABLE>

<PAGE>



               COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES

                SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF

                     REGISTRANT UNCONSOLIDATED (PARENT ONLY)

            CONDENSED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT

                              (in (UK Pound)000's)

<TABLE>
<CAPTION>
                                                                                   Year Ended December 31,
                                                                          1997                 1996                1995
COSTS AND EXPENSES
<S>                                                              <C>                <C>                     <C>
   General and administrative.................................     (UK Pound)629      (UK Pound)1,064         (UK Pound)595
   Management fees............................................             1,165                1,306                 1,424
   Amortization...............................................             1,126                1,135                   668
                                                               -----------------    -----------------      ----------------
                                                                           2,920                3,505                 2,687
                                                               -----------------    -----------------      ----------------

OPERATING LOSS................................................            (2,920)              (3,505)               (2,687)

OTHER (INCOME) EXPENSE
   Interest expense...........................................            24,684               23,210                 3,539
   Investment income..........................................           (16,608)             (18,768)              (11,512)
   Equity in net losses of affiliates.........................            51,265               45,585                33,177
   Exchange losses (gains) and other..........................             5,095              (12,957)                1,071
                                                               -----------------    -----------------      ----------------
                                                                          64,436               37,070                26,275
                                                               -----------------    -----------------      ----------------

NET LOSS......................................................           (67,356)             (40,575)              (28,962)

ACCUMULATED DEFICIT
   Beginning of year..........................................          (120,017)             (79,442)              (50,480)
                                                               -----------------    -----------------      ----------------

   End of year................................................((UK Pound)187,373)  ((UK Pound)120,017)    ((UK Pound)79,442)
                                                               =================    =================      ================
</TABLE>

<PAGE>

               COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES

                SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF

                     REGISTRANT UNCONSOLIDATED (PARENT ONLY)

                        CONDENSED STATEMENT OF CASH FLOWS

                              (in (UK Pound)000's)
<TABLE>
<CAPTION>
                                                                                   Year Ended December 31,
                                                                          1997              1996             1995
OPERATING ACTIVITIES
<S>                                                            <C>               <C>                <C>    
   Net loss................................................... ((UK Pound)67,356)((UK Pound)40,575)(UK Pound)28,962)
   Adjustments to reconcile net loss to net cash
    provided  by  operating activities:
     Depreciation and amortization............................             1,126            1,135               668
     Amortization on foreign exchange contracts...............             2,770            2,752               (75)
     Non-cash interest expense................................            24,684           23,209             3,539
     Non-cash investment income...............................            (2,521)          (2,854)           (5,016)
     Exchange losses (gains)..................................             2,852          (18,857)              944
     Equity in net losses of affiliates.......................            51,265           45,585            33,177
     Other....................................................               717               19                14
                                                                 ---------------  ---------------  ----------------
                                                                          13,537           10,414             4,289

     (Increase) decrease in other current assets..............               (29)              73                (3)
     (Decrease) increase in accounts payable
        and accrued expenses..................................              (186)             186               154
                                                                 ---------------  ---------------  ----------------
         Net cash provided by operating activities............            13,322           10,673             4,440
                                                                 ---------------  ---------------  ----------------

FINANCING ACTIVITIES
   Proceeds from borrowings...................................                                              192,542
   Debt acquisition costs.....................................                                               (6,089)
   Purchase of foreign exchange put options...................                                              (13,855)
   Proceeds from sales of foreign exchange call options.......                              2,125             3,415
   Other......................................................                                                  (53)
                                                                 ---------------  ---------------  ----------------
         Net cash provided by financing activities............                              2,125           175,960
                                                                 ---------------  ---------------  ----------------

INVESTING ACTIVITIES
   Proceeds from sales (purchases) of short-term
     investments, net.........................................            61,466           (4,226)          (43,141)
   Additions to deferred charges..............................              (600)            (390)
   Net transactions with affiliates...........................          (102,668)        (108,126)          (79,603)
                                                                 ---------------  ---------------  ----------------
         Net cash used in investing activities................           (41,802)        (112,742)         (122,744)
                                                                 ---------------  ---------------  ----------------

(DECREASE) INCREASE IN CASH AND
   CASH EQUIVALENTS...........................................           (28,480)         (99,944)           57,656

CASH AND CASH EQUIVALENTS, beginning of year..................            56,354          156,298            98,642
                                                                 ---------------  ---------------  ----------------

CASH AND CASH EQUIVALENTS, end of year........................  (UK Pound)27,874 (UK Pound)56,354 (UK Pound)156,298
                                                                 ===============  ===============  ================
</TABLE>



<PAGE>

               COMCAST UK CABLE PARTNERS LIMITED AND SUBSIDIARIES

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

                              (in (UK Pound)000's)

<TABLE>
<CAPTION>

                                                                              Additions
                                              Balance at    Effect of        Charged to         Deductions             Balance
                                              Beginning     SingTel          Costs and             from                at End
                                               of Year    Transaction        Expenses          Reserves(A)            of Year

Allowance for Doubtful Accounts
<S>                                    <C>                <C>             <C>                 <C>               <C>    
   1997............................    (UK Pound)1,338.0  (UK Pound)      (UK Pound)1,488.0   (UK Pound)228.0   (UK Pound)2,598.0

   1996............................                 40.0            577.0           1,325.0             604.0             1,338.0

   1995............................                  8.0                               32.0                                  40.0
</TABLE>




(A) Uncollectible accounts written off.