##### Table of Contents



---

---

SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-K

|           |  |                                                                                                                                 
|---------- |  | --------------------------------------------------------------------------------------------------------------------------------
|(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, 2002
|or        
|[   ]      |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from      to 

Commission file number: 0-19889

South Hertfordshire United Kingdom Fund, Ltd.

(Exact name of registrant as specified in its charter)


|                                |  |                    
|------------------------------- |  | -------------------
|Colorado                        |  | #84-1145140        
|(State or Other Jurisdiction of |  | (I.R.S. Employer   
|Incorporation or Organization)  |  | Identification No.)

|                                           |  |                                       
|------------------------------------------ |  | --------------------------------------
|Bartley Wood Business Park, Hook,          |  | Secretary, NTL Incorporated           
|Hampshire RG27 9UP, England                |  | 110 East 59th Street                  
|+44 1256 752000                            |  | New York, NY 10022                    
|(Address and Telephone Number of Principal |  | (212) 906-8440                        
|Executive Offices)                         |  | (Name, address and telephone number of
|                                           |  | agent for service)                    



---

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

None




---

Securities Registered Pursuant to Section 12(g) of the Act:
Limited Partnership Interests



---

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 the registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-K or any
amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act) Yes [  ] No
 [X]

There is no established public market for the registrants limited
partnership interests.



---

DOCUMENTS INCORPORATED BY REFERENCE
None



---

---





---

TABLE OF CONTENTS



|               |                                                                                               |  |  |  |  |  |  | 
|-------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I        
|               | ITEM 1. BUSINESS                                                                             
|               | ITEM 2. PROPERTIES                                                                           
|               | ITEM 3. LEGAL PROCEEDINGS                                                                    
|               | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|PART II       
|               | ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS            
|               | ITEM 6. SELECTED FINANCIAL DATA                                                              
|               | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|               | ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                          
|               | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                          
|               | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 
|PART III      
|               | ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                  
|               | ITEM 11. EXECUTIVE COMPENSATION                                                              
|               | ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                      
|               | ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                      
|               | ITEM 14. CONTROLS AND PROCEDURES                                                             
|PART IV       
|               | ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K                     
|EXHIBIT INDEX 
|SIGNATURES    
|SUBSIDIARIES  
|CERTIFICATIONS



---



##### Table of Contents



TABLE OF CONTENTS

|               |  |                                                                                       |  |     
|-------------- |  | ------------------------------------------------------------------------------------- |  | ----
|               |  |                                                                                       |  | Page
|               |  |                                                                                       |  |     
|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 STOCKHOLDER MATTERS             |  | 16  
|ITEM 6.        |  | SELECTED FINANCIAL DATA                                                               |  | 16  
|ITEM 7.        |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS |  | 17  
|ITEM 7a.       |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            |  | 23  
|ITEM 8.        |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                           |  | 30  
|ITEM 9.        |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE  |  | 30  
|PART III       |  |                                                                                       |  |     
|ITEM 10.       |  | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                    |  | 31  
|ITEM 11.       |  | EXECUTIVE COMPENSATION                                                                |  | 31  
|ITEM 12.       |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                        |  | 31  
|ITEM 13.       |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                        |  | 31  
|ITEM 14.       |  | CONTROLS AND PROCEDURES                                                               |  | 32  
|PART IV        |  |                                                                                       |  |     
|ITEM 15.       |  | EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K                       |  | 33  
|SIGNATURES     |  | 34                                                                                   
|CERTIFICATIONS |  | 35                                                                                   

This Annual Report on Form 10-K for the year ended December 31, 2002, 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.

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

Certain statements contained herein constitute forward-looking
statements as that term is defined under the Private Securities Litigation
Reform Act of 1995. When used in this Form 10-K, the words, believe,
anticipate, should, intend, plan, will, expects, estimates,
projects, positioned, strategy, and similar expressions identify such
forward-looking statements. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of the Partnership, or industry results,
to be materially different from those contemplated or projected, forecasted,
estimated or budgeted, whether expressed or implied, by such forward-looking
statements. Such factors include, among others, those set forth under the
caption Risk Factors in this Form 10-K as well as: the ability of the
Partnership to continue as a going concern, the ability of the Partnership to
obtain trade credit and shipments and terms with vendors and service providers
for current orders; the Partnerships ability to maintain contracts that are
critical to its operations; potential adverse developments with respect to the
Partnerships liquidity or results of operations; the ability to fund and
execute its business plan; the ability to attract, retain and compensate key
executives and associates; the ability of the Partnership attract and retain
customers; general economic and business conditions, technological
developments, the Partnerships ability to continue to design networks, install
facilities, obtain and maintain any required governmental licenses or approvals
and finance construction and development, all in a timely manner at reasonable
costs and on satisfactory terms and conditions, as well as assumptions about
customer acceptance, churn rates, overall market





---



##### Table of Contents



penetration and competition from providers of alternative services, the
impact of restructuring and integration actions, the impact of new business
opportunities requiring significant up-front investment and interest rate and
currency exchange rate fluctuations. We assume no obligation to
update the forward-looking statements contained herein to reflect
actual results, changes in assumptions or changes in factors
affecting such statements.

In this Annual Report on Form 10-K, the Partnership, we, us and
our refer to South Hertfordshire United Kingdom Fund, Ltd. and its
subsidiaries except where we expressly state that we are referring only to
South Hertfordshire United Kingdom Fund, Ltd. or the context otherwise requires
that we are referring only to South Hertfordshire United Kingdom Fund, Ltd.,
NTL South Herts and the Company refer to our subsidiary NTL (South
Hertfordshire) Limited and NTL refers to NTL Incorporated (formerly NTL
Communications Corp.) and its consolidated subsidiaries except where we
expressly state that we are referring only to NTL Incorporated or the context
otherwise requires that we are referring only to NTL Incorporated.

ii



---



##### Table of Contents






PART I




ITEM 1. BUSINESS

South Hertfordshire United Kingdom Fund, Ltd., formerly known as Jones
United Kingdom Fund, Ltd., is a Colorado limited partnership that was formed
in December 1991 pursuant to the public offering of limited partnership
interests in the Partnership for the purpose of acquiring one or more cable
television/telephony systems in the United Kingdom. Upon acquisition of its
system, the Partnerships primary investment objective was to obtain capital
appreciation in the value of its investment in the system over the term such
investment is held by the Partnership.

NTLs Completed Restructuring

On May 8, 2002, NTL Incorporated (then known as NTL Communications Corp.),
the ultimate parent of our general partner, NTL Europe, Inc. (then known as NTL
Incorporated) and certain of their subsidiaries filed a pre-arranged joint
reorganization plan, referred to in this annual report as the Plan, under
Chapter 11 of the US Bankruptcy Code. We were not included in the Chapter 11
filing, nor was our operating subsidiary or the other operating subsidiaries of
NTL Incorporated and NTL Europe, Inc. The Plan became effective on January 10,
2003, at which time NTL Incorporated, the indirect parent company of our
general partner, emerged from Chapter 11 reorganization.

Pursuant to the Plan, the entity formerly known as NTL Incorporated and
its subsidiaries and affiliates were split into two separate groups, and NTL
Incorporated and NTL Europe, Inc. each emerged as independent public companies.
The entity formerly known as NTL Communications Corp. was renamed NTL
Incorporated and became the holding company for the former NTL groups
principal UK and Ireland assets and the ultimate parent company of our general
partner. Prior to consummation of the Plan, NTL Incorporated was a wholly-owned
subsidiary of the entity then known as NTL Incorporated, which, pursuant to the
Plan, was renamed NTL Europe, Inc. and which became the holding company for
the former NTL groups continental European and certain other assets.

History

The Partnership was formed upon the receipt of subscriptions for limited
partnership interests exceeding the minimum offering of $10,000,000. The
general partner of the Partnership was initially Jones Global Funds, Inc., a
Colorado corporation (Jones Global Funds). As of August 15, 1992, when the
initial offering by the Partnership terminated, the Partnership had raised
$16,548,000 in gross offering proceeds from the sale of 16,548 limited
partnership interests, or $14,272,650 net of sales commissions and other
organizational and offering costs. On September 14, 1992, the Partnership
commenced a second offering of limited partnership interests. As of April 1994,
when the second offering terminated, the Partnership had raised a total of
$56,935,000 in gross offering proceeds from the sale of 56,935 limited
partnership interests, or $48,817,997 net of sales commissions and other
organizational and offering costs, from both its initial and its second public
offerings.

On February 20, 1992, upon receipt of approval from UK regulatory
authorities, the Partnership acquired, through nominees, beneficial ownership
of all of the shares of NTL (South Hertfordshire) Limited (formerly Cable &
Wireless Communications (South Hertfordshire) Limited and Jones Cable Group of
South Hertfordshire Limited) from Jones Global Funds and certain of its
affiliates (the Former Owners). NTL South Herts is a UK corporation which
holds the cable and telecommunications licenses necessary to build and operate
a cable television/telephony system in the South Hertfordshire franchise area,
located adjacent to the north-west perimeter of Greater London (the South
Herts System). The acquisition by the Partnership of all of the shares of NTL
South Herts resulted in the Partnership acquiring an indirect beneficial
ownership interest in the South Herts System. The Partnership paid the Former
Owners a total of $4,996,700, representing, at cost, their expenses in
connection with obtaining, holding and maintaining the licenses for the South
Herts System and their capital expenditures during and before the Partnership
acquired the beneficial ownership of NTL South Herts, plus the amount of
operating and interest expenses in excess of operating receipts incurred during
such period. Subsequent to the Partnerships investment in NTL South Herts,
cost reimbursements have been and will continue to be made to the general
partner of the Partnership (or its affiliates) for construction costs of the
South Herts System. Partnership funds are used to reimburse the general partner
(or its affiliates) at cost on a monthly basis for expenditures incurred by the
general partner (or its affiliates) for the South Herts Systems construction
and operation.





---



##### Table of Contents



The South Herts Systems ownership by NTL South Herts, a UK corporation,
rather than directly by the Partnership, results from an intention to insulate
the limited partners of the Partnership (the Limited Partners) from potential
UK taxation upon the eventual sale of the South Herts System. Under current UK
tax laws, the sale of a UK cable television/telephony system by a U.S. limited
partnership may give rise to limited partner tax liability in the UK whereas
the sale of shares in a UK corporation by a U.S. limited partnership does not
give rise to limited partner tax liability in the UK, on the basis that the
limited partnership is not itself trading in the UK through a permanent
establishment there. The shares of NTL South Herts are held indirectly by the
Partnership through corporate nominees. This indirect ownership structure is
intended to afford the Limited Partners more certain protection from UK tax
liability.

In order to provide additional funding for the construction of the South
Herts System, two additional participants invested in NTL South Herts in 1993
and 1994. Jones Intercable of South Hertfordshire, Inc. invested £3,400,000 in
NTL South Herts in exchange for 34,000 Class A shares in November 1993. Also in
November 1993, affiliates of Sandler Capital Management (the Sandler Group)
committed to invest £6,800,000 in NTL South Herts, of which £2,266,600 was
funded in November 1993, for 22,666 Class B shares. In June 1994, the Sandler
Group invested £3,273,232 for 32,732 Class B shares and Jones Intercable of
South Hertfordshire, Inc. invested £503,283 for 5,033 Class A shares. In July
1994, the Sandler Group invested £1,800,000 for 18,000 Class B shares and Jones
Intercable of South Hertfordshire, Inc. invested £466,800 for 4,668 Class B
shares.

On June 10, 1994, Jones Global Group, Inc., Jones Intercable, Inc. and
certain of their subsidiaries (collectively, Jones) and the Sandler Group
entered into agreements to transfer all of their interests in their UK cable
television/telephony operations and franchises, including Jones Intercable of
South Hertfordshire, Inc.s interest in NTL South Herts, Jones Global Funds
ownership of the general partner of the Partnership and the Sandler Groups
interest in NTL South Herts, to Bell Cablemedia plc (BCM) in exchange for
ordinary shares (in the form of American Depository Shares or ADSs) to be
issued by BCM in connection with a planned public equity offering of ADSs by
BCM. At that date, BCI Telecom Holding Inc (BCITH) (formerly Bell Canada
International Inc) indirectly owned 80 percent of BCM and Cable and Wireless
plc (C&W) owned the remaining 20 percent of BCM.

On July 22, 1994, in connection with the closing of the public equity
offering by BCM, Jones and the Sandler Group completed the exchange of their
interests in UK cable television/telephony operations and franchises for
ordinary shares (in the form of ADSs) issued by BCM. At closing, BCM acquired
Jones Intercable of South Hertfordshire, Inc.s interest in NTL South Herts,
the Sandler Groups interest in NTL South Herts and the general partner of the
Partnership. These acquisitions are collectively referred to as the BCM
Acquisition. In October 1994, the Partnership invested £5,108,900 in NTL South
Herts for 51,089 Class A shares and BCM invested £2,554,600 in NTL South Herts
for 25,546 Class A shares. In November 1994, the Partnership invested
£1,410,000 in NTL South Herts for 14,100 Class A shares and BCM invested
£705,000 in NTL South Herts for 7,050 Class A shares. As a result of these
transactions, NTL South Herts was owned 66.7% by the Partnership and 33.3% by
BCM, and the general partner of the Partnership, Fawnspring Limited, a UK
corporation (the General Partner), was a wholly owned subsidiary of BCM. The
General Partner provided consulting services to the Partnership and, pursuant
to the partnership agreement, was authorized to delegate some or all of the
consulting services to BCM or other affiliates.

On October 22, 1996, C&W, BCITH and Bell Atlantic (at that time, NYNEX)
announced that they had entered into an agreement, pursuant to which, subject
to the satisfaction of certain conditions precedent, the parties agreed to
combine: (i) Mercury Communications Limited (Mercury), (ii) BCM (as enlarged
by the acquisition of Videotron), and (iii) NYNEX CableComms Group PLC and
NYNEX CableComms Group Inc. (collectively NYNEX CableComms) under one company
to be called Cable & Wireless Communications plc (CWC Comms).

On July 26, 1999, C&W, NTL Incorporated and CWC Comms announced:



| | (a) |  | the proposed separation of CWC Comms into its corporate,
business, Internet protocol and wholesale operations (CWC DataCo)
and its residential cable, business cable, indirect residential
telephony, residential Internet and digital television development
and services businesses, which includes NTL South Herts (CWC
ConsumerCo);
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | the proposed indirect acquisition by C&W of the 47.3% interest
in CWC DataCo which was not at the time attributable to it (thereby
achieving 100% ownership of CWC DataCo); and                                                                                                                                                            

2



---



##### Table of Contents





| | (c) |  | the proposed indirect acquisition by NTL of CWC ConsumerCo
(together with the proposed separation of CWC Comms and the C&W
acquisition, the Transaction).
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------

Following the approval of shareholders, bondholders and the competition
authorities the Transaction was completed on May 30, 2000. Following
completion, CWC Comms changed its name to NTL (CWC) limited (NTL (CWC)).

As a result of the foregoing transactions, NTL South Herts is now owned
66.7% by the Partnership and 33.3% by NTL. In addition, NTL is the indirect
parent company of the General Partner. The General Partner may, pursuant to
the Partnership agreement, provide consulting services to the Partnership or
designate consulting services to NTL or other affiliates.

The South Herts System

Franchise Area

The South Hertfordshire franchise area comprises the three administrative
areas of Three Rivers, Watford and Hertsmere, with a population of
approximately 240,000. The franchise area covers commuter suburbs of London,
and many people who reside in the franchise area use the available fast rail
and motorway services to travel to work in central London. South Hertfordshire
has benefited from the completion in 1986 of the M25 London Motorway, which
makes commuting from the franchise area to other areas in or near London more
convenient. An M1 motorway link exists to give London-bound commuters direct
access from Watford to the London highway system. The M1 link is half a mile
from the South Herts System headend. There are approximately 94,000 homes in
the franchise area, of which approximately 91,749 are passed by the South Herts
System cable television/telephony network. Construction in the franchise area
is substantially complete. The average housing density in the South Herts
franchise area is approximately 1,150 homes per square mile.

The South Hertfordshire franchise area contains approximately 7,000
businesses, 80% of which are small or medium-sized. In addition, there are
several business parks containing predominantly industrial and manufacturing
concerns.

Operations

Construction of a cable television-only network in the South Hertfordshire
franchise area commenced in early 1991 and, an integrated cable
television/telephony network architecture was developed for this franchise in
late 1991. As of December 31, 2002, approximately 91,749 homes, or 97% of total
homes, in this area had been passed. Cable television services commenced in
April 1992 and telephony services commenced in February 1993, following
completion of the installation of a telephony switch. In January 2000, NTL
commenced the rollout of digital cable television services within the South
Herts franchise and in 2001 commenced broadband Internet access services. As of
December 31, 2002, NTL South Herts serviced 25,704 basic cable television
customers including 20,681 digital cable customers, 29,069 residential
telephony lines and 5,741 broadband customers, representing a total of 32,018
customers with a penetration level of 34.9%.

Management control is exercised by Fawnspring Limited, a UK corporation,
which is a wholly owned indirect subsidiary of NTL Incorporated and is the
General Partner of the Partnership, although management control is delegated to
other affiliated companies of NTL. The Partnerships business is managed both
locally and by NTL Group Limited (NTLG), a subsidiary of NTL, from
headquarters in Hook, Hampshire. As indirect parent of the General Partner, NTL
and the Partnership believe that management as an integral part of the larger
group reaps the benefits of synergy and maximizes returns. NTLG performs a
variety of management functions and procures services on behalf of the.
Pursuant to an agreement between NTLG and the Partnership, the Partnership has
the legal right to offset amounts receivable from NTLG against amounts payable
to NTLG. Consequently, the net balance payable by the Partnership to NTL is
disclosed under accounts payable to affiliates and related parties in the
accompanying financial statements.

Accordingly, as an integrated part of NTLs UK operations, the following
business description describes the portion of NTLs UK
operations of which NTL South Herts comprises a part.

3



---



##### Table of Contents



NTLS BUSINESS

Network

NTLs network infrastructure, as of January 1, 2003, consists of:



| | Broadband Communications Networksin the UK that currently pass approximately 8.4 million homes. These high-capacity
two-way local broadband fiber networks serve entire communities throughout these regional franchise areas. NTLs fiber
optic cables pass a significant number of businesses in these areas and are connected to distribution points, or nodes.
Approximately 80% of our nodes serve approximately 500 to 600 homes with each home typically no more than 500 meters
from the node. Approximately 20% of our nodes serve between approximately 2,000 and 2,400 homes. Each serviced home
is then connected by a cable allowing NTL to deliver telephone, cable television and Internet services over a single
integrated network; and                                 
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| | A National/International Synchronous Digital Hierarchy (SDH) and Wavelength Division Multiplex (WDM) fiber optic
telecommunications network in the UK, which connects all of the major population centers in the UK and Ireland. SDH
allows high-speed data transmission and redirects transmissions in the event of a problem to prevent any disruption.
This backbone network utilizes Asynchronous Transfer Mode (ATM) and Internet protocol (or IP) technology. The duct
network was built with sufficient duct capacity to accommodate up to 2,300 fibers on the majority of the network. This
network was designed to enable the placement of active components, such as routing devices, close to NTLs customers,
allowing NTL to offer a broad range of voice and data services.

This backbone transmission network connects all NTLs voice switches and
broadband IP network.

NTL does not insure the underground portion of its cable network nor the
street cabinets. As substantially all of NTLs cable network is constructed
underground, any catastrophe that affects its underground cable network and
street cabinets could result in substantial uninsured losses.

Products and Services

NTL provides the following communication services:



| | ntl: home, delivering broadband services to residential markets
comprising residential telephone, analog and digital cable television,
narrowband and broadband Internet access and interactive services, as
well as wholesale Internet access solutions to UK Internet Service
Providers, or ISPs; and
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| | ntl: business, comprising business data, voice and Internet services.                                                                                                                                                                                                                                  

I. ntl: home

NTLs ntl: home division provides residential cable television, Internet
and telephony services, as well as wholesale Internet access solutions to UK
ISPs. NTL is the largest direct provider of broadband services in the UK. As of
December 31, 2002, NTL had approximately 2.69 million residential cable
television, Internet and telephony customers, including 987,000
broadband, narrowband and DTV access Internet customers and approximately 5 million revenue generating
units, which are referred to as RGUs. At such date, NTLs penetration rates
were approximately 32.1% telephone penetration, 26.6% cable television
penetration and over 34.7% overall customer penetration.

Throughout 2002, NTLs primary objective was to conserve capital, reduce
customer churn, focus on customer upsell and complete the decentralization of
NTLs consumer business. As NTL entered 2002, it decided to preserve capital
and curtailed its sales and marketing activities, which yielded a decline in
NTLs gross activation rate from 112,000 additions in the fourth quarter of
2001 to 105,800 additions in the fourth quarter of 2002. The reduction in

activity surrounding new customers permitted NTL to focus on existing customers
and subsequently NTLs churn rate declined from 21.3% in the fourth quarter of
2001 to 15.9% in the fourth quarter of 2002. In addition to providing its
customers with better service, NTL also continued its efforts to upsell
customers with Internet and Digital TV packages, ending the fourth quarter of
2002 with over 517,000 broadband Internet subscribers and over 70% of NTLs
digital TV customers taking its Family Pack bundle, which consists of over 100
TV channels for £25.50 per month including telephone line rental. The
decentralization of NTLs

4



---



##### Table of Contents



consumer business has given ownership of the customer back to the local
level managers, who are predominantly responsible for the improvements in churn
reduction and customer experience. NTLs six regional business units are
London, East South East, South, North East, North West and Celtic (Wales,
Scotland and Northern Ireland).

Broadband Internet (which refers to Internet access at speeds at or
greater than 128 kilobytes per second (Kb/s)) usage by residential customers is
a relatively new and undeveloped market. However, NTL believes the most
effective strategy to maximize revenues and penetration for its residential
offerings is to bundle together telephone, cable television and Internet
services, which includes broadband Internet services. NTLs product and pricing
strategies emphasize choice, value and quality and are designed to encourage
subscription to multiple services to maximize customer retention and average
revenue per customer.

NTLs core local access network typically consists of optical fiber
connected to distribution points, or nodes, from which NTL provides coaxial
cable and two copper pair telephone wires into each home. Approximately 80% of
our nodes serve approximately 500 to 600 homes with each home typically no
more than 500 meters from the node. Approximately 20% of our nodes serve
between approximately 2,000 and 2,400 homes. This cabling enables the provision
of two telephone lines, an analog or digital television service and a
high-speed cable modem service to each customers home.

When NTL first started building its network in the early 1990s, the UK
became the first country in the world where TV, phone and Internet could all be
connected to the home via a single cable. Almost a decade later, that same
network design is being used to service todays growth in broadband services.

NTLs fiber network has the capability to carry telephone services as well
as high-speed data services. Although this is not a service that NTL provides,
or has any current plans to provide, NTLs fiber network is capable of
supporting digital subscriber lines, or DSL, which consist of a bi-directional
2 megabytes per second (Mb/s) connection capable of supporting 30 voice channels and enable the provision of
higher capacity services to business customers. NTL is able to support digital
and interactive services as well as advanced video services over its network
through cable modems that enable Internet access at almost 20 times the speed
of conventional dial up access.

NTLs cable modem broadband Internet service has been engineered to
provide high quality residential high speed Internet access service. It is
therefore able to support small businesses and people who work from home,
including enabling a link to a companys local area network, or LAN. NTL has in
place the next generation of network technology using IP over optic fiber cable
technology in its core backbone network. This technology, in which data is
broken up into discrete packets for transmission, enables more efficient use of
network capacity, resulting in growth at lower unit cost and positioning NTL to
provide high speed broadband access on a mass scale.

Internet access

In March 2000, NTL launched a free, unmetered Internet access service for
residential customers to supplement its existing, metered (1 pence/minute)
dial-up access service offering. Both products were marketed under the name
ntl World. The free unmetered service proved popular and over 650,000
customers subscribed for this service.

Throughout 2001, Internet penetration and usage (hours online/week) both
increased and customers have continued to migrate to flat-rate, unlimited
access packages, demonstrating a willingness to pay more for superior access
services.

In January 2002, NTL announced the replacement of its free, unmetered
service with a flat-rate, unmetered package called ntl Unlimited, which
offers Internet access at any time for a flat monthly fee of £10. In the
fourth quarter of 2002, NTL launched a dual package called Phone & Surf,
offering Internet access at any time combined with unlimited local and national
calls at anytime for £19 per month (in addition to standard line
rental). NTLs metered Internet service ntl pay as you go continues to be offered at a fee
of 1 pence per minute.

From February to December 2002, NTL migrated over 440,000 customers from
the free unmetered service to the paid-for metered or unmetered or broadband
packages, with approximately 172,000 customers of the free unmetered service
discontinuing service in December 2002. As of December 31, 2002, NTL had
approximately 123,000 customers for its metered Pay as you Go dial-up
Internet service, and approximately 320,000 customers for its unmetered
Unlimited service.

5



---



##### Table of Contents



Broadband Internet access

In 1999, NTL was the first communications provider in the UK to launch a
high-speed cable modem Internet service, which links customers of its local
cable franchise networks to the Internet at up to twenty times the speed
possible over standard telephone lines.

As of December 31, 2002, NTL had 517,000 broadband customers.
Approximately 85% of NTLs networks are currently able to provide this service
to its customers.

When NTL launched its broadband Internet service, it offered a single tier
of service: 512 Kb/s. NTL has since added two additional tiers: a competitively
priced 128Kb/s tier and a 1024Kb/s (1Mb/s), the fastest Internet access
available to residential UK customers. NTL also upgraded its 512Kb/s service to
600Kb/s, to provide a distinct advantage over competing DSL services, which are
generally limited to speeds in the region of 512Kb/s. The service is an always
on service, eliminating logging-on delays and the need to log off while using
the telephone. It uses the hybrid fiber coaxial cable portion of NTLs
broadband network, which allows customers who also subscribe to a telephony
service to simultaneously make or receive telephone calls while accessing the
Internet. The 128Kb/s and 600Kb/s services are currently offered at flat rates
of £14.99 and £24.99 per month, respectively, including the rental of a cable
modem. This compares with the current prices a 512Kb/s ADSL service from
Freeserve (£27.99 per month) and BT Broadband (£27 per month), each of which
require the customer to purchase a DSL modem at a cost of approximately £85. In
the first quarter of 2002, NTL was the first to launch a 1Mb/s service at a
price of £49.99 per month. On January 1, 2003, this price was reduced to £34.99
per month.

Franchise customers

NTL first introduced a bundled cable service to its franchise customers in
1996, when it implemented a promotional pricing and packaging structure called
Choices. Since then, NTL has continued to refine and enhance its offerings.
The packages NTL currently offers to the majority of its UK residential
franchise customers, comprise:



| |  | telephone service, including a second telephone line for an additional charge unless the customer decides not to take
television;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------
| 
| |  | narrowband Internet access service, if the customer takes a telephone service;                                                   
| 
| |  | broadband Internet access service;                                                                                               
| 
| |  | all of the current terrestrial television channels and access to multi-channel television, including pay per view; and           
| 
| |  | interactive television services.                                                                                                 

NTLs
packaging and pricing are designed to encourage its customers to use
multiple services such as dual telephone and broadband Internet access, dual
telephone and narrowband Internet access, dual telephone and TV, or triple
telephone, TV and Internet access. Among other telecommunications
companies in the UK, only
Telewest, which does not offer its cable services in our service areas, is able
to offer the full range of services we provide (see table below). Unlike NTLs
telephone service, which allows customers to connect directly to NTLs network,
BSkyBs telephone service, Sky Talk, is a service reselling BTs telephone
service, and requires BSkyBs customers to retain and separately pay for their
BT line rental.

|         |  |          |   |    |  |           |   |  |  |  |   | 
|-------- |  | -------- | - | -- |  | --------- | - |  |  |  | - | 
|         |  | Internet |   | TV |  | Telephone
|         |  |          |   |    |  |          
|NTL      |  |          | ü |    |  |           | ü |  |  |  | ü | 
|BT       |  |          | ü |    |  |           | X |  |  |  | ü | 
|BSkyB    |  |          | X |    |  |           | ü |  |  |  | X | 
|Telewest |  |          | ü |    |  |           | ü |  |  |  | ü | 

Cable television

The selection of analog cable channels that NTL currently offers to its
customers varies based on the particular network area. This variation is a
result of the different channel offerings NTL has inherited as a result of its
acquisitions of

6



---



##### Table of Contents



various cable networks over the past several years. Variations between
network areas will increasingly be removed as digital cable television is
rolled out offering the same channels, subject to regional programming
variations. In addition to offering many of the popular channels available on
BSkyBs satellite platform, NTL also offers to all of its customers, through
its joint venture with Telewest, a cable-only movie, sport and special events
pay per view television service called Front Row that NTL rolled out to its
customers beginning in March 1998. NTLs joint venture with Telewest
represented the first ever alternative in the UK to BSkyB in the provision of
films and sports events through pay television. Front Row has signed content
output contracts with major Hollywood studios, including Warner Brothers, Sony
Pictures Entertainment (Columbia/Tri-Star), the Walt Disney Company (Walt
Disney Studios, Miramax, Hollywood Pictures and Touchstone), Dreamworks, MGM
and Universal.

Interactive services

NTL has moved rapidly to take advantage of the convergence between the
Internet and television and the advent of digital cable television. NTL is
currently aggregating a broad range of interactive content into a service that
can be deployed as part of its interactive television offering to its
residential customers. NTLs interactive offering comprises a free television
e-mail service and a walled garden of partner websites.

NTL has established relationships with over 75 content providers to
deliver a wide range of interactive services, including education, shopping and
banking, finance, travel, entertainment, games, news, weather, sports and local
content. Interactive content is organized into channels, including news &
weather, sport, travel, lifestyle, money, entertainment and shopping. NTLs
partners include Sainsburys, Iceland, eBay, WHSmith PC World and Bloomberg.
The travel channel includes content partners such as Thomascook.com, ebookers,
Lastminute.com and British Airways and the money channel features content
partners such as Abbey National, The Halifax and MX Moneyextra.

NTL also offers additional channels providing up to date news and weather
information, games and educational content. Where appropriate, NTLs contracts
with content providers require the payment of tenancy fees as well as
commissions on e-commerce transactions. NTL also derives revenues from the
advertising opportunities that exist across its interactive service offering.

Telephony

In 1999, NTL launched the NTL 3-2-1 call plan for its residential
franchise customers pursuant to which national and local calls cost only three
pence per minute during the day, evening calls cost two pence per minute and
weekend calls cost one pence per minute. A five pence connection charge is
payable with each call under the NTL 3-2-1 plan. NTL is able to offer this
plan by using its national telecommunications and local networks and bypassing
a portion of the wholesale long distance fees which would otherwise be charged
by BT and other carriers for carrying calls to and from its local franchise
networks. In 2002, NTL launched its new Talk plans, which include Talk
Unlimited with unlimited local and national calls on evenings and weekends for
£8 per month and Talk Unlimited 24 which includes unlimited local and
national calls at anytime for £15.50 per month. The price of NTLs Talk plans
is in addition to standard line rental. Although the number of calls is
unlimited under these plans, the duration of each call must be 60 minutes or
less to qualify.

Wholesale Internet

NTLs wholesale Internet access group provides solutions including network
services, call center operations and customer provisioning and billing to
leading UK ISPs, including AOL, Virgin.net and Tesco.net. NTL initially
launched this service with a dial-up Internet offering in 1995 and in December
2002 it added wholesale cable modem services to the line-up via an arrangement
with AOL.

Indirect access

As of December 31, 2002, NTL had approximately 91,000 off-net customers
(customers who are not directly connected to its network) of which
approximately 69,000 were also customers of its ntlworld Internet service.

7



---



##### Table of Contents



Customer management systems

For most of its franchise areas, NTL uses billing and customer management
systems that enable it to control all aspects of a customers account for both
telecommunication and television products. NTL currently operates a number of
billing systems inherited from the different operations it has acquired. It is
in the process of merging these different systems onto a single Internet-based
platform, which it expects will reduce costs, improve customer call center
efficiencies, provide customers with on-line access to their accounts and
improve overall customer satisfaction.

II. ntl: business

The primary objective of NTLs business services division, ntl:
business, is to provide a comprehensive range of voice, data and application
based communications services for NTLs business customers.

NTLs existing customer base includes both private and public sector
organizations such as TXU, HSS, EDS, Cambridge County Council, Hertfordshire
County Council, London Borough of Lambeth and Brighton & Hove Council.

NTLs business strategy is to fully exploit its superior network
capability and place an increasing emphasis on broadband products and services.
Rather than simply offering its customers a lower price for their existing
service, NTL offers a package of standard services designed to address all
their communications needs at a price which offers good value. For its smaller
business customers, NTL provides a range of bundled packages based on its
standard services and standard terms and conditions. For its larger customers,
NTL offers services that are tailored for their specific needs.

ntl: business has developed a diverse portfolio of skills and services
through both product development and a number of significant acquisitions.
Beginning in 2000, NTL commenced a program to integrate the skills and
abilities of employees from ntl: business, X-Tant and ConsumerCos small
business team with those of the existing business telecom operations, to create
a single integrated portfolio and customer support organization. Another
example of this strategy is NTLs acquisition in the third quarter of 2001 of
the UK assets and contracts of Viatel UK. Viatel was a provider of managed data
and voice services to UK based corporate companies and also provided voice
services to resellers, voice and Internet services to wholesalers and managed
data services to other European managed service providers.

During 2002, NTL continued to focus on customer service improvement,
developing customer support systems, and enhancing its product line-up. In
addition, NTL is increasingly focusing specific sales and marketing efforts on
winning business customers in its franchise areas and increasing revenue from
its existing customers.

NTLs network already passes within approximately 200 meters of more than
570,000 business premises in the UK. NTL believes that the architecture and
reach of its network infrastructure has positioned ntl: business to play a
leading role in the delivery of broadband services to UK businesses going
forward. NTL plans to exploit demand for broadband services primarily through
its broadband cable modem product, which was launched in the second quarter of
2001, and its E-1 Direct Internet Access Service. NTL will continue to market
its standard products and services ranging from telephony and Internet access
to data and managed services. NTL will deliver these services via copper wire,
coaxial cable, fiber and wireless.

In 2003, NTL intends to implement a new strategy in which there will be an
ever-increasing focus on cash generation and the exploitation of the local
network. The business is currently being re-structured into four regions,
centered on existing franchise networks, which will be Northern, London and the
South-East, Southern and Celtic.

In October 2000, NTL opened a new small business call center which uses
telephone account management techniques to sell and service a range of simple
business bundles for smaller businesses across the UK. Under this business
model, NTL has developed sophisticated marketing programs for its target
customer base. In the second quarter of 2001, NTL added broadband services to
the business bundle. In December 2001, NTL launched a new web site allowing
customers to self provision a range of products and view their bills on-line.
In 2002, NTL continued to expand the reach of its broadband services and
launched three important new products:



| | Carrier Pre-Select allowing access to NTLs network for off-net business customers; and                    
|- | ------------------------------------------------------------------------------------------------------------
| 
| | Intelligent Contact Management allowing business customers to create intelligent call or contact centers.

8



---



##### Table of Contents



NTL will continue to utilize its national capabilities and the expertise
of its locally focused account management and technical support teams to target
on-net customers and increase penetration.

NTL offers the following business products and services to its business customers:



| | Access Servicesthat connect NTLs customers to NTL for inbound and outbound voice and data calls. These access services
include additional analog business exchange lines, or BELs, and digital business exchange lines, or DELs. DEL services
include basic rate access, also known as ISDN2, and primary rate access, also known as ISDN30. NTL believes these and other
direct and indirect access services are priced competitively and are often in competition with similar services provided by
a number of other direct and indirect suppliers.               
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| | Managed Voice Services/Virtual Private Networksthat are best illustrated by NTLs central exchange Centrex service.
Through this service NTL provides its customers with business exchange lines configured as a virtual PABX, where it
provides the services normally associated with a traditional PABX, a device which routes calls through internal lines
located at a customers premises. NTL provides these services on a rental basis, which allows its customers to avoid the
expense associated with an outright capital purchase and maintenance costs.
| 
| | Managed Data Servicesthat include point to point private circuits at speeds of multiples of over 2Mb/s and individually
tailored 100Mb/s and 155Mb/s services. Other services include the provision of inter-site data services with particular
transmission protocols, such as Internet Protocol also known as TCP/IP, Frame Relay and ATM.                                                                                                                                                                                                                          
| 
| | Managed Local Area Networks (LANs), in order to support the developing needs of its business market, NTL has established
significant capabilities that enable it to fully manage LANs or to design, project manage and integrate new LAN platforms
for its customers.                                                                                                                                                                                                                                                                                                 
| 
| | 08xx Servicesthat include free local and national call services together
with a range of other routing features based on NTLs network. These
services enable NTLs customers to manage inbound calls and establish
varying tariffs for their customers to contact them.                                                                                                                                                                                                                                                                                              
| 
| | Internet Services, that include E-1 Direct Internet Access and DSL. The
range of services NTL provides also includes the provision of simple,
inexpensive software to enable its customers to begin doing business over
the Internet.                                                                                                                                                                                                                                                                                                                                 

NTL has a variety of alternative methods to carry its national
telecommunications network over the last mile to the premises of those
customers which are located outside of NTLs franchise area:



| | Obtaining permits to construct telecommunications networks, and
building out its network to reach its customers. Although this is
often the most costly means of reaching a customer, the expense can be
justified in the case of larger customers or where a significant level
of traffic is obtained from a customer.                                                                              
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| | Leasing circuits on the local networks of other service providers to
connect to its customers premises. Although this may reduce the
operating margin on a particular account, it requires significantly
less capital expenditure than a direct connection, can often be put in
place relatively quickly and can be replaced with a direct connection
at a later date if traffic volumes justify it.
| 
| | Connecting customers to NTLs national telecommunications network via
its extensive tower infrastructure by implementing point-to-point
microwave radio links between tower sites and NTL customers.                                                                                                                                                                                                 

Competition

NTL faces significant competition from established and new competitors in
the areas of residential telephony, business telecommunications services,
Internet and cable television.

Consumer Services

NTL competes primarily with BT in providing telephone services to
residential customers in the UK. BT occupies an established market position and
manages fully built networks and has resources substantially greater than
NTLs.

9



---



##### Table of Contents



According to the Office of Telecommunications, or OFTEL, as at June 2002,
BT serviced 82.5% of UK residential telephone exchange line customers. NTLs
growth in telecommunications services, therefore, depends upon its ability to
convince BTs customers to switch to NTLs telecommunications services. NTL
believes that value for money is currently one of the most important factors
influencing the decision of UK customers to switch from BT to a competing
telecommunications service. BT has, however, introduced price reductions in
some categories of calls and, due to regulatory price controls, BT will be
making further reductions in its telecommunications prices. Accordingly,
although NTL intends to remain competitive, in the future it may be unable to
offer residential telephone services at rates lower than those offered by BT.
In this case, NTL may not achieve desired penetration rates and may experience
a decline in total revenues. There can be no assurance that any such decline in
revenues or penetration rates will not adversely affect NTL. In addition to BT,
other telecommunications competitors could prevent NTL from increasing its
share of the residential telecommunications market. In particular, carrier
pre-selection for all calls (except for some special categories) was launched
in 2001, which may increase the appeal of indirect access operators, whose
discounted call charges may undercut NTL.

NTL also competes with mobile networks. This technology may grow to become
a competitive threat to NTLs networks, particularly if call charges are
reduced further on the mobile networks. NTLs tower services group may enable
NTL to benefit from the growth in this technology. There can be no assurance,
however, that NTL will be able to compete successfully with such
telecommunications operators.

NTL believes that it has a competitive advantage in the residential market
because it offers integrated telephone, cable television, telecommunications
services (including Internet, interactive and on-line services) and
multi-product packages designed to encourage customers to subscribe to multiple
services. The packages NTL currently offers to the majority of its UK
residential franchise customers comprise telephone service, narrowband Internet
access service, broadband Internet access services, all of the current
terrestrial television channels and access to multi-channel television,
including pay per view and interactive television services. NTLs packaging and
pricing are designed to encourage its customers to use multiple services such
as dual telephone and broadband, dual telephone and narrowband, dual telephone
and TV, or triple telephone, TV and Internet access. Of NTLs competitors, only
Telewest, which does not offer its services in NTLs franchise areas, is able
to offer the full range of services NTL provides. However, there can be no
assurance that this competitive advantage will continue. Indeed, BT and all
other operators have been permitted to provide and convey cable television
services throughout the UK from January 1, 2001, and exclusive franchises will
no longer be awarded.

BSkyB currently markets telecommunications services on an indirect access
basis, which requires the customer to dial additional digits before entering
the primary telephone number, thus diverting calls onto another operators
network.

NTLs cable television systems compete with direct reception over-the-air
terrestrial broadcast television, DTH satellite services (i.e., BSkyB) and
satellite master antenna systems. In addition, pay television and pay-per-view
services offered by NTL compete to varying degrees with other communications
and entertainment media, including home video, cinema exhibition of feature
films, live theater and newly emerging multimedia services. NTL expects that,
in the future, it may face competition from programming provided by
video-on-demand services. In addition, BSkyB has access to various movie and
sports programming content, with which it creates some of the most popular pay
TV channels in the UK. Although there are competing channel providers, the
position of programming supplier to NTL undoubtedly is an advantage to BSkyB,
not only because the Sky brand is a feature of NTLs cable TV service, but also
because NTL is dependant upon the supply of these Sky premium channels allowing
BSkyB, subject to applicable regulation, to influence pricing and bundling.

Business Telecommunications

NTL faces a wide range of competitors in the UK market. The nature of
this competition varies depending on geography, product and the opportunity
size. Only BT and Telewest have both extensive local access networks and a
national backbone network, however, as Telewests local networks do not overlap
with NTLs networks NTL does not compete with them to any material extent; in
all opportunities BT would be a major competitor. Cable and Wireless and
Energis own national backbone networks and they tend to focus on the large
enterprise/corporate markets as does Worldcom, however, they do not own network
to any material extent and rely on wholesale arrangements to supply their
customers.

Colt
has an extensive network particularly in London and also focuses
on large enterprise/corporate accounts; Thus has a network in Scotland,
principally in Edinburgh and Glasgow and YourCom has a network in Manchester.
NTL

10



---



##### Table of Contents



faces these competitors on a local basis mainly in the medium to large end
of the SME market and in larger enterprise/corporate accounts.

Although many customers have a dual supplier sourcing policy, competition
remains based on price and quality of service and NTL expects price competition
to intensify as existing and other new entrants compete aggressively. Most of
these competitors have substantial resources and there can be no assurance that
these or other competitors will not expand their businesses in NTLs existing
markets or that NTL will be able to continue to compete successfully with such
competitors in the business telecommunications market.

Government Regulation

Telecommunications service industries in the UK are governed by
legislation under the Telecommunications Act 1984, the Broadcasting Act 1990,
and the Broadcasting Act 1996. The operator of a full-service
telecommunications system in the UK requires the following two principal
non-exclusive licenses:



| | a telecommunications license, granted under the Telecommunications Act
by the Secretary of State and supervised by the Department of Trade
and Industry, or DTI, and OFTEL, which authorizes the installation and
operation of the telecommunications network used to provide cable
television and cable telephone services; and
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| | a cable television license granted under the Broadcasting Act and
supervised by the Secretary of State and the Independent Television
Commission, or ITC, which authorizes the provision of broadcasting
services.                                                                                                              

We do not hold these licenses. NTLG, the NTL company which provides
management services to us holds each of the above licenses and operates our network pursuant to the
licenses it holds. NTLGs telecommunications license has a
duration of 25 years, running from June 23, 2000 and its
cable license has a duration of 15 years, running from
January 1, 2000. Each type of license described above contains various
conditions, and in the event of the breach of such conditions, the Director
General of Telecommunications (the head of OFTEL) or the ITC, as appropriate,
could issue an enforcement order and ultimately commence proceedings to require
compliance or to revoke such licenses.

Price Regulation

BT is currently subject to controls over the prices it may charge
customers. In particular, BT may not increase charges for certain services by
more than the amount of the percentage change in the retail price index. In
July 2002, OFTEL confirmed that BT would be subject to a requirement to
introduce a new wholesale indirect access product designed to stimulate
competition in the calls market. A safeguard price cap of RPI-RPI to prevent
increases in the bills of the lowest spending 80% of residential customers by
spend would remain in place until this product was fully implemented by BT and
was being used by other operators to provide services. After that, a safeguard
cap of RPI+0 would remain in place to peg prices to the rate of inflation,
pending a further review of the retail market in 2004.

We are not subject to the same scrutiny and control by OFTEL of our retail
telephone prices as BT, given our non-dominant status in the market. However,
we are subject to prohibitions on undue preference and undue discrimination in
our cable television pricing. We are also required to publish our standard
prices, terms and conditions for cable television services.

Number Portability

The European Union agreed in 1998 to a revision to the Interconnection
Directive that made it a requirement for Member States to mandate number
portability. Implementing regulations came into force on January 19, 2000
requiring that number portability should be provided on request to all
customers switching between different operators and providers of fixed
telecommunications services. We have a process in place to comply with our
existing obligations and we are now in the process establishing arrangements
with other operators.

Local Loop Unbundling

In November 1999, an OFTEL policy statement mandated the unbundling of
BTs local loop to rival providers, enabling them to offer a range of higher
bandwidth services using Digital Subscriber Line (DSL) technology. On August 8,
2000, conditions in BTs license were brought into force setting out the
requirements under which BT must provide services

11



---



##### Table of Contents



necessary for local loop unbundling. OFTEL published the wholesale prices
for BTs unbundled local loops on December 2000 and prices for shared access
were published in 2001 although discussions continue as to the appropriate
wholesale charges. In addition, BT is currently rolling out ADSL over its own
network. ADSL will allow consumers access to high-speed information services.

Local loop unbundling could allow us to increase our broadband off-net
subscriber base, although we are not currently pursuing this initiative. Local
loop unbundling could also increase competition for us, as it will also allow
other providers of broadband Internet access services to provide services to
current or potential customers of ours. A number of companies, such as
Freeserve, have started to market broadband services using BTs local loop.

Interconnection

Through the agency of NTLG, we have access to interconnection at wholesale
rates to other operators, such as BT.

Open Access to Cable Infrastructure

In April 2001, OFTEL issued a statement on regulated access to cable
infrastructure (referred to as open access). The conclusion reached by OFTEL
was that no case existed for mandating open access to cable infrastructure at
that time.

BSkyB

In December 2002, the Office of Fair Trading, or OFT, announced that it
had concluded its investigation of whether BSkyB has acted in breach of the UK
Competition Act 1998, in particular by:



| | Exerting an anti-competitive margin squeeze on rival distributors of Pay TV;
|- | ------------------------------------------------------------------------------
| 
| | Pricing its channels in the form of anti-competitive mixed bundling;        
| 
| | Giving anti-competitive discounts to distributors.                            

The conclusion of the OFTs analysis are that:



| | BSkyB has a dominant position for the wholesale supply of certain premium sports and film channels;                                                                                                   
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| | With a borderline result, there are insufficient grounds for finding that BSkyB had abused a dominant position by exerting
an anti-competitive margin squeeze against rival distributors of Pay TV; or
| 
| | There are insufficient grounds for finding that BSkyB had abused a dominant position in respect of the mixed bundling of
its channels; and                                                            
| 
| | BSkyB had not been found in breach of competition law.                                                                                                                                                

Competition Act 1998

The Competition Act, which came into force in March 2000, introduced a
prohibition on the abuse of a dominant position and on anti-competitive
agreements and introduced third party rights, stronger investigative powers,
interim measures and effective enforcement powers (including fines of up to 10%
of UK turnover). The Competition Act enables third parties to bring enforcement
actions directly against telecommunications operators who are in breach of the
prohibitions and seek damages, rather than have to wait for the Director
General of Telecommunications to make an enforcement order.

In February 2000, OFTEL issued specific guidance on the application of the
Competition Act in the telecommunications sector. This guidance states that
OFTEL would follow closely the general principles of competition law in its
application of the new prohibitions. In addition, the regulators must not reach
decisions that are inconsistent with EC law.

12



---



##### Table of Contents



The Competition Act, as well as OFTELs regulations, limits the types of
agreements and arrangements NTL can enter into. For example, we may be
prohibited from establishing pricing arrangements or purchasing arrangements
which have the effect of reducing competition in the market or forcing
companies to behave in a certain way dictated by us.

The Enterprise Act

The Enterprise Act received Royal Assent on 7 November 2002. It covers a
range of measures to enhance business through strengthening the UKs
competition law framework, transforming the approach to bankruptcy and
corporate rescue, and empowering consumers.

The main reforms in the Act are:

Competition. To a large extent rather than the Secretary of State,
independent, competition bodies will now take decisions on merger and market
investigations using competition-based tests. This competition-based test will
replace the existing public interest test and will assess whether the merger
will lead to a substantial lessening of competition. A new jurisdictional
threshold on turnover replaces the old gross assets test. The acquisition of a
business with annual sales in the UK of £70 million or more will qualify for
investigation.

The competition authorities will issue comprehensive guidance on the new
regime. They will be obliged to consult on and give reasons for all significant
decisions. There will be a new right of appeal to the Competition Appeals
Tribunals, or CAT, in merger and market inquiries. Inquiries will have to be
completed within statutory maximum timetables. Reforms to the Competition
Commissions procedures will allow for a more transparent and better-informed
remedy-setting phase following the publication of provisional competition
findings.

Individuals who cause or encourage the making of agreements between
competitors designed to fix prices, share markets, limit supply or production
and rig bids within the UK, can be prosecuted and imprisoned for up to 5 years.
Victims of anti-competitive behavior will have greater opportunities to gain
redress, and will now find it easier to bring claims for damages for losses
suffered due to anti-competitive behavior. Where infringement has already been
established by the OFT, CAT or the European Commission, the CAT can award
damages for that infringement. Where no prior decision is available, claims may
be pursued in the High Court.

Consumer Protection. Stop Now Orders will now be extended to protect
consumers from traders (including companies like us) who do not meet their
legal obligations. The new enforcement regime will apply to infringements of a
wide range of legislation protecting the economic interests of consumers, such
as failing to carry out a service to a reasonable standard. This will also
ensure that honest traders, especially small businesses, do not face unfair
competition from those who engage in unlawful conduct.

Designated consumer bodies will be empowered to make super-complaints to
the OFT about features of a market which are harming consumers. The aim is to
address situations were markets have failed to work for consumers, rather than
the conduct of particular companies. The OFT will be required to specify what
action it intends to take within 90 days. This will significantly strengthen
the voice of consumers on competition matters.

Insolvency. The Act reforms corporate insolvency law by streamlining the
administration procedures; making them quicker, more flexible, easier to access
and fairer.

Mobile Phone Termination Charges

On December 12, 2001, OFTEL announced that it had referred to the
Competition Commission its proposal to impose a cap on the amount mobile phone
operators can charge for receiving calls on their networks. OFTELs conclusion
was that mobile termination rates were substantially in excess of cost and that
there was little incentive for operators to reduce the charges. Accordingly,
OFTEL proposed a charge cap on future termination rates of RPI -12% over four
years.

It was announced on January 22, 2003, that the Competition Commissions
findings supported OFTELs view that consumers pay too much for calls to mobile
phones and that the mobile operators must cut their termination charges for
these

13



---



##### Table of Contents



calls. Following the Director Generals reference to the Competition
Commission in January 2002, the Competition Commission has reached the
following conclusions:



| |  | operators are overcharging customers by up to 40 percent for terminating calls onto their networks;                                                                                                                  
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | callers to mobile phones have no choice but to pay the termination charge set by the mobile operator, which means that
there is little incentive for the operators to reduce their charges towards their actual cost;
| 
| |  | there should be a 15 percent cut in call termination charges for all mobile operators by 25 July 2003; and                                                                                                           
| 
| |  | further
charge controls for termination rates should be introduced after
July: RPI-15% for O2 and Vodafone, and RPI-14% for
Orange and T-Mobile. The charge controls should run for three years until 2005-06.       

OFTEL has accepted the Competition Commissions conclusions and will now
consult on the amendment to each mobile operators license in the light of
these recommendations. The mobile operators have said that they intend to seek
a judicial review of the Competition Commissions investigation, and as at
todays date, T-Mobile and Vodafone have filed an application for judicial
review with the Court.

Communications Bill

In December 2002, the UK Government introduced a Communications Bill
intended to incorporate into UK law a series of EU Directives, and create a new
body OFCOM to regulate the communications industry. This will merge the
functions of, among others, OFTEL, the Radiocommunications Agency and ITC and
it is intended that it will provide a more flexible framework for regulating a
converging industry.

The proposed legislation includes a number of other significant changes to
the existing regulatory regime, including:



| |  | The abolition of individual network licenses, to be replaced with general authorizations;                                                          
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | A new framework for imposing access rules on all platforms which have Significant Market Power  closely related to the
market dominance principle;
| 
| |  | Rights and obligations currently applied to infrastructure-based operators only will be extended to service providers; and                           
| 
| |  | Content rules will be applied in a light touch fashion and Internet content is not intended to be regulated at all.                                

European Union Legislation

Our business is further regulated by the EU under various European
Commission Directives. In February 2002, the European Union adopted a package
of legislative measures, which set out a new framework for electronic
communication and ensures that the legislation is more technology neutral. The
new framework consists of five harmonization Directives, including a framework
Directive and four specific Directives on authorization, access and
interconnection, universal service and users rights, and data protection in
telecommunications services, a Regulation on unbundling the local loop, a draft
liberalization Directive and a decision on Community radio spectrum policy.

The UK Government must now implement these directives into UK law no later
than July 24, 2003, and intends to do so with the enactment of the
Communications Bill. This will have a number of important effects on the
current regulatory regime, including the abolition of existing individual
Telecommunications Act licenses, to be replaced with a General Authorization.
Regulators will be required to undertake a review of individual communications
market sectors with a view to identifying the level of competition in those
sectors, and which companies if any have Significant Market Power (SMP)
(equivalent to a dominant position in competition law). A finding of SMP will
lead to the imposition of specific controls such as price controls or open
access requirements.

Research and Development

We do not carry out research and development activities.

14



---



##### Table of Contents



Patents, Trademarks, Copyrights and Licenses

We do not have any patents, trademarks, copyrights or licences. NTLG owns
and has the right to use registered trademarks, which are used by us through an
agency agreement. These trademarks in some cases are, and in others may be, of
material import to our business, including the ntl: logo. NTLG, and
consequently, we, are substantially dependent on the licenses granted by the
legislative agencies, which regulate our respective businesses. The loss of any
one or more of those licenses could have a material adverse effect on our
business and financial condition.

Customers

No material part of our business is dependent upon a single customer or a
few customers, the loss of any one or more of which would have a materially
adverse effect on us.

Employees

As the management of our business is performed by NTLG, we do not have any employees on our payroll.




ITEM 2. PROPERTIES

The Partnership does not own or lease any properties. NTL South Herts owns
a freehold property at 9 Greycaine Road, Watford for use as offices and to
house network equipment.




ITEM 3. LEGAL PROCEEDINGS

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




ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters that were submitted to a vote of the holders of our
limited partnership interests during the quarter ended December 31, 2002.

15



---



##### Table of Contents






PART II




ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

While the Partnerships interests are publicly held, there is no
established public market for the limited partnership interests, and it is not
expected that such a market will develop in the future. As of March 28, 2003,
the approximate number of holders of limited partnership interests in the
Partnership was 5,200.




ITEM 6. SELECTED FINANCIAL DATA

The
following table sets forth certain financial data for the years ended
December 31, 2002, 2001, 2000, 1999 and 1998. This information
should be read in conjunction with the consolidated financial
statements and notes thereto appearing elsewhere in this
Form 10-K.

South Hertfordshire United Kingdom Fund, Ltd.

|                                                                 |  |                          |             |      |  |      |             |      |  |      |             |   |  |   |             |   |  |   |             |  
|---------------------------------------------------------------- |  | ------------------------ | ----------- | ---- |  | ---- | ----------- | ---- |  | ---- | ----------- | - |  | - | ----------- | - |  | - | ----------- | -
|                                                                 |  | Years ended December 31,
|                                                                 |  |                         
|                                                                 |  | 2002                     |             | 2001 |  | 2000 |             | 1999 |  | 1998
|                                                                 |  |                          |             |      |  |      |             |      |  |     
|Income Statement Data:                                           |  |                          |             |      |  |      |             |      |  |      |             |   |  |   |             |   |  |   |             |  
|Revenues                                                         |  | $                        | 29,552,065  |      |  | $    | 28,354,653  |      |  | $    | 26,310,898  |   |  | $ | 28,345,316  |   |  | $ | 28,396,020  |  
|Cost of Goods Sold                                               |  |                          | (10,772,887 | )    |  |      | (12,277,725 | )    |  |      | (10,366,295 | ) |  |   | (10,837,197 | ) |  |   | (11,785,683 | )
|Selling, General and
Administrative Expenses                     |  |                          | (329,325    | )    |  |      | (253,634    | )    |  |      | (99,892     | ) |  |   | (224,211    | ) |  |   | (228,330    | )
|Management Fees and
Allocations from General
Partner             |  |                          | (12,035,660 | )    |  |      | (11,901,237 | )    |  |      | (13,128,873 | ) |  |   | (10,447,802 | ) |  |   | (8,173,374  | )
|Depreciation                                                     |  |                          | (7,595,523  | )    |  |      | (14,629,055 | )    |  |      | (4,759,437  | ) |  |   | (6,279,976  | ) |  |   | (4,119,297  | )
|Restructuring Costs                                              |  |                          | (1,488,502  | )    |  |      | (2,307,942  | )    |  |      |            |   |  |   |            |   |  |   |            |  
|                                                                 |  |                          |             |      |  |      |             |      |  |      |             |   |  |   |             |   |  |   |             |  
|Operating (Loss) / Income                                        |  |                          | (2,669,832  | )    |  |      | (13,014,940 | )    |  |      | (2,043,599  | ) |  |   | 556,130     |   |  |   | 4,089,336   |  
|Interest Income                                                  |  |                          |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   | 39,777      |  
|Interest Expense                                                 |  |                          | (1,587,925  | )    |  |      | (1,577,428  | )    |  |      | (3,217,052  | ) |  |   | (3,322,569  | ) |  |   | (3,743,532  | )
|                                                                 |  |                          |             |      |  |      |             |      |  |      |             |   |  |   |             |   |  |   |             |  
|(Loss) / Income before
Minority Interest                         |  |                          | (4,257,757  | )    |  |      | (14,592,368 | )    |  |      | (5,260,651  | ) |  |   | (2,766,439  | ) |  |   | 385,581     |  
|Minority Interest                                                |  |                          | 768,837     |      |  |      | 4,723,504   |      |  |      | 1,665,805   |   |  |   | 797,107     |   |  |   | (249,713    | )
|                                                                 |  |                          |             |      |  |      |             |      |  |      |             |   |  |   |             |   |  |   |             |  
|Net (Loss) / Income                                              |  | $                        | (3,488,920  | )    |  | $    | (9,868,864  | )    |  | $    | (3,594,846  | ) |  | $ | (1,969,332  | ) |  | $ | 135,868     |  
|                                                                 |  |                          |             |      |  |      |             |      |  |      |             |   |  |   |             |   |  |   |             |  
|Net (Loss) / Income per
Limited Partnership Unit                 |  | $                        | (60.67      | )    |  | $    | (171.60     | )    |  | $    | (62.51      | ) |  | $ | (34.24      | ) |  | $ | 2.36        |  
|Weighted Average Number
of Limited Partnership
Units Outstanding |  |                          | 56,935      |      |  |      | 56,935      |      |  |      | 56,935      |   |  |   | 56,935      |   |  |   | 56,935      |  
|Balance Sheet Data:                                              |  |                          |             |      |  |      |             |      |  |      |             |   |  |   |             |   |  |   |             |  
|Total Assets                                                     |  | $                        | 58,973,664  |      |  | $    | 59,167,848  |      |  | $    | 70,366,262  |   |  | $ | 73,021,980  |   |  | $ | 77,814,972  |  
|Accounts Payable to
Affiliates/Related
Parties                   |  |                          | 62,691,338  |      |  |      | 58,599,365  |      |  |      | 32,690,227  |   |  |   | 21,114,583  |   |  |   | 19,157,847  |  
|Long Term Debt                                                   |  |                          |            |      |  |      |            |      |  |      | 21,618,413  |   |  |   | 29,014,559  |   |  |   | 32,028,350  |  
|General Partners Deficit                                        |  |                          | (524,377    | )    |  |      | (489,488    | )    |  |      | (390,799    | ) |  |   | (354,851    | ) |  |   | (335,158    | )
|Limited Partners
Capital/(Deficit)                              |  |                          | (2,913,157  | )    |  |      | 540,874     |      |  |      | 10,311,049  |   |  |   | 13,869,947  |   |  |   | 15,819,586  |  
|Minority Interest                                                |  |                          |            |      |  |      | 739,160     |      |  |      | 5,645,599   |   |  |   | 7,883,670   |   |  |   | 8,912,532   |  

16



---



##### Table of Contents






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

Liquidity and Capital Resources

NTLs Completed Restructuring

On May 8, 2002, NTL Incorporated (then known as NTL Communications Corp.),
the ultimate parent of our General Partner, NTL Europe, Inc. (then known as NTL
Incorporated) and certain of their subsidiaries filed a pre-arranged joint
reorganization plan under Chapter 11 of the US Bankruptcy Code. We were not
included in the Chapter 11 filing, nor was our operating subsidiary or the
other operating subsidiaries of NTL Incorporated and NTL Europe, Inc. The Plan
became effective on January 10, 2003, at which time NTL Incorporated, the
indirect parent company of our General Partner, emerged from Chapter 11
reorganization.

Pursuant to the Plan, the entity formerly known as NTL Incorporated and
its subsidiaries and affiliates were split into two separate groups, and NTL
Incorporated and NTL Europe, Inc. each emerged as independent public companies.
The entity formerly known as NTL Communications Corp. was renamed NTL
Incorporated and became the holding company for the former NTL groups
principal UK and Ireland assets and the ultimate parent company of our General
Partner. Prior to consummation of the Plan, NTL Incorporated was a wholly-owned
subsidiary of the entity then known as NTL Incorporated, which, pursuant to the
Plan, was renamed NTL Europe, Inc. and which became the holding company for
the former NTL groups continental European and certain other assets.

Background of Restructuring

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

Promptly upon obtaining the requisite waivers from the lenders under its
credit facilities, in March 2002, the former NTL Incorporated commenced
negotiations with a steering committee of the unofficial committee of its
bondholders and the committees legal and financial advisors.

The former NTL Incorporated and its subsidiaries failed to make interest
payments on some of the outstanding notes starting on April 1, 2002. It also
failed to declare or pay dividends on certain series of its outstanding
preferred stock, due to a lack of available surplus under Delaware law.

On April 16, 2002, the former NTL Incorporated announced that it and the
unofficial committee of its public bondholders had reached an agreement in
principle on a comprehensive recapitalization of the former NTL group. To
implement the proposed recapitalization plan, on May 8, 2002, the former NTL
Incorporated and certain of its subsidiaries, including the current ultimate
parent company of our General Partner, then known as NTL Communication (now NTL
Incorporated) (collectively, the Debtors) filed cases and a pre-arranged
joint reorganization plan under Chapter 11 of the US Bankruptcy Code. In
connection with the filing, some members of the unofficial creditors committee
of bondholders entered into a credit facility agreement, referred to in this
annual report as the DIP facility, committing to provide a wholly-owned
subsidiary of the current NTL Incorporated with up to $500 million in new debt
financing (NTL Delaware committed to provide up to an additional $130 million
to the current NTL Incorporated and its subsidiaries under the DIP facility).

As a result of the payment defaults as well as the voluntary filing under
Chapter 11 by the Debtors on May 8, 2002, there was an event of default under
all of the former NTL Incorporated and its subsidiaries credit facilities and
the indentures governing all of their publicly traded debt, other than debt of
NTL Triangle.

17



---



##### Table of Contents



The Plan was confirmed by the Bankruptcy Court on September 5, 2002.
During the fall of 2002, the former NTL Incorporated negotiated with a group of
lenders to enter into a new financing arrangement to repay the DIP facility, to
repay certain obligations and to provide liquidity to NTL. The Plan became
effective on January 10, 2003 (referred to as the Effective Date), at which
time the Debtors emerged from Chapter 11 reorganization. In connection with
the Debtors emergence from Chapter 11 reorganization, the current NTL
Incorporated and certain of its subsidiaries issued $558.249 million aggregate
principal face amount of 19% Senior Secured Notes due 2010 (the Exit Notes) on
January 10, 2003. Initial purchasers of the Exit Notes also purchased 500,000
shares of the current NTL Incorporateds common stock on that date. The gross
proceeds from the sale of the Exit Notes and such shares totaled $500 million.
The proceeds were used in part to repay amounts outstanding under the DIP
facility (which was repaid on the Effective Date) and to purchase from NTL
Delaware a £90 million note of NTL (UK) Group Inc. and to repay certain other
obligations. Also on January 10, 2003, NTL Incorporated and its lending banks
amended its existing credit facilities.

The Partnership

The Partnerships source of cash has been the net proceeds of its
offerings of limited partnership interests. Historically, the Partnerships
principal uses of cash have been capital contributions to NTL South Herts in
order to fund the Partnerships proportionate share of the construction costs
of the South Herts System. As of December 31, 2002 the Partnership had current
liabilities of $2,694,392 due to NTL Group companies, and consolidated current
liabilities of $62,691,338 due to NTL Group companies. Accordingly, until such
time as NTL South Herts begins to pay dividends on its ordinary shares (which
is not expected in the foreseeable future) the Partnership will be required to
fund its administrative expenses by additional issuances of limited partnership
interests or from borrowings. It is unlikely that the Partnership will be able
to sell debt or equity securities in the public markets at least in the short
term or to obtain financing from commercial banks. Accordingly, the
Partnership is dependent on NTL for funds to cover operating expenses, and will
continue to be dependent upon NTL to meet its liquidity requirements for the
foreseeable future.

NTL South Herts

On April 18, 1995, NTL South Herts entered into an agreement with two
major banks to provide a £25,000,000 revolving and term loan credit facility
agreement maturing on December 31, 2003 (the South Herts Credit Agreement).
On October 18, 1996, £5,000,000 was cancelled and the facility reduced to
£20,000,000. The facility was repaid in full on February 21, 2001.

As of December 31, 2002, NTL South Herts had current liabilities of
$59,996,946 due to NTL Group companies.

Inflation

On average, inflation rates in the UK economy have been relatively low
over the past three years. Although long term inflation rates are difficult to
predict, the General Partner believes it has the flexibility in operations and
capital structure to maintain a competitive position.

Selected Operating Data

The following table sets forth certain data of the Partnership as of
December 31, 2002.

18



---



##### Table of Contents



|                                     |  |              |        |  
|------------------------------------ |  | ------------ | ------ | -
|                                     |  | December 31,
|                                     |  | 2002        
|                                     |  |             
|Homes passed (1)                     |  |              | 91,749 |  
|Homes marketed (2)                   |  |              | 91,749 |  
|Total customers                      |  |              | 32,018 |  
|Digital
Cable Subscribers            |  |              | 20,681 |  
|Analog
Cable Subscribers             |  |              | 5,023  |  
|Broadband Subscribers                |  |              | 5,741  |  
|Telephony
Subscribers                |  |              | 29,069 |  
|Penetration (Homes marketed) (3)     |  |              | 34.9   | %
|Churn (4)                            |  |              | 12.9   | %
|Average monthly revenue per Customer |  |              | £47.11 |  



---

|(1) | Homes passed is the number of homes that have ducting buried outside.                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | Homes marketed is the number of homes activated for which the initial
marketing phase (including door to door direct marketing) has been
completed.
|   
|(3) | Penetration rate is calculated by dividing the number of customers by the
number of homes marketed.                                                
|   
|(4) | Churn is the number of customers not continuing with any of the companys
products expressed as a percentage of the total number of customers.     

Consolidated Statement of Cash Flows

Net cash outflow for the year ended December 31, 2002 was $nil. The cash
inflow from operating activities was $1,878,445, which includes a decrease in
accounts payable to affiliates and related parties of $1,580,721 in the year
ended December 31, 2002. The inflow was applied to investment in the roll out
of digital services to customers, which amounted to $1,878,445.

Net cash outflow for the year ended December 31, 2001 was $nil. The cash
inflow from operating activities was $26,331,074, which reflected the increase
in accounts payable to related parties of $26,200,073 for the year ended
December 31, 2001. The inflow was applied to investment in the roll out of
digital services to customers, which amounted to $5,398,631 and the repayment
of the principal on the South Herts Credit Agreement of $20,919,270.

Contractual Obligations and Commercial Commitments

The Partnership has no significant contractual obligations and commercial
commitments as of December 31, 2002.

Critical Accounting Policies

The consolidated financial statements of the Partnership and related
financial information are based on the application of accounting principles
generally accepted in the United States, referred to as GAAP. GAAP requires the
use of estimates, assumptions, judgments and subjective interpretations of
accounting principles that have an impact on the assets, liabilities, revenue
and expense amounts reported, as well as disclosures about contingencies, risk
and financial condition. The following critical accounting policies have the
potential to have a more significant impact on the Partnerships financial
statements, either because of the significance of the financial statement item
to which they relate, or because they require more judgment and estimation due
to the uncertainty involved in measuring, at a specific point in time,
transactions which are continuous in nature.



| |  |  | A subsidiary of NTL provides infrastructure and management
support services to the Partnership and NTL South Herts. The related
charges represent the Partnerships portion of costs incurred by the
subsidiary of NTL for the benefit of all UK operations within NTL.
The charges made on the basis of an allocation formula
appropriate to each category of charge. The allocation is based on
managements judgment of a reasonable methodology given the facts
and circumstances.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The Partnerships determination of the treatment of contingent
liabilities in the financial statements is based on a view of the
expected outcome of the applicable contingency. Legal counsel is
consulted on matters related to litigation. Experts both within and
outside the company are consulted with respect to other matters that
arise in                                                                                                                                   

19



---



##### Table of Contents





| |  |  | the ordinary course of business.
Examples of such matters that are based on assumptions, judgments and
estimates are the amount to be paid to terminate certain agreements
included in restructuring charges and the amounts to be paid to
settle certain other liabilities. A liability is accrued if the
likelihood of an adverse outcome is probable and the amount is
capable of estimation.
| |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Partnership reviews long-lived assets for impairment as
described in the Notes to Consolidated Financial Statements. In
analyzing potential impairments, projections of future cash flows
from the asset are used. The projections are based on assumptions,
judgements and estimates of growth rates for the related business,
anticipated future economic, regulatory and political conditions, the
assignment of discount rates relative to risk and estimates of
terminal values. Changes to these variables in the future may
necessitate impairment charges to reduce the carrying value to fair
value.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Fixed assets are assigned useful lives which impact the annual
depreciation expense. The assignment of useful lives involves
significant judgments and the use of estimates. Changes in
technology or changes in intended use of these assets may cause the
estimated useful life to change.                                                                                                                                                                                                                                                                                                                     

Results of Operations

Consolidated financial information for the Partnership for the years ended
December 31, 2002, 2001 and 2000 is as follows (NM denotes percentage is not
meaningful):

|                                                                |  |   |              |   |                     |   |             |   |   |   |             |   |  |  |       |   | 
|--------------------------------------------------------------- |  | - | ------------ | - | ------------------- | - | ----------- | - | - | - | ----------- | - |  |  | ----- | - | 
|                                                                |  |   | Year ended   |   |                     |   |             |   |   |   |            
|                                                                |  |   | December 31, |   | Increase/(Decrease)
|                                                                |  |   |              |   |                    
|                                                                |  |   | 2002         |   | 2001                |   | $           |   | %
|                                                                |  |   |              |   |                     |   |             |   |  
|Revenues                                                        |  | $ | 29,552,065   |   |                     | $ | 28,354,653  |   |   | $ | 1,197,412   |   |  |  | 4.2   |  
|Cost of goods sold                                              |  |   | (10,772,887  | ) |                     |   | (12,277,725 | ) |   |   | (1,504,838  | ) |  |  | (12.3 | )
|Selling,
general and administrative expenses                    |  |   | (329,325     | ) |                     |   | (253,634    | ) |   |   | 75,691      |   |  |  | 29.8  |  
|Management fees and allocated overhead from the
General Partner |  |   | (12,035,660  | ) |                     |   | (11,901,237 | ) |   |   | 134,423     |   |  |  | 1.1   |  
|Depreciation                                                    |  |   | (7,595,523   | ) |                     |   | (14,629,055 | ) |   |   | (7,033,532  | ) |  |  | (48.1 | )
|Restructuring costs                                             |  |   | (1,488,502   | ) |                     |   | (2,307,942  | ) |   |   | (819,440    | ) |  |  | (35.5 | )
|                                                                |  |   |              |   |                     |   |             |   |   |   |             |   |  |  |       |  
|Operating loss                                                  |  |   | (2,669,832   | ) |                     |   | (13,014,940 | ) |   |   | (10,345,108 | ) |  |  | (79.5 | )
|Interest expense                                                |  |   | (1,497,775   | ) |                     |   | (1,490,718  | ) |   |   | 7,057       |   |  |  | 0.5   |  
|Other                                                           |  |   | (90,150      | ) |                     |   | (86,710     | ) |   |   | 3,440       |   |  |  | 4.0   |  
|                                                                |  |   |              |   |                     |   |             |   |   |   |             |   |  |  |       |  
|Net loss before minority interest                               |  |   | (4,257,757   | ) |                     |   | (14,592,368 | ) |   |   | (10,334,611 | ) |  |  | (70.8 | )
|Minority interest                                               |  |   | 768,837      |   |                     |   | 4,723,504   |   |   |   | (3,954,667  | ) |  |  | (83.7 | )
|                                                                |  |   |              |   |                     |   |             |   |   |   |             |   |  |  |       |  
|Net loss                                                        |  | $ | (3,488,920   | ) |                     | $ | (9,868,864  | ) |   | $ | (6,379,944  | ) |  |  | (64.6 | )
|                                                                |  |   |              |   |                     |   |             |   |   |   |             |   |  |  |       |  

|                                                                |  |              |             |                     |  |   |             |   |  |   |             |   |  |    |       |  
|--------------------------------------------------------------- |  | ------------ | ----------- | ------------------- |  | - | ----------- | - |  | - | ----------- | - |  | -- | ----- | -
|                                                                |  | Year ended   |             |                     |  |   |             |   |  |  
|                                                                |  | December 31, |             | Increase/(Decrease)
|                                                                |  |              |             |                    
|                                                                |  | 2001         |             | 2000                |  | $ |             | %
|                                                                |  |              |             |                     |  |   |             |  
|Revenues                                                        |  | $            | 28,354,653  |                     |  | $ | 26,310,898  |   |  | $ | 2,043,755   |   |  |    | 7.8   |  
|Cost of goods sold                                              |  |              | (12,277,725 | )                   |  |   | (10,366,295 | ) |  |   | 1,911,430   |   |  |    | 18.4  |  
|Selling, general and administrative expenses                    |  |              | (253,634    | )                   |  |   | (99,892     | ) |  |   | 153,742     |   |  |    | 153.9 |  
|Management fees and allocated overhead from the
General Partner |  |              | (11,901,237 | )                   |  |   | (13,128,873 | ) |  |   | (1,227,636  | ) |  |    | (9.4  | )
|Depreciation                                                    |  |              | (14,629,055 | )                   |  |   | (4,759,437  | ) |  |   | 9,869,618   |   |  |    | 207.4 |  
|Restructuring costs                                             |  |              | (2,307,942  | )                   |  |   |            |   |  |   | (2,307,942  | ) |  | NM
|                                                                |  |              |             |                     |  |   |             |   |  |   |             |   |  |    |      
|Operating loss                                                  |  |              | (13,014,940 | )                   |  |   | (2,043,599  | ) |  |   | (10,971,341 | ) |  |    | 536.9 |  
|Interest expense                                                |  |              | (1,490,718  | )                   |  |   | (3,125,930  | ) |  |   | (1,635,212  | ) |  |    | (52.3 | )
|Other                                                           |  |              | (86,710     | )                   |  |   | (91,122     | ) |  |   | (4,412      | ) |  |    | (4.8  | )
|                                                                |  |              |             |                     |  |   |             |   |  |   |             |   |  |    |      
|Net loss before minority interest                               |  |              | (14,592,368 | )                   |  |   | (5,260,651  | ) |  |   | 9,331,717   |   |  |    | 177.4 |  
|Minority interest                                               |  |              | 4,723,504   |                     |  |   | 1,665,805   |   |  |   | 3,057,699   |   |  |    | 184.7 |  
|                                                                |  |              |             |                     |  |   |             |   |  |   |             |   |  |    |      
|Net loss                                                        |  | $            | (9,868,864  | )                   |  | $ | (3,594,846  | ) |  | $ | 6,274,018   |   |  |    | 174.5 |  
|                                                                |  |              |             |                     |  |   |             |   |  |   |             |   |  |    |      

20



---



##### Table of Contents



2002 compared with 2001

Revenues of the Partnership increased $1,197,412 for the year ended
December 31, 2002, from $28,354,653 in 2001 to $29,552,065 in 2002. The
increase is mainly due to an increase in the number of customers taking
broadband Internet services. In 2002, the number of broadband customers
increased by 5,619 from 122 as of December 2001 to 5,741 as of December 2002.
This increase was offset by a decrease in the number of cable television and
telephony customers.

The South Herts System served approximately 25,704 basic cable television
customers and 29,069 residential telephony lines as of December 31, 2002,
compared to 27,231 basic cable television customers and 30,198 residential
telephony lines as of December 31, 2001.

Cost of goods sold decreased $1,504,838 or 12.3% for the year ended
December 31, 2002, from $12,277,725 in 2000 to $10,772,887 in 2002. The
decrease in cost of goods sold is due primarily to efficiencies and cost
savings generated by NTL and partially to a decrease in customers.

Selling, general and administrative expenses increased $75,691 for the
year ended December 31, 2002 from $253,634 in 2001 to $329,325 in 2002
primarily as a result of changes in the exchange rate of US dollars to UK
pounds.

Management fees and allocated overhead from the General Partner increased
$134,423 for the year ended December 31, 2002 from $11,901,237 in 2001 to
$12,035,660 in 2002. The business of NTL South Herts is managed as an integral
part of NTL. The combined costs of managing the larger group are allocated to
each entity with the NTL group, including NTL South Herts, on a consistent and
proportional basis according to the level of trading in that entity. The
General Partner considers this to be a fair and reasonable method as management
as an integral part of a larger group to reap benefits of synergy maximizes
returns. Management fees and allocated overhead increased during the
year despite the allocation to NTL South Herts of the net decrease in NTLs costs
resulting from the following:



| |  |  | As a result of capital constraints imposed on its business, NTL
reduced its expenditure in a number of areas, including those related
to expanding its customer base, and those related to service
arrangements with third parties that provide capital improvements as
part of their services. These measures, as well as the significant
restructuring of NTLs business in 2002 in terms of headcount
reduction and departmental reorganization, have caused NTL to
reassess whether for some 2002 expenditures, assumptions and
estimates relating to the allocation of those costs between capital
and operating expense need to be revised. The result of this
reassessment was to increase the Companys costs by
approximately $568,000, for the year ended
December 31, 2002.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | During the year NTL undertook a review of certain balance sheet
accounts which identified that there were accruals that were no
longer necessary in light of the resolution of the issues and other
liabilities that such accruals sought to address. The review
resulted in a decrease in the Companys costs by approximately
$620,000, for the year ended December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                       

Depreciation decreased $7,033,532 for the year ended December 31, 2002
from $14,629,055 in 2001 to $7,595,523 in 2002. Following the acquisition by
NTL of CWC ConsumerCo (which included NTL South Herts), the General Partner
reviewed the book value and useful economic lives of the assets of NTL South
Herts. This resulted in a change to the book value and useful economic lives of
customer installation costs and cable converter costs. Previously, these costs
had been depreciated over varying lives of between 7 and 40 years. Customer
installation and cable converter costs are now depreciated over three years
being the General Partners estimate of the average life of customer
connection. This represents a change in accounting estimate and resulted in an
adjustment of $8 million in 2001 relating to those costs that would have been
fully depreciated under the revised policy. The net book value of customer
connection costs and cable converters acquired in the three years prior to May
2000 are being depreciated over the remainder of their revised useful economic
lives.

In the fourth quarter of 2002, the Partnership reviewed its fixed assets
in accordance with FAS 144 in light of the lower valuation of the NTL group.
The Partnership determined that no write down was required as a result of this
assessment.

Restructuring costs represents NTL South Herts share of the costs of
NTLs program of business rationalization and recapitalization process.

21



---



##### Table of Contents



Interest expense and other increased $10,497 for the year ended December
31, 2002 from $1,577,428 in 2001 to $1,587,925 in 2002 due to an increase in
amounts payable to affiliates by the Partnership and a corresponding increase
in the interest payable on outstanding balances due to affiliates.

Minority interest represents NTLs share of the losses of NTL South Herts.

2001 compared with 2000

Revenues
of the Partnership increased $2,043,755 for the year ended
December 31, 2001, from $26,310,898 in 2000 to $28,354,653 in 2001. In pounds
sterling terms, revenue increased by 13.3% for the year ended December 31, 2001
The increase is mainly due to an increase in the number of customers taking
digital cable television services and price increases in the first quarter of
2001. In 2001, the number of digital cable television customers increased by
6,985 from 13,016 customers as of December 31, 2000 to 20,001 customers as of
December 31, 2001. This increase in digital cable television customers resulted
in the average revenue per customer increasing from $35.97 per month in 2000 to
$41.14 per month in 2001.

The South Herts System served approximately 27,231 basic cable television
customers and 30,198 residential telephony lines as of December 31, 2001,
compared to 27,011 basic cable television customers and 33,945 residential
telephony lines as of December 31, 2000. Also, during 2001 NTL South Herts
launched its broadband service and as of December 31, 2001 NTL South Herts had
122 broadband customers.

Costs of goods sold increased $1,911,430 or 18.4% for the year ended
December 31, 2001 over the similar period in 2000 from $10,366,295 in 2000 to
$12,277,725 in 2001. The increase in cost of goods sold is
attributable to the increase in revenue.

Selling, general and administrative expenses increased $153,742 for the
year ended December 31, 2001 from $99,892 in 2000 to $253,634 in 2001 primarily
as a result of changes in the exchange rate of US dollars to UK pounds.

Management fees and allocated overhead from the General Partner decreased
$1,227,636 for the year ended December 31, 2001 from $13,128,873 in 2000 to
$11,901,237 in 2001. The decrease in management fees and overhead was due to
the attribution of costs from the larger NTL UK Group to NTL South Herts in
2001. The business of South Herts is managed as an integral part of NTL. The
combined costs of managing the larger group are allocated to each entity with
the NTL Group, including NTL South Herts, on a consistent and proportional
basis according to the level of trading in that entity. The General Partner
considers this to be a fair and reasonable method as returns are maximized by
management as an integral part of a larger group to reap benefits of economies
of scale.

Depreciation increased $9,869,618 for the year ended December 31, 2001
from $4,759,437 in 2000 to $14,629,055 in 2001. Following the acquisition by
NTL of CWC ConsumerCo (including NTL South Herts) in May 2000, a review of the
book value and useful economic lives of the assets of NTL South Herts was
undertaken. The significant change related to the book value and useful
economic life of customer installation and cable converter costs. Previously,
these costs had been amortized over varying useful economic lives of between 5
and 40 years. They are now amortized over three years being an estimate of the
average life of consumer connection. This resulted in the catch up adjustment
of $8 million, relating to those assets that would have been fully depreciated
under the new policy. The net book values as of May 2000 of customer
installation and converter costs acquired in the three years prior to May 2000
are being amortized over the remainder of their revised useful lives. The
impact on these assets of the reduction of the estimated useful lives was
$712,176 in 2001.

Interest expense and other decreased $1,639,624 for the year ended
December 31, 2001 from $3,217,052 in 2000 to $1,577,428 in 2001. The decrease
was due to repayment in full of the principal on the South Herts Credit
Agreement previously outstanding.

Recent Accounting Pronouncements

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations, effective for the Partnership on January 1, 2003. This
Statement addresses financial accounting and reporting for obligations
associated with

22



---



##### Table of Contents



the retirement of tangible fixed assets and the associated asset
retirement costs. The adoption of this new standard is not expected
to have a significant effect on the results of operations, financial
condition or cash flows of the Partnership.

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

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections, which is effective for the Partnership on January 1, 2003. The
adoption of SFAS No. 145 will require any gain or loss recognized on the
extinguishment of debt to be classified as income or loss from continuing
operations. Prior to SFAS No. 145, gain or loss from the extinguishment of debt
was classified as an extraordinary item.

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




ITEM 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The functional currency of NTL South Herts is UK pounds sterling and all
revenue and significantly all costs are incurred in UK pounds sterling. The
Partnership reports in US dollars. Therefore, the Partnership is exposed to
fluctuations in the UK sterling US dollar exchange rate.

The aggregate potential loss from a hypothetical one-percent fall in the
UK £/ US $ exchange rate is $37,454 for the year ended December 31, 2002.

The Partnership has no debt other than amounts due to affiliates. As of
December 31, 2002, the Partnership had approximately $62 million in liabilities
to NTL. Consequently, it has little interest rate risk.

RISK FACTORS

The following risk factors concern both our business and, in most cases,
NTLs business generally. Because we rely on NTL and its subsidiaries, those
risks are pertinent to us.

We have historically relied on NTL and its subsidiaries to meet our
funding needs. NTLs business is capital intensive and it has historically
incurred losses and generated negative cash flows and there can be no assurance
that NTL will be profitable in the future or that it will have sufficient
liquidity to meet our cash flow needs, fund its working capital and capital
expenditures and to meet its obligations under its existing debt instruments.

We are a holding company with no independent operations or significant
assets other than investments in and advances to our subsidiary. We do not
generate sufficient cash flow from our operations to fund our operational
expenses and interest payments. We have historically met our cash requirements
through debt or equity from NTL Incorporated and other subsidiaries of NTL
Incorporated. Thus, we are dependent on NTLs financial health for our own.

NTLs business is very capital intensive and has always required
significant amounts of cash. Historically, construction, operating expenditures
and interest costs have resulted in negative cash flow, which NTL expects will
continue for the foreseeable future. NTL has also incurred and expects to
continue to incur substantial losses. NTL cannot be certain that it will
achieve or sustain profitability in the future. Failure to achieve
profitability could diminish NTLs ability to meet our cash flow needs, sustain
operations, meet financial covenants, obtain additional required funds and make
required payments on any indebtedness it has incurred or may incur.

23



---



##### Table of Contents



NTL had net losses for the year ended December 31, 2002 of $2,375.8
million, and for the years ended December 31:



| |  |  | 2001: $11,837.0 million (including an asset impairment charge of $8,160.6 million)
| | - |  | ----------------------------------------------------------------------------------
|
| |  |  | 2000: $2,388.1 million                                                            
|
| |  |  | 1999: $716.5 million                                                              
|
| |  |  | 1998: $534.6 million                                                              

As of December 31, 2002, NTLs accumulated deficit was $18.6 billion.

Moreover,
NTL currently expects that it will require approximately £310
million ($499 million) to fund its working capital and capital
expenditures, and payments it was required to make on the Effective
Date pursuant to the Plan and the amendment of its UK credit
facilities, net of cash from operations in the
twelve months from January 1, 2003 to December 31, 2003. A
significant portion of the £310 million total relates to
payments made on the Effective Date. NTL believes that
cash, cash equivalents and marketable securities on hand of
$507.2 million as of
December 31, 2002, and the $500 million in cash from the issuance of its Exit
Notes and shares of NTL Incorporateds common stock to the purchasers of the
Exit Notes will be sufficient for its cash requirements during the twelve
months from January 1, 2003 to December 31, 2003. It is possible that these
sources of cash will be insufficient, resulting in NTL having to raise
additional funds for liquidity. There can be no assurance that NTL will have
the requisite access to new funding if the need arises.

In addition, beginning in 2005, a series of principal payments will come
due on NTLs existing debt instruments as they approach their respective
maturity dates. NTLs ability to make these payments and meet our cash flow
needs and its other ongoing funding requirements is dependent upon a number of
factors, including NTLs existing cash balances, the cash flow generated by its
operating subsidiaries, and its ability to obtain additional financing in the
future. Failure to achieve profitability or maintain or achieve various other
financial performance levels could in the future diminish NTLs ability to meet
our cash flow needs, sustain operations, meet financial covenants, obtain
additional funds, and make required payments on its indebtedness.

We are a holding company that is dependent upon cash flow from our
operating subsidiary to meet our obligations; our ability to access that cash
flow may be limited in some circumstances.

We are a holding company with no independent operations or significant
assets other than our investments in and advances to our operating subsidiary.
We depend, in part, upon the receipt of sufficient funds from our operating
subsidiary to meet our obligations. In addition, the terms of existing and
future indebtedness of us and our subsidiary and the laws of the jurisdictions
under which that subsidiary is organized may limit the payment of dividends,
loan repayments and other distributions to us under many circumstances.

We are operationally completely integrated into NTL and thus are reliant on
NTLs management entirely for our business.

Because we are operated as a fully integrated part of NTL, we are entirely
dependant upon NTLs management to manage our business. Thus, the success or
lack of success of NTLs management team as a whole will be directly correlated
to our success or failure. If there is a material adverse effect on NTLs
business as a whole, it is likely we would experience such a material adverse
effect as well.

NTLs substantial leverage could adversely affect its financial health.

NTL is, and, for the foreseeable future will continue to be, highly
leveraged. On a pro forma basis to give effect to NTLs emergence from Chapter
11 reorganization as of December 31, 2002, the accreted value of NTLs total
long-term indebtedness would have been $6,540.1 million. This debt represents
approximately 69.1% of its estimated total capitalization on a pro forma basis
as of December 31, 2002.

NTLs substantial indebtedness, coupled with the relatively high effective
interest rate on its Exit Notes, could adversely affect its financial health
by, among other things:

24



---



##### Table of Contents





| |  |  | increasing its vulnerability to adverse changes in general economic
conditions or increases in prevailing interest rates particularly for
any borrowings at variable interest rates,    
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | limiting its ability to obtain additional financing, if needed, and                                                                                                                     
|
| |  |  | requiring it to dedicate a substantial portion of its cash flow from
operations to service its debt, which reduces the funds available for
operations and future business opportunities.

NTL Incorporated is subject to restrictive debt covenants pursuant to its
indebtedness.

As part of the implementation of the Plan, NTL Incorporated issued
$558.249 million principal amount of Exit Notes to certain of its creditors
under the terms of an indenture. In addition, it amended the terms of its
existing Senior Credit Facility and Working Capital Credit Facility.

The indentures governing NTL Incorporateds outstanding notes, including
its Exit Notes, among other things, significantly restrict and, in some cases,

prohibit its ability and the ability of most of its subsidiaries to:



| |  |  | incur additional debt;                                                               
| | - |  | -------------------------------------------------------------------------------------
|
| |  |  | create or incur liens;                                                               
|
| |  |  | pay dividends or make other equity distributions;                                    
|
| |  |  | purchase or redeem share capital;                                                    
|
| |  |  | create restrictions on the payment of dividends or other amounts by its subsidiaries;
|
| |  |  | make investments;                                                                    
|
| |  |  | sell assets;                                                                         
|
| |  |  | issue or sell share capital of certain subsidiaries;                                 
|
| |  |  | engage in transactions with affiliates; and                                          
|
| |  |  | effect a merger or consolidation of, or sell all or substantially all of its assets. 

Similar restrictive covenants are contained in the Senior Credit Facility
and Working Capital Credit Facility that are applicable to NTL Incorporated and
most of its subsidiaries. In addition, under its credit facilities, NTL
Incorporated and its subsidiaries must comply with certain financial covenants
specifying various financial performance levels that they are required to meet.
In the event they were to fail to meet any of these covenant and were unable to
cure such breach or otherwise renegotiate such covenants, the lenders under
those facilities would have significant rights to seize control of most of
NTLs assets. Such a default, or a breach of any of the other obligations in
the indenture governing the Exit Notes, could also trigger a default under the
Exit Notes.

The covenants in NTL Incorporateds credit facilities and the indentures
governing its outstanding notes and any future debt may significantly restrict
NTLs future operations. Furthermore, upon the occurrence of any event of
default under the indentures governing NTL Incorporateds notes, credit
facilities or the agreements governing any other debt of its subsidiaries, the
lenders could elect to declare all amounts outstanding under such indentures,
credit facilities or agreements, together with accrued interest, to be
immediately due and payable. If those lenders accelerate the payment of those
amounts, there can be no assurance that the assets of NTL Incorporated and its
subsidiaries will be sufficient to repay in full those amounts.

The Chapter 11 reorganization of NTL Incorporated and certain of its
subsidiaries, together with uncertainty over NTLs financial condition, may
harm our business and our brand name.

Adverse publicity or news coverage regarding the recent Chapter 11
reorganization of NTL Incorporated, and certain of its subsidiaries and NTLs
financial condition could have an adverse effect on parts of our business.
Similarly, negative press

25



---



##### Table of Contents



about the financial condition of other cable and pay television operations
and alternative telecom carriers in general may affect our reputation. For
example, one of our key strategies is to increase our penetration of higher
value small to medium size enterprises, or SMEs, and provide increased retail
services of bundled voice, data and Internet services for SMEs. However, due to
the negative publicity surrounding NTL Incorporateds Chapter 11 reorganization
and NTLs financial condition and the potential effect of that publicity on our
brand name, we may find it difficult to convince SMEs to take up our services.
Although the Plan was successfully consummated, there can be no assurance that
such negative publicity will not adversely impact our results of operations or
have a long-term effect on our brand.

In addition, uncertainty during the recapitalization process may have
adversely affected our relationships with our suppliers. If suppliers become
increasingly concerned about NTLs financial condition, they may demand faster
payments or refuse to extend normal trade credit, both of which could further
adversely affect our cash conservation measures and our results of operations.
We may not be successful in obtaining alternative suppliers if the need arises
and this would adversely affect our results of operations.

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

The telecommunications industry is subject to rapid and significant
changes in technology and the effect of technological changes on our businesses
cannot be predicted. Our core offerings may become outdated due to
technological breakthroughs rendering our products out of date. In addition,
our business plan contemplates the introduction of services using new
technologies. Our investments in those new services, such as those related to
the 3G mobile network, may prove premature and we may not realize anticipated
returns on these new products. The cost of implementation for emerging and
future technologies could be significant, and our ability to fund such
implementation may depend on our ability to obtain additional financing. We
cannot be certain that we would be successful in obtaining any additional
financing required.

We are subject to significant competition in each of our business areas
and we expect that competition will intensify  if we are unable to compete
successfully, our financial conditions and results of operations could be
adversely affected.

We face significant competition from established and new competitors in
each of our businesses. In particular, in two of our three key lines of
business  telephony and television  the markets are dominated by our
competitors (BT and BSkyB, respectively), who have very large market shares and
generally have less financial and operating constraints than we do. As existing
technology develops and new technologies emerge, we believe that competition
will intensify in each of our business areas, particularly business
telecommunications and the Internet. Some of our competitors have substantially
greater financial and technical resources than we do. Moreover, we may also be
required to reduce prices if our competitors reduce prices, or as a result of
any other downward pressure on prices for telecommunications services, which
could have an adverse effect on us.

In addition, BSkyB has access to various movie and sports programming
content, with which they create some of the most popular pay TV channels in the
UK. We carry several of those channels on our systems. Although there are
competing channel providers, the position of programming supplier to NTL

undoubtedly is an advantage to BSkyB, not only because the Sky brand is a
feature of our cable TV service, but also because we are dependant upon the
supply of these Sky premium channels allowing BSkyB to influence pricing and
bundling. Thus far, regulators have not disturbed the pricing arrangements
imposed on us by BSkyB. NTL is currently negotiating with BSkyB a formal, long-term
agreement for the supply of certain BSkyB channels, and believes this will be
concluded amicably. However, in the event that we are unable to conclude an
agreement successfully, NTL may be faced with uncertainty over the terms and
charges of such supply, now and in the future.

If we are unable to compete successfully, our financial condition and
results of operations could be adversely affected.

NTLs growth has been curtailed by funding constraints.

NTL has significantly decreased the amount it is spending on capital
expenditures due to liquidity constraints during the recapitalization process
and expects to further reduce capital expenditures during 2003. The decrease in
capital expenditure is the result of NTLs need to divert increasing amounts of
its financial resources to meet liquidity requirements. As a result, we may be
unable to increase our customers in the short term and our near-term revenue
and future revenue growth may be adversely affected.

26



---



##### Table of Contents



NTL remains subject to the risks of successfully integrating the acquisitions
through which it has historically grown its business. In particular, NTL is in
the process of integrating its various billing and operation platforms  if it
does not complete this integration, NTL could experience an adverse effect on
its customer service, churn rate and operating costs.

NTL has historically grown its business through acquisitions. This has
resulted in its exposure to the risk of failing to successfully integrate those
acquisitions, in particular, workforce, management, network and systems. A
significant result of NTLs growth through acquisitions is that it has
inherited a variety of distinct billing and customer service systems from
various companies that it has acquired. NTL is in the process of integrating
its various billing systems and customer databases in an effort to improve one
of the main tools it uses to provide customer service; however, it does not as
yet have an integrated billing and operational platform. There can be no
assurance that this integration project will be successful. If the full
integration of NTLs billing and customer service systems is not successful,
NTL could experience an adverse effect on its customer service, churn rate and
costs of maintaining these systems going forward. NTL could also experience
operational failures related to billing and collecting revenue from its
customers, which, depending on the severity of the failure, could have a
material adverse effect on its business.

Moreover, the integration process has involved a number of internal
reorganizations of NTLs business as NTL continues to strive for better
performance. These reorganizations have typically involved, among other
things, the termination of employees made redundant as a result of the process.
Although NTL cannot predict precisely the effect that this has had, it is
likely these internal reorganizations have negatively impacted employee morale.
If NTL undertakes additional internal reorganizations they will similarly
likely negatively impact morale. Negative effects on employee morale can have
a negative effect on NTLs operations generally.

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

NTL has experienced rapid growth and development in a relatively short
period, either through acquisitions or connecting customers to its network. One
of NTLs biggest challenges as it has grown has been to limit its customer
churn. The successful implementation of NTLs business plan depends upon a
reduction in the percentage of customers that stop using its services.

In order to reduce churn in the future, NTL aims to improve customer
service. This improvement will be difficult to obtain without an integrated
billing system and a customer database across NTLs entire network. If the
integration of NTLs various billing system is not successful, it could
experience an adverse effect on customer service and, in turn, the churn rate.

NTL plans to increase its customer and revenue generating unit (referred
to in this annual report as an RGU) base in 2003. If demand for NTLs products
and services is greater than anticipated, its customer service call centers
could experience a higher than expected volume of calls. If customer service
suffered as a result, it could contribute to churn. NTLs business plan also
includes the migration of its customers from analog to digital service. The
migration process could also increase churn levels.

NTLs ability to reduce churn could also be adversely affected by the
availability of competing services in the UK, such as the digital satellite and
digital terrestrial television services offered by BSkyB and the BBC, and
telephone, Internet and broadband services offered by BT. BT and BSkyB have
regularly launched strong direct and indirect win-back campaigns to entice
NTLs customers to churn and move to these competing services..

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

NTLs prospects will depend in part on its ability to control its costs while
maintaining and improving service levels following our recent restructuring.

As a result of capital constraints imposed on NTLs business during our
recent restructuring, NTL has been engaged in a process of reducing
expenditures in a variety of areas, including by way of a substantial reduction
in capital expenditure, a reduction in the number of employees and the
outsourcing of some functions. NTLs prospects will depend in part on its

27



---



##### Table of Contents



ability to continue to control costs and operate more efficiently, while
maintaining and improving existing service levels. In particular, in order to
reduce costs we are in the process of negotiating with several of our vendors
for better terms under existing and future agreements. We cannot be certain
that such negotiations will conclude successfully.

Failure to successfully market broadband to NTLs existing customer base will
adversely impact NTLs revenue and results of operations.

A significant component of NTLs strategy is to successfully market
broadband products to its existing consumer customer base. NTL believes that
its triple play offering of telephony, broadband access to the Internet and
digital television will prove attractive to its existing customer base and
allow it to increase its average revenue per user. However, NTL faces
significant competition in these markets, through digital satellite and digital
terrestrial television and through alternative Internet access media, such as
the DSL service offered by BT and Freeserve. Additionally, some of NTLs
competitors have substantially greater financial and technical resources than
NTL does. If NTL is unable to charge the prices for broadband services that are
anticipated in its business plan in response to competition or if NTLs
competition offers a better product to its customers, NTLs results of
operations will be adversely affected.

NTL is dependent upon a small number of key personnel.

A small number of key executive officers manage NTLs businesses. The loss
of one or more of these executive officers could have a material adverse effect
on NTL. NTL believes that its future success will depend in large part on its
continued ability to attract and retain highly skilled and qualified personnel.
Although NTL has entered into employment contracts with all of its executive
officers, those contracts cannot prevent such individuals from resigning. If an
individual does resign, he or she is bound by certain non-compete clauses which
may or may not discourage the individual from leaving.

NTLs principal businesses are subject to government regulation, including
pricing regulation, and changes in current regulations may adversely affect it.

NTLs principal business activities are regulated and supervised by
various governmental bodies. Changes in laws, regulations or governmental
policy or the interpretations of those laws or regulations affecting our
activities and those of NTLs competitors, such as licensing requirements,
changes in price regulation and deregulation of interconnection arrangements,
could have a material adverse effect on NTL.

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

NTL is dependent upon many critical systems and processes, many of which are
dependent upon hardware that is concentrated in a small number of locations. If
a catastrophe were to occur at one or more of those locations, it could have a
material adverse effect on NTLs business.

NTLs business is dependent on many sophisticated critical systems, which
support all of the various aspects of its operations from its network to its
billing and customer service systems. The hardware supporting a large number of
critical systems is housed in a relatively small number of locations. If one or
more of these locations were to be subject to fire, natural disaster,
terrorism, power loss, or other catastrophe, it could have a material adverse
effect on and cause irreparable harm to NTLs business. NTL is currently
studying ways to improve its disaster recovery to prevent or mitigate such a
potential failure. However, despite any disaster recovery, security and service
continuity protection measures NTL has or may in the future undertake, there
can be no assurance that these measures will be sufficient. In addition,
although NTL builds its network in resilient rings to ensure the continuity of
network availability in the event of any damage to its underground fibers,
should any ring be cut twice in different locations, it is likely that no
transmission signals will be able to pass, which could cause significant damage
to NTLs business. This is especially so in relation to NTLs Sirius undersea
ring connecting the UK to the Republic of Ireland: any simultaneous cut of the
Northern and Southern rings would isolate NTLs Irish networks from its UK
networks for an extended period.

28



---



##### Table of Contents



NTL does not insure the underground portion of our cable network.

NTL obtains insurance of the type and in the amounts that it believes are
customary for similar companies. Consistent with this practice, NTL does not
insure the underground portion of its cable network. Substantially all of NTLs
cable network is constructed underground. Any catastrophe that affects NTLs
underground cable network could result in substantial uninsured losses.

We and NTL are subject to currency risk because we obtained significant
financing and may in the future obtain additional financing in U.S. dollars but
generally generate revenues and incur expenses in pounds sterling and Euros.

We and NTL encounter currency exchange rate risks because we generate
revenues and incur construction and operating expenses in pounds sterling and
Euros while we pay interest and principal obligations with respect to a
significant amount of our existing indebtedness in U.S. dollars. There can be
no assurance that any hedging transactions we might enter into will be
successful or that shifts in the currency exchange rates will not have a
material adverse effect on us. For example, to the extent that the pound
sterling declines in value against the U.S. dollar, and we have not fully
hedged against such declines, the effective cost of servicing our U.S. dollar
debt will be higher and we will incur currency losses.

NTLs broadcast services business is dependent upon ITV and other contracts.

NTLs broadcast services business has contracts for the provision of
television broadcasting transmission services with the ITV national network of
15 affiliated television stations, Channel 4/S4C and Channel 5. The majority of
the prices that NTL may charge these companies for transmission services are
subject to regulation by the UK Office of Telecommunications (referred to in
this annual report as OFTEL). Although, historically, the ITV companies and
Channel 4/S4C have renewed their contracts with NTL, there can be no assurance
that they will do so upon expiration of the current contracts, that they will
not negotiate terms for provision of transmission services by NTL on a basis
less favorable to it or that they would not seek to obtain from third parties a
portion of the transmission services that NTL currently provides.

Other
NTL contracts include a contract for the provision of communications services to
the Metropolitan Police. This contract is subject to renewal and there can be
no assurance that the renewal will be on the same basis, or that the
Metropolitan Police will not seek other parties to provide such services.

The loss of any one of these contracts could have a material adverse
effect on NTL.

NTLs broadcast services business is dependent upon site sharing arrangements
with its principal competitor.

As a result of, among other factors, a natural shortage of potential
transmission sites and the difficulties in obtaining planning permission for
erection of further masts, Crown Castle U.K. Ltd. and NTL have made
arrangements to share a large number of tower sites. There can be no assurance
that the site sharing arrangements will not be terminated. Termination of the
site sharing arrangements would have a material adverse effect on NTL.

Under the present arrangements for analog broadcast services, one of the
parties is the owner, lessor or licensor of each site and the other party is
entitled to request a license to use specified facilities at that site. Each
site license granted pursuant to the site sharing agreement is for an initial
period expiring on December 31, 2005, subject to title to the site and to the
continuation in force of the site sharing agreement. Each site sharing
agreement provides that, if requested by the sharing party, it will be extended
for further periods. Either party may terminate the agreement by giving 5
years written notice until December 31, 2005 or at any date which is a date 10
years or a multiple of 10 years after December 31, 2005. With respect to
digital broadcast services, NTL and Crown Castle UK Ltd are
negotiating a formal
arrangement pending finalization of a separate digital site sharing agreement
which is envisaged to be on terms similar to the existing analog site
sharing agreement. Presently the parties are operating under an informal
arrangement pending finalization of the formal arrangement. Although NTL
believes that such formalization will be concluded successfully, it cannot be
certain of that conclusion.

29



---



##### Table of Contents



Some provisions of the agreements governing the indebtedness of NTL
Incorporated, us and our respective subsidiaries, certain provisions of our
respective certificates of incorporation and NTL Incorporateds stockholder
rights plan could delay or prevent transactions involving a change of control
of us or NTL Incorporated.

We and NTL Incorporated may, under some circumstances involving a change
of control, be obligated to offer to repurchase substantially all of our
respective outstanding notes, and repay other indebtedness (including bank
facilities). There can be no assurance that we or NTL Incorporated, as the case
may be, will have available financial resources necessary to repurchase such
notes or indebtedness in those circumstances.

If NTL Incorporated cannot repurchase and repay this indebtedness in the
event of a change of control, the failure to do so would constitute an event of
default under the indentures and agreements under which that indebtedness was
incurred and could result in a cross-default under other indebtedness. The
threat of this could have the effect of delaying or preventing transactions
involving a change of control of NTL Incorporated, including transactions in
which stockholders might otherwise receive a substantial premium for their
shares over then current market prices, and may limit the ability of its
stockholders to approve transactions that they may deem to be in their best
interest.

NTL Incorporateds stockholder rights plan and certain provisions of its
certificate of incorporation may have the effect, alone or in combination with
each other or with the existence of authorized but unissued common stock and
preferred stock, of preventing or making more difficult transactions involving
a change of control of NTL Incorporated. Certain provisions of our certificate
of incorporation may have a similar effect with respect to a change of control
involving us.




ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following is a summary of the quarterly results of operations for the
years ended December 31, 2002 and 2001.

|                                      |  |                    |           |         |  |              |           |             |  |  |           |   |  |  |            |  
|------------------------------------- |  | ------------------ | --------- | ------- |  | ------------ | --------- | ----------- |  |  | --------- | - |  |  | ---------- | -
|                                      |  | 2002              
|                                      |  | Three Months Ended
|                                      |  |                   
|                                      |  | March 31           |           | June 30 |  | September 30 |           | December 31
|                                      |  |                    |           |         |  |              |           |            
|Revenues                              |  |                    | 7,198,950 |         |  |              | 7,212,269 |             |  |  | 7,516,867 |   |  |  | 7,623,979  |  
|Operating loss                        |  |                    | (488,042  | )       |  |              | (401,880  | )           |  |  | (125,303  | ) |  |  | (1,654,607 | )
|Net loss                              |  |                    | (596,268  | )       |  |              | (578,574  | )           |  |  | (412,323  | ) |  |  | (1,901,755 | )
|Net loss per limited partnership unit |  |                    | (10.37    | )       |  |              | (10.06    | )           |  |  | (7.17     | ) |  |  | (33.07     | )

|                                      |  |                    |            |         |  |              |            |             |  |  |           |   |  |  |            |  
|------------------------------------- |  | ------------------ | ---------- | ------- |  | ------------ | ---------- | ----------- |  |  | --------- | - |  |  | ---------- | -
|                                      |  | 2001              
|                                      |  | Three Months Ended
|                                      |  |                   
|                                      |  | March 31           |            | June 30 |  | September 30 |            | December 31
|                                      |  |                    |            |         |  |              |            |            
|Revenues                              |  |                    | 7,023,325  |         |  |              | 7,030,445  |             |  |  | 6,912,705 |   |  |  | 7,388,178  |  
|Operating loss                        |  |                    | (8,800,948 | )       |  |              | (1,344,389 | )           |  |  | (883,167  | ) |  |  | (1,986,436 | )
|Net loss                              |  |                    | (6,278,312 | )       |  |              | (1,132,564 | )           |  |  | (802,219  | ) |  |  | (1,655,769 | )
|Net loss per limited partnership unit |  |                    | (109.17    | )       |  |              | (19.70     | )           |  |  | (13.95    | ) |  |  | (28.79     | )

During the fourth quarter of 2002, the Company was charged $1.5 million by
an affiliate of NTL in relation to NTLs business rationalization program and
its recapitalization process. During the fourth quarter of 2001, the Company
was charged $2.3 million by an affiliate of NTL in relation to NTLs business
rationalization program.




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

None.

30



---



##### Table of Contents






PART III




ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The Partnership itself has no officers or directors. Certain information
concerning directors and executive officers of the General Partner is set forth
below.

|                 |  |     |    |                                    |  |                       
|---------------- |  | --- | -- | ---------------------------------- |  | ----------------------
|Name             |  | Age |    | Positions with the General Partner
|                 |  |     |    |                                    |  |                       
|Barclay Knapp    |  |     | 46 |                                    |  | Director              
|Bret Richter     |  |     | 33 |                                    |  | Director              
|Robert Mackenzie |  |     | 41 |                                    |  | Director and Secretary

Barclay Knapphas been a Director of the General Partner since February 21,
2002. He has been the President, Chief Executive Officer and a director of NTL
since its formation with the exception that Mr. Knapp was Chief Operating
Officer until October 1996 when he was appointed Chief Executive Officer. Mr.
Knapp co-founded NTL in 1993 with George Blumenthal. Prior to NTL, Mr. Knapp
was a co-founder of Cellular Communications, Inc. (CCI) in 1982, serving first
as CFO and then later as President and COO. CCI was a pioneering US cellular
telephone company that grew to become one of the industrys leading players at
the time of its sale to Airtouch in 1996 for $2.5 billion. In addition, CCI was
the parent, and Mr. Knapp was COO, of Cellular Communications of Puerto Rico
(CCPR) and Cellular Communications International (CCII)  the latter a founding
partner of Omnitel in Italy. These companies were spun off from CCI in 1991 and
ultimately sold to SBC (1999) and Mannesman (1998), respectively. Mr. Knapp is
currently Chairman of ATX Communications, the successor to CoreComm, a US-based
CLEC which also had its roots in the CCI companies and NTL.

Bret Richterhas been a Director of the General Partner since January 10, 2003.
Bret Richter is the Senior Vice President  Finance and Acting Chief Financial
Officer of NTL. Mr. Richter is responsible for NTLs finance activities,
strategic initiatives, investor relations and capital raising efforts. Mr.
Richter joined NTL in September 1994, and prior to his current responsibilities
he held various positions in NTLs Corporate Development Group including Vice
President  Corporate Finance and Development. Prior to joining NTL, he was a
member of the media and telecommunications investment banking group at Salomon
Brothers Inc.

Robert Mackenziehas been Secretary and a Director of the General Partner since
May 30, 2000. He joined International CableTel Incorporated in 1993, to establish the
legal department in the UK and act as Company Secretary for the newly formed
CableTel, subsequently renamed NTL. From 1988 to 1993, Robert worked for
Theodore Goddard as a Solicitor in the Corporate Finance department advising
public and private companies on corporate finance, take-overs, domestic and
international mergers and acquisitions. He was additionally seconded to
corporate brokers Phoenix Securities Ltd as Mergers & Acquisitions Manager.
Previously he worked for Mischon de Reya, handling High Court commercial
litigation. He was admitted as a Solicitor in 1987, and graduated in law from
Kings College, University of London. Law Society Finals were taken at the
College of Law, London.




ITEM 11. EXECUTIVE COMPENSATION

The Partnership has no employees; however, various personnel are required
to operate the South Herts System. Personnel are employed by NTL and its
affiliates and, pursuant to the terms of the Partnerships limited partnership
agreement; NTL and its affiliates charge the cost of such employment to the
Partnership as a direct reimbursement item. See Item Certain Relationships and
Related Transactions for a description of the relationship between the
Partnership and NTL.




ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

No person or entity known to the Partnership owns more than 5% of the
limited partnership interests in the Partnership. No directors or executive
officers of the General Partner beneficially own any of the limited partnership
interests in the Partnership.




ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The General Partner and its affiliates engage in certain transactions with
the Partnership as contemplated by the limited partnership agreement of the
Partnership and as disclosed in the prospectuses for the Partnerships public
offerings.

31



---



##### Table of Contents



The General Partner believes that the terms of such transactions, which
are subject to the Partnerships limited partnership agreement, are generally
as favorable as could be obtained by the Partnership from unaffiliated parties.
This determination has been made by the General Partner in good faith, but none
of the terms were or will be negotiated at arms-length and there can be no
assurance that the terms of such transactions have been or will be as favorable
as those that could have been obtained by the Partnership from unaffiliated
parties.

An affiliate of the General Partner is entitled to be paid a consulting
fee by NTL South Herts. During the construction phases of the cable
television/telephony system, this consulting fee was 2% of construction costs.
After completion of construction of each portion of the system, the consulting
fee for the completed portion is 5% of gross revenues, excluding revenues from
the sale of cable television/telephony systems. Consulting fees paid or payable
by the Partnership to NTL for the year ended December 31, 2002 totaled
$1,477,606.

The General Partner and its affiliates are entitled to reimbursement from
NTL South Herts for direct and indirect expenses allocable to the operation of
the South Herts System and from the Partnership for direct and indirect
expenses allocable to the operation of the Partnership, which include but are
not limited to rent, supplies, telephone, travel, copying charges and salaries
of any full or part time employees.

The General Partner and its affiliates may make advances to, and defer
collection of fees and allocated expenses owed by, the Partnership, although
they are not required to do so. The Partnership will be charged interest on
such advances and deferred amounts. Interest charges incurred by the
Partnership for the year ended December 31, 2002 amounted to
$116,831.




ITEM 14. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures. The Directors of the
General Partner who serve as Chief Executive Officer and Acting Chief Financial
Officer of NTL Incorporated*, the indirect parent of the General Partner, have
conducted an evaluation of the effectiveness of the Partnerships disclosure
controls and procedures (as such term is defined in Rule 13a-14(c) and
15d-14(c) under the Exchange Act of 1934 (the Exchange Act)) as of a date
within 90 days prior to the filing date of this annual report (the Evaluation
Date). Based on that evaluation, the Directors of the General Partner
concluded that, as of the Evaluation Date, the Partnerships disclosure
controls and procedures are effective in alerting them on a timely basis to
material information relating to the Partnership (including NTL Sourth Herts)
required to be included in the Partnerships reports filed or submitted under
the Exchange Act.

(b) Changes in Internal Controls. Since the Evaluation Date, there have
been no significant changes in the Partnerships internal controls, or in other
factors that could significantly affect the Partnerships internal controls.



---

|* |  | The Partnership has no Chief Executive Officer or Chief Financial
Officer. Barclay Knapp and Bret Richter are Directors of Fawnspring
Limited, the general partner of the Partnership, and are Chief Executive
Officer and Acting Chief Financial Officer, respectively, of NTL
Incorporated, the indirect parent of Fawnspring Limited.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

32



---



##### Table of Contents






PART IV




ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

|    |  |                                                                                                                          
|--- |  | -------------------------------------------------------------------------------------------------------------------------
|(a) |  | (1)      Financial Statements                                                                                            
|    |  |                                                                                                                          
|    |  | See index to financial statements on page F-1 for the list of
financial statements filed as a part of this Annual Report.
|    |  |                                                                                                                          
|    |  | (2)       Financial Statement Schedules                                                                                  
|    |  |                                                                                                                          
|    |  | None                                                                                                                     
|    |  |                                                                                                                          
|    |  | (3)       Exhibits                                                                                                       
|    |  |                                                                                                                          
|    |  | See Exhibit Index on page 33.                                                                                            
|    |  |                                                                                                                          
|(b) |  | The Partnership did not file a report on Form 8-K during the
quarter ended December 31, 2002.                            
|    |  |                                                                                                                          
|(c) |  | Exhibits  The response to this portion of Item 15 is submitted
as a separate section of this report.                    
|    |  |                                                                                                                          
|(d) |  | Financial Statement Schedules - None                                                                                     




EXHIBIT INDEX

|            |  |                                                                                                                                                                                                                                    
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  |                                                                                                                                                                                                                                    
|            |  |                                                                                                                                                                                                                                    
|3.1         |  | Certificate of Limited Partnership dated December 31, 1991 (Incorporated by reference to Exhibit 3.1 to
the Registrants Form 10-K for the year ended December 31, 1994, filed on March 31, 1995, File No.
0-19889)                
|            |  |                                                                                                                                                                                                                                    
|3.2         |  | Amendment to the Certificate of Limited Partnership dated January 31, 1995 (Incorporated by reference
to Exhibit 3.2 to the Registrants Form 10-K for the year ended December 31, 1994, filed on March 31,
1995, File No. 0-19889)
|            |  |                                                                                                                                                                                                                                    
|4.1         |  | Limited Partnership Agreement dated December 31, 1991 (Incorporated by reference to the Registrants
Post-Effective Amendment No. 2 to Form S-1, filed on May 6, 1993, File No. 33-48400)                                          
|            |  |                                                                                                                                                                                                                                    
|4.2         |  | Amendment No. 1 to Limited Partnership Agreement dated October 20, 1992 (Incorporated by reference to
Exhibit 4.2 to the Registrants Form 10-K for the year ended December 31, 1994, filed on March 31,
1995, File No. 0-19889)   
|            |  |                                                                                                                                                                                                                                    
|21          |  | List of Subsidiaries of South Hertfordshire United Kingdom Fund, Ltd.*                                                                                                                                                             
|            |  |                                                                                                                                                                                                                                    
|99.1        |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350*                                                                                                                           



---

|* |  | Filed herewith.
|- |  | ---------------

33



---



##### Table of Contents






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.

| |  |                            |                                           
| |  | -------------------------- | ------------------------------------------
| |  | SOUTH HERTFORDSHIRE UNITED
| |  | KINGDOM FUND, LTD.        
| |  |                            | a Colorado limited partnership            
| |  |                            |                                           
| |  | By:                        | Fawnspring Limited,                       
| |  |                            | its General Partner                       
| |  |                            |                                           
| |  | By:                        | /s/ Barclay Knapp                         
| |  |                            |                                           
| |  |                            | Barclay Knapp                             
| |  |                            | Director of Fawnspring Limited            
| |  |                            | the General Partner of South Hertfordshire
| |  |                            | United Kingdom Fund, Ltd.                 

Dated: March 31, 2003

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

|                                     |  |                                                                                                       |               
|------------------------------------ |  | ----------------------------------------------------------------------------------------------------- | --------------
|Signature                            |  | Title                                                                                                 | Date          
|                                     |  |                                                                                                       |               
|/s/ Barclay KnappBarclay Knapp       |  | Director of Fawnspring Limited,
the General Partner of South
Hertfordshire United Kingdom
Fund, Ltd.* | March 31, 2003
|                                    
|
|/s/ Bret RichterBret Richter         |  | Director of Fawnspring Limited,
the General Partner of South
Hertfordshire United Kingdom
Fund, Ltd.* | March 31, 2003
|                                    
|/s/ Robert MackenzieRobert Mackenzie |  | Director of Fawnspring Limited,
the General Partner of South
Hertfordshire United Kingdom
Fund, Ltd.  | March 31, 2003



---

*     The Partnership has no Chief Executive Officer or Chief Financial Officer.
Barclay Knapp and Bret Richter are Directors of Fawnspring Limited, the general
partner of the Partnership, and are Chief Executive Officer and acting Chief
Financial Officer, respectively, of NTL Incorporated, the indirect parent of
Fawnspring Limited.


34



---



##### Table of Contents



I, Barclay Knapp, certify that:



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



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



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



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



|6. |  | The registrants other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|      |                |  |                                                                      
|----- | -------------- |  | ---------------------------------------------------------------------
|Date: | March 31, 2003 |  | /s/ Barclay Knapp                                                    
|      |                |  |                                                                      
|      |                |  | Barclay Knapp                                                        
|      |                |  | Director of Fawnspring Limited,                                      
|      |                |  | the General Partner of South Hertfordshire United Kingdom Fund, Ltd.*

35



---



##### Table of Contents



I, Bret Richter, certify that:



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



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



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



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



|6. |  | The registrants other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|      |                |                                                                      
|----- | -------------- | ---------------------------------------------------------------------
|Date: | March 31, 2003 | /s/ Bret Richter                                                     
|      |                |                                                                      
|      |                | Bret Richter                                                         
|      |                | Director of Fawnspring Limited,                                      
|      |                | the General Partner of South Hertfordshire United Kingdom Fund, Ltd.*



---

|* |  | The Partnership has no Chief Executive Officer or Chief Financial
Officer. Barclay Knapp and Bret Richter are Directors of Fawnspring
Limited, the general partner of the Partnership, and are Chief Executive
Officer and acting Chief Financial Officer, respectively, of NTL
Incorporated, the indirect parent of Fawnspring Limited.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

36



---



##### Table of Contents



FORM 10K  ITEM 15(a) (1)

SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.

CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2002, and 2001
and for the Years Ended December 31, 2002, 2001, and 2000


The following consolidated financial statements of South Hertfordshire United
Kingdom Fund, Ltd. are included in Item 8:

INDEX

|                                                                                        |  |      |     | 
|--------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                        |  | Page
|                                                                                        |  |     
|Report of Independent Auditors                                                          |  |      | F-2 | 
|Consolidated Balance Sheets                                                             |  |      | F-3 | 
|Consolidated Statements of Operations and Consolidated Statements of Comprehensive Loss |  |      | F-4 | 
|Consolidated Statements of Partners Capital /(Deficit)                                 |  |      | F-5 | 
|Consolidated Statements of Cash Flows                                                   |  |      | F-6 | 
|Notes to Consolidated Financial Statements                                              |  |      | F-7 | 

F-1



---



##### Table of Contents



REPORT OF INDEPENDENT AUDITORS

The Partners
South Hertfordshire United Kingdom Fund, Ltd.

We have audited the accompanying consolidated balance sheets of South
Hertfordshire United Kingdom Fund, Ltd. (a Colorado limited partnership) and
its subsidiary as of December 31, 2002 and 2001, and the related consolidated
statements of operations, comprehensive loss, partners capital
(deficit) and cash flows for each of the three years in the period ended
December 31, 2002. These financial statements are the responsibility of the
General Partner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. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of South
Hertfordshire United Kingdom Fund, Ltd. and its subsidiary at December 31, 2002
and 2001, and the consolidated results of their operations and their
consolidated cash flows for each of the three years in the period ended
December 31, 2002 in conformity with accounting principles generally accepted
in the United States.

ERNST & YOUNG LLP

London, England
March 27, 2003

F-2



---



##### Table of Contents



SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.

(A Limited Partnership)


CONSOLIDATED BALANCE SHEETS

|                                                                                                                                          |                                                                                               |                                         |            |             |            |      |            |             |            | 
|----------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------- | --------------------------------------- | ---------- | ----------- | ---------- | ---- | ---------- | ----------- | ---------- | 
|                                                                                                                                          |                                                                                               |                                         |            | December 31
|                                                                                                                                          |                                                                                               |                                         |            |            
|                                                                                                                                          |                                                                                               |                                         |            | 2002        |            | 2001
|                                                                                                                                          |                                                                                               |                                         |            |             |            |     
|ASSETS                                                                                                                                    |                                                                                               |                                         |            |             |            |      |            |            
|Plant, property and equipment (net of accumulated
depreciation of $65,341,704 and $51,716,191 at
December 31, 2002 and 2001 respectively) |                                                                                               | $                                       | 58,877,094 |             |            | $    | 58,962,082 |            
|Other assets                                                                                                                              |                                                                                               |                                         | 96,570     |             |            |      | 205,766    |            
|                                                                                                                                          |                                                                                               |                                         |            |             |            |      |            |            
|Total assets                                                                                                                              |                                                                                               | $                                       | 58,973,664 |             |            | $    | 59,167,848 |            
|                                                                                                                                          |                                                                                               |                                         |            |             |            |      |            |            
|LIABILITIES AND PARTNERS DEFICIT                                                                                                         |                                                                                               |                                         |            |             |            |      |            |            
|                                                                                                                                          | Current Liabilities                                                                           |                                         |            |             |            |      |            |             |           
|                                                                                                                                          | Accounts payable to affiliates and related parties                                            |                                         | $          | 62,691,338  |            |      | $          | 58,599,365  |           
|                                                                                                                                          |                                                                                               |                                         |            |             |            |      |            |            
|                                                                                                                                          | Total liabilities                                                                             |                                         |            | 62,691,338  |            |      |            | 58,599,365  |           
|                                                                                                                                          |                                                                                               |                                         |            |             |            |      |            |            
|COMMITMENTS AND CONTINGENCIES                                                                                                             |                                                                                               |                                         |           |             |            |      |           |            
|MINORITY INTEREST                                                                                                                         |                                                                                               |                                         |           |             |            |      | 739,160    |            
|PARTNERS CAPITAL/(DEFICIT)                                                                                                               |                                                                                               |                                         |            |             |            |      |            |            
|                                                                                                                                          | General Partner-                                                                              |                                         |            |             |            |      |            |             |           
|                                                                                                                                          | Contributed capital                                                                           |                                         |            | 1,000       |            |      |            | 1,000       |           
|                                                                                                                                          | Accumulated deficit                                                                           |                                         |            | (525,377    | )          |      |            | (490,488    | )         
|                                                                                                                                          |                                                                                               |                                         |            |             |            |      |            |            
|                                                                                                                                          |                                                                                               |                                         | (524,377   | )           |            |      | (489,488   | )          
|                                                                                                                                          |                                                                                               |                                         |            |             |            |      |            |            
|Limited Partners-                                                                                                                         |                                                                                               |                                         |            |             |            |      |            |            
|                                                                                                                                          | Net contributed capital (56,935 units outstanding
at December 31, 2002 and 2001 respectively) |                                         |            | 48,817,997  |            |      |            | 48,817,997  |           
|                                                                                                                                          | Accumulated deficit                                                                           |                                         |            | (51,731,154 | )          |      |            | (48,277,123 | )         
|                                                                                                                                          |                                                                                               |                                         |            |             |            |      |            |            
|                                                                                                                                          |                                                                                               |                                         | (2,913,157 | )           |            |      | 540,874    |            
|                                                                                                                                          |                                                                                               |                                         |            |             |            |      |            |            
|                                                                                                                                          | Accumulated comprehensive loss                                                                |                                         |            | (280,140    | )          |      |            | (222,063    | )         
|                                                                                                                                          |                                                                                               |                                         |            |             |            |      |            |            
|                                                                                                                                          | Total partners deficit                                                                       |                                         |            | (3,717,674  | )          |      |            | (170,677    | )         
|                                                                                                                                          |                                                                                               |                                         |            |             |            |      |            |            
|                                                                                                                                          |                                                                                               | TOTAL LIABILITIES AND PARTNERS DEFICIT |            | $           | 58,973,664 |      |            | $           | 59,167,848 | 
|                                                                                                                                          |                                                                                               |                                         |            |             |            |      |            |            

The accompanying notes
are an integral part of these consolidated balance sheets.

F-3



---



##### Table of Contents



SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.

(A Limited Partnership)


CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                                                                                                        |  |                         |             |      |  |      |             |   |  |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ----------- | ---- |  | ---- | ----------- | - |  | - | ----------- | -
|                                                                                                                                                        |  | Years ended December 31
|                                                                                                                                                        |  |                        
|                                                                                                                                                        |  | 2002                    |             | 2001 |  | 2000
|                                                                                                                                                        |  |                         |             |      |  |     
|REVENUES                                                                                                                                                |  | $                       | 29,552,065  |      |  | $    | 28,354,653  |   |  | $ | 26,310,898  |  
|COSTS AND EXPENSES                                                                                                                                      |  |                         |             |      |  |      |             |   |  |   |             |  
|Cost of goods sold (exclusive of items shown separately below)                                                                                          |  |                         | (10,772,887 | )    |  |      | (12,277,725 | ) |  |   | (10,366,295 | )
|Selling, general and administrative expenses                                                                                                            |  |                         | (329,325    | )    |  |      | (253,634    | ) |  |   | (99,892     | )
|Management fees and allocated overhead from the General Partner                                                                                         |  |                         | (12,035,660 | )    |  |      | (11,901,237 | ) |  |   | (13,128,873 | )
|Depreciation                                                                                                                                            |  |                         | (7,595,523  | )    |  |      | (14,629,055 | ) |  |   | (4,759,437  | )
|Restructuring costs                                                                                                                                     |  |                         | (1,488,502  | )    |  |      | (2,307,942  | ) |  |   |            |  
|                                                                                                                                                        |  |                         |             |      |  |      |             |   |  |   |             |  
|OPERATING LOSS                                                                                                                                          |  |                         | (2,669,832  | )    |  |      | (13,014,940 | ) |  |   | (2,043,599  | )
|OTHER EXPENSE                                                                                                                                           |  |                         |             |      |  |      |             |   |  |   |             |  
|Interest expense and other (interest payable to related
parties amounted to $1,497,775, $1,228,360 and $1,075,982 in
2002, 2001 and 2000, respectively) |  |                         | (1,587,925  | )    |  |      | (1,577,428  | ) |  |   | (3,217,052  | )
|                                                                                                                                                        |  |                         |             |      |  |      |             |   |  |   |             |  
|LOSS BEFORE MINORITY INTEREST                                                                                                                           |  |                         | (4,257,757  | )    |  |      | (14,592,368 | ) |  |   | (5,260,651  | )
|Minority interest                                                                                                                                       |  |                         | 768,837     |      |  |      | 4,723,504   |   |  |   | 1,665,805   |  
|                                                                                                                                                        |  |                         |             |      |  |      |             |   |  |   |             |  
|NET LOSS                                                                                                                                                |  | $                       | (3,488,920  | )    |  | $    | (9,868,864  | ) |  | $ | (3,594,846  | )
|                                                                                                                                                        |  |                         |             |      |  |      |             |   |  |   |             |  
|ALLOCATION OF NET LOSS (Note 1)                                                                                                                         |  |                         |             |      |  |      |             |   |  |   |             |  
|General Partner                                                                                                                                         |  | $                       | (34,889     | )    |  | $    | (98,689     | ) |  | $ | (35,948     | )
|Limited Partners                                                                                                                                        |  |                         | (3,454,031  | )    |  |      | (9,770,175  | ) |  |   | (3,558,898  | )
|                                                                                                                                                        |  |                         |             |      |  |      |             |   |  |   |             |  
|NET LOSS                                                                                                                                                |  | $                       | (3,488,920  | )    |  | $    | (9,868,864  | ) |  | $ | (3,594,846  | )
|                                                                                                                                                        |  |                         |             |      |  |      |             |   |  |   |             |  
|NET LOSS PER LIMITED PARTNERSHIP UNIT                                                                                                                   |  | $                       | (60.67      | )    |  | $    | (171.60     | ) |  | $ | (62.51      | )
|                                                                                                                                                        |  |                         |             |      |  |      |             |   |  |   |             |  
|WEIGHTED AVERAGE NUMBER OF LIMITED PARTNERSHIP UNITS
OUTSTANDING                                                                                        |  |                         | 56,935      |      |  |      | 56,935      |   |  |   | 56,935      |  
|                                                                                                                                                        |  |                         |             |      |  |      |             |   |  |   |             |  

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

|                                         |  |                         |            |      |  |      |             |   |  |   |            |  
|---------------------------------------- |  | ----------------------- | ---------- | ---- |  | ---- | ----------- | - |  | - | ---------- | -
|                                         |  | Years ended December 31
|                                         |  |                        
|                                         |  | 2002                    |            | 2001 |  | 2000
|                                         |  |                         |            |      |  |     
|NET LOSS:                                |  | $                       | (3,488,920 | )    |  | $    | (9,868,864  | ) |  | $ | (3,594,846 | )
|Foreign currency translation adjustments |  |                         | (58,077    | )    |  |      | (351,711    | ) |  |   | (1,143,736 | )
|                                         |  |                         |            |      |  |      |             |   |  |   |            |  
|COMPREHENSIVE LOSS                       |  | $                       | (3,546,997 | )    |  | $    | (10,220,575 | ) |  | $ | (4,738,582 | )
|                                         |  |                         |            |      |  |      |             |   |  |   |            |  

The accompanying notes
are an integral part of these consolidated financial statements.

F-4



---



##### Table of Contents



SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.

(A Limited Partnership)


CONSOLIDATED STATEMENTS OF PARTNERS CAPITAL (DEFICIT)

|                                        |  |                          |            |      |  |      |            |   |  |   |            |  
|--------------------------------------- |  | ------------------------ | ---------- | ---- |  | ---- | ---------- | - |  | - | ---------- | -
|                                        |  | Years ended December 31,
|                                        |  |                         
|                                        |  | 2002                     |            | 2001 |  | 2000
|                                        |  |                          |            |      |  |     
|GENERAL PARTNER:                        |  |                          |            |      |  |      |            |   |  |   |            |  
|Balance, beginning of year              |  | $                        | (489,488   | )    |  | $    | (390,799   | ) |  | $ | (354,851   | )
|Net loss for year                       |  |                          | (34,889    | )    |  |      | (98,689    | ) |  |   | (35,948    | )
|                                        |  |                          |            |      |  |      |            |   |  |   |            |  
|Balance, end of year                    |  | $                        | (524,377   | )    |  | $    | (489,488   | ) |  | $ | (390,799   | )
|                                        |  |                          |            |      |  |      |            |   |  |   |            |  
|LIMITED PARTNERS:                       |  |                          |            |      |  |      |            |   |  |   |            |  
|Balance, beginning of year              |  | $                        | 540,874    |      |  | $    | 10,311,049 |   |  | $ | 13,869,947 |  
|Net loss for year                       |  |                          | (3,454,031 | )    |  |      | (9,770,175 | ) |  |   | (3,558,898 | )
|                                        |  |                          |            |      |  |      |            |   |  |   |            |  
|Balance, end of year                    |  | $                        | (2,913,157 | )    |  | $    | 540,874    |   |  | $ | 10,311,049 |  
|                                        |  |                          |            |      |  |      |            |   |  |   |            |  
|Accumulated comprehensive income/(loss) |  |                          | (280,140   | )    |  |      | (222,063   | ) |  |   | 129,648    |  
|                                        |  |                          |            |      |  |      |            |   |  |   |            |  
|Total partners capital/(deficit)       |  | $                        | (3,717,674 | )    |  | $    | (170,677   | ) |  | $ | 10,049,898 |  
|                                        |  |                          |            |      |  |      |            |   |  |   |            |  

The accompanying notes
are an integral part of these consolidated financial statements.

F-5



---



##### Table of Contents



SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.

(A Limited Partnership)


CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                       |  |                          |            |      |  |      |             |   |  |   |            |  
|-------------------------------------------------------------------------------------- |  | ------------------------ | ---------- | ---- |  | ---- | ----------- | - |  | - | ---------- | -
|                                                                                       |  | Years ended December 31,
|                                                                                       |  |                         
|                                                                                       |  | 2002                     |            | 2001 |  | 2000
|                                                                                       |  |                          |            |      |  |     
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                  |  |                          |            |      |  |      |             |   |  |   |            |  
|Net loss                                                                               |  | $                        | (3,488,920 | )    |  | $    | (9,868,864  | ) |  | $ | (3,594,846 | )
|Adjustments to reconcile net profit/loss to
net cash generated by operating activities |  |                          |            |      |  |      |             |   |  |   |            |  
|Minority interest                                                                      |  |                          | (768,837   | )    |  |      | (4,723,504  | ) |  |   | (1,665,805 | )
|Depreciation                                                                           |  |                          | 7,595,523  |      |  |      | 14,629,055  |   |  |   | 4,759,437  |  
|Change in operating assets and liabilities                                             |  |                          |            |      |  |      |             |   |  |   |            |  
|Decrease in other assets                                                               |  |                          | 121,400    |      |  |      | 94,314      |   |  |   | 83,527     |  
|Increase (decrease) in accounts payable to
affiliates and related parties              |  |                          | (1,580,721 | )    |  |      | 26,200,073  |   |  |   | 13,509,685 |  
|                                                                                       |  |                          |            |      |  |      |             |   |  |   |            |  
|Net cash generated by operating activities                                             |  |                          | 1,878,445  |      |  |      | 26,331,074  |   |  |   | 13,091,998 |  
|                                                                                       |  |                          |            |      |  |      |             |   |  |   |            |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                                   |  |                          |            |      |  |      |             |   |  |   |            |  
|Construction payments for cable
television/telephony system                            |  |                          | (1,878,445 | )    |  |      | (5,398,631  | ) |  |   | (8,036,361 | )
|                                                                                       |  |                          |            |      |  |      |             |   |  |   |            |  
|Net
cash used in investing activities                                                  |  |                          | (1,878,445 | )    |  |      | (5,398,631  | ) |  |   | (8,036,361 | )
|                                                                                       |  |                          |            |      |  |      |             |   |  |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                                   |  |                          |            |      |  |      |             |   |  |   |            |  
|Decrease in loans                                                                      |  |                          |           |      |  |      | (20,919,270 | ) |  |   | (5,275,848 | )
|Principal payments under capital leases                                                |  |                          |           |      |  |      |            |   |  |   | (33,411    | )
|                                                                                       |  |                          |            |      |  |      |             |   |  |   |            |  
|Net cash used in financing activities                                                  |  |                          |           |      |  |      | (20,919,270 | ) |  |   | (5,309,259 | )
|                                                                                       |  |                          |            |      |  |      |             |   |  |   |            |  
|Increase (decrease) in cash and cash
equivalents before exchange rate changes          |  |                          |           |      |  |      | 13,173      |   |  |   | (253,622   | )
|Effect of exchange rate changes on cash                                                |  |                          |           |      |  |      | (13,173     | ) |  |   | (19,567    | )
|                                                                                       |  |                          |            |      |  |      |             |   |  |   |            |  
|Net decrease in cash and cash equivalents                                              |  |                          |           |      |  |      |            |   |  |   | (273,189   | )
|Cash and cash equivalents, beginning of year                                           |  |                          |           |      |  |      |            |   |  |   | 273,189    |  
|                                                                                       |  |                          |            |      |  |      |             |   |  |   |            |  
|Cash and cash equivalents, end of year                                                 |  |                          |           |      |  |      |            |   |  |   |           |  
|                                                                                       |  |                          |            |      |  |      |             |   |  |   |            |  
|SUPPLEMENTAL CASH FLOW DISCLOSURES                                                     |  |                          |            |      |  |      |             |   |  |   |            |  
|Interest paid                                                                          |  | $                        |           |      |  | $    | 261,886     |   |  | $ | 2,070,948  |  
|                                                                                       |  |                          |            |      |  |      |             |   |  |   |            |  

The accompanying notes
are an integral part of these consolidated financial statements.

F-6



---



##### Table of Contents



SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.

(A Limited Partnership)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|(1) |  | ORGANIZATION AND PARTNERS INTERESTS
|--- |  | ------------------------------------

Formation and Business

South Hertfordshire United Kingdom Fund, Ltd. (the Partnership), a
Colorado limited partnership, was formed on December 23, 1991, in connection
with a public offering of its limited partnership interests. The Partnership
was formed to acquire, construct, develop, own and operate cable
television/telephony systems in the UK. Fawnspring Limited, a UK corporation
(Fawnspring), a subsidiary of NTL, is the general partner (the General
Partner) of the Partnership.

The General Partner has the authority to manage the business, properties
and activities of the Partnership. This includes the ability to operate and
maintain cable television and telephony properties, and to purchase or lease
property at the expense of the Partnership, the ability to make on behalf of
the Partnership all payments required of the Partnership for all direct and
indirect costs incurred in the conduct of its business, the ability to borrow
money in the name of the Partnership, and the obligation to maintain accurate
financial records and to prepare and file the reports required under applicable
regulations.

Contributed Capital

The capitalization of the Partnership is set forth in the accompanying
Consolidated Statements of Partners Capital (Deficit). No existing partner is obligated
to make any additional contributions to partnership capital.

The General Partner purchased its interest in the Partnership by
contributing $1,000 to partnership capital.

Profits, losses and distributions of the Partnership are currently
allocated 99% to the limited partners and 1% to the General Partner until the
limited partners have received distributions equal to 100% of their capital
contributions plus an annual return thereon of 12%, cumulative and
non-compounded. Thereafter, profits and distributions will generally be
allocated 75% to the limited partners and 25% to the General Partner. Interest
income earned prior to the formation of the Partnership was allocated 100% to
the limited partners.

The profits allocated to the limited partners and General Partner is the
net profit or loss rather than the comprehensive income. The net profit or
loss does not take account of any foreign currency translation adjustments as
these are unrealized. The net profit or loss per limited partner unit is
calculated after allocating 1% of the net profit or loss to the General
Partner. For the year ended December 31, 2002 the loss per limited partner
unit amounted to $60.67.

NTL (South Hertfordshire) Limited

NTL (South Hertfordshire) Limited (formerly C&W Comms (South Herts)
Limited) (NTL South Herts) is a UK corporation originally owned by Jones
Global Funds, Inc. (the previous general partner) and Jones Cable Group, Ltd.,
an affiliate of the previous general partner. NTL South Herts is the holder of
a franchise to own and operate a cable television/telephony system in the South
Hertfordshire franchise area, located adjacent to the northwest perimeter of
Greater London, England (the South Herts System).

NTL South Herts is owned 66.7% by the Partnership and 33.3% by NTL. NTL
also owns the General Partner. The General Partner provides consulting services
to the Partnership and may delegate some or all of the consulting services to
NTL or to other affiliates.

F-7



---



##### Table of Contents





|(2) |  | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|--- |  | ------------------------------------------

Use of Estimates

The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenue and expenses
during the reported period. Actual amounts could differ from such estimates.

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States.
The consolidated financial statements include the accounts of the Partnership
and its subsidiary NTL South Herts. Intercompany transactions and balances are
eliminated in consolidation.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, amounts held in banks and
highly liquid investments purchased with an original maturity of three months
or less.

Foreign Currency Translation

For financial reporting purposes assets and liabilities of the
Partnerships foreign subsidiary, are translated at year-end rates, and income
and expenses are translated at average exchange rates prevailing during the
period. Translation adjustments arising from differences in exchange rates
from period to period have been reported as other comprehensive income/(loss)
in partners capital/(deficit) and in minority interest (for the portion
attributable to the minority shareholders).

Foreign currency transactions arising from normal trading activities are
recorded in local currency at current exchange rates. Monetary assets and
liabilities denominated in foreign currencies at the year-end are translated at
the year-end exchange rate. Foreign currency gains and losses are credited or
charged to the statement of operations as they arise.

Property, Plant and Equipment

Depreciation is provided on property, plant and equipment at rates that
are intended to write off the cost of the assets over their estimated useful
lives. Effect is given to commercial and technical obsolescence. Depreciation
is provided on a straight-line basis over 3-40 years for the cable network and
other electronic equipment, 40 years for buildings and 3-10 years for office
and other equipment. Depreciation of the capitalized construction costs begins
from the time of receiving the first revenues from subscribers. Repairs and
maintenance costs are charged to expense when incurred.

Following the acquisition by NTL of CWC ConsumerCo (which included NTL
South Herts), the General Partner reviewed the book value and useful economic
lives of the assets of NTL South Herts. This resulted in a change to the book
value and useful economic lives of customer installation costs and cable
converter costs. Previously, these costs had been amortized over varying lives
of between 5 and 40 years. Customer installation and cable converter costs are
now amortized over three years being the General Partners estimate of the
average life of consumer connection. This represents a change in accounting
estimate and resulted in an adjustment of $8 million in 2001 relating to those
costs that would have been fully amortized under the revised policy. The net
book value of customer connection costs and cable converters acquired in the
three years prior to May 2000 are being amortized over the remainder of their
revised useful economic lives.

The assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. If the
sum of the expected future undiscounted cash flows is less than the carrying
amount of the asset, a loss is recognized for the difference between the fair
value and the carrying amount of the asset. The fair value of the asset is
determined by the higher of the discounted cash flows and the net realizable
value upon sale.

Revenue and Revenue Recognition

Revenues
are recognized at the time the service is rendered to the customer or
the performance of the service has been completed. Charges for
services that are billed in advance are deferred and recognized when
earned. Rental revenues are recognized when earned on a monthly
basis. Installation and other service revenues are recognized when the
performance or the service has been completed. Revenue excludes UK
value added tax.

F-8



---



##### Table of Contents



Derivatives

The Partnership does not enter into any derivative transactions.

Advertising costs

Advertising costs are expensed as incurred. Advertising costs were
$295,853, $774,835 and $1,472,866 in 2002, 2001 and 2000, respectively.

Current assets and liabilities

Since May 2000, the current assets and liabilities of NTL South Herts have
been managed by NTL. Books and records related to accounts receivable, accounts
payable and deferred revenue are maintained by NTL. Pursuant to the arrangement
between NTL and NTL South Herts contained in the letter of appointment and
agreement, NTL South Herts has the legal right to offset amounts receivable
from NTL against amounts payable to NTL. Consequently, the net balance payable
by NTL South Herts to NTL is disclosed under accounts payable to affiliates and
related parties in the accompanying financial statements. Effective from June
2000, the bank accounts maintained by NTL South Herts were closed and a bank
account maintained by NTL is used for cash transactions. Accordingly the net
result from cash transactions is also included in accounts payable to
affiliates and related parties.

Reclassifications

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



|(3) |  | TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATED ENTITIES
|--- |  | -------------------------------------------------------------

Consulting and Management Fees

An affiliate of the General Partner is entitled to be paid a consulting
fee by NTL South Herts. During the construction phases of the South Herts
System, this consulting fee was 2% of construction costs. Since completion of
construction of each portion of the system, the consulting fee for the
completed portion has been 5% of the gross revenues, excluding revenues from
the sale of cable television/telephony systems. The consulting fee is
calculated and payable monthly. Consulting fees paid or payable by NTL South
Herts for the years ended December 31, 2002, 2001 and 2000 were $1,477,606,
$1,528,773 and $1,423,603, respectively. These amounts were expensed
in the
Consolidated Statements of Operations each year.

F-9



---



##### Table of Contents





Distribution
Ratios and Reimbursement


Any Partnership distributions made from cash flow (defined as cash
receipts derived from routine operations, less debt principal and interest
payments and cash expenses) are allocated 99% to the limited partners and 1% to
the General Partner. Any distributions other than interest income on limited
partner subscriptions earned prior to the acquisition of the Partnerships
first cable television system or from cash flow, such as from the sale or
refinancing of a system or upon dissolution of the Partnership, will be made as
follows: 99% to the limited partners and 1% to the General Partner until any
negative balances in the limited partners capital accounts are reduced to
zero; 100% to the General Partner until any negative balance in its capital
account is reduced to zero; 99% to the limited partners and 1% to the General
Partner until the balance in the limited partners capital accounts is equal to
their adjusted capital contribution plus a 12% return; 100% to the General
Partner until the balance in its capital account is equal to its adjusted
capital contribution, and any remaining income or gain shall be allocated 75%
to the limited partners and 25% to the General Partner.

The General Partner and its affiliates are entitled to reimbursement from
NTL South Herts for direct and indirect expenses allocable to the operation of
the South Herts System, and from the Partnership for direct and indirect
expenses allocable to the operation of the Partnership which include but are
not limited to, rent, supplies, telephone, travel, copying charges and salaries
of any full or part-time employees. The General Partner believes that the
methodology used in allocating these expenses is fair and reasonable. During
the years ended December 31, 2002, 2001 and 2000, reimbursement made by NTL
South Herts and the Partnership to the General Partner or its affiliates for
any allocable direct and indirect expenses totaled $10,558,055, $10,766,997 and
$11,705,270, respectively.

The General Partner and its affiliates may make advances to, and defer
collection of fees and allocated expenses owed by, the Partnership, although
they are not required to do so. The Partnership is charged interest on such
advances and deferred amounts at a rate equal to the General Partners or
certain affiliates weighted average cost of all debt financing from
unaffiliated entities. For the years ended December 31, 2002, 2001 and 2000,
interest on deferred fees of $1,380,944, $1,126,261 and $978,761, respectively,
was charged by an affiliate of the General Partner, and interest on advances
of, $116,831, $102,099 and $97,221, respectively, was charged by the General
Partner.



|(4) |  | RESTRUCTURING COSTS
|--- |  | -------------------

The restructuring charge in each of the years ended December 31, 2002 and
2001, relates to the NTLs announcements that it was taking additional actions
to reorganize, re-size and reduce operating costs and create greater efficiency
in various areas. The charge allocated to NTL South Herts in 2002 includes
employee severance and related costs of $0.7 million (2001: $1.4 million),
professional fees of $0.3 million (2001: $nil) and $0.5 million (2001: $0.9
million) of contract termination and exit costs.



|(5) |  | PLANT, PROPERTY & EQUIPMENT
|--- |  | ---------------------------

Plant, property and equipment consists of (in $s):

|                                             |  |                   |             |                   |  |   |             |  
|-------------------------------------------- |  | ----------------- | ----------- | ----------------- |  | - | ----------- | -
|                                             |  | December 31, 2002 |             | December 31, 2001
|                                             |  |                   |             |                  
|Cable Network and other electrical equipment |  | $                 | 116,110,470 |                   |  | $ | 103,096,046 |  
|Buildings and other equipment                |  |                   | 6,978,493   |                   |  |   | 6,383,971   |  
|Construction in progress                     |  |                   | 1,129,834   |                   |  |   | 1,198,256   |  
|                                             |  |                   |             |                   |  |   |             |  
|                                             |  |                   | 124,218,798 |                   |  |   | 110,678,273 |  
|Accumulated depreciation                     |  |                   | (65,341,704 | )                 |  |   | (51,716,191 | )
|                                             |  |                   |             |                   |  |   |             |  
|                                             |  | $                 | 58,877,094  |                   |  | $ | 58,962,082  |  
|                                             |  |                   |             |                   |  |   |             |  



|(6) |  | FINANCING
|--- |  | ---------

NTL South Herts

On April 18, 1995, NTL South Herts entered into an agreement with two
major banks to provide a £25,000,000 revolving and term loan credit facility
agreement maturing on December 31, 2003 (the South Herts Credit Agreement).
On October 18, 1996, £5,000,000 was cancelled and the facility reduced to
£20,000,000.

F-10



---



##### Table of Contents



The credit facility was structured as a revolving facility through
December 31, 1997, at which time the facility was converted into a term loan.
The facility was divided into two tranches, denoted Facility A and Facility B,
and the aggregate amount drawn down under both tranches would not exceed
£20,000,000. Amounts drawn down under Facility A bore interest at sterling
LIBOR plus a margin of 2.5%. The availability of Facility B of £20,000,000 was
subject to certain conditions and amounts drawn down under Facility B bore
interest at sterling LIBOR plus a margin ranging from 0.75% to 2.0% depending
on the bank debt ratio (the ratio of bank debt to annualized operating cash
flow) of NTL South Herts. The amount outstanding under the facility at
December 31, 2000 was £14,475,500 and this amount was all drawn under Facility
B.

The facility was repaid in full with funding from NTL on February 21,
2001. Thereafter, NTL South Herts is reliant upon the support of NTL to
continue its operations as a going concern.



|(7) |  | INCOME TAXES
|--- |  | ------------

Income taxes have not been recorded in the accompanying consolidated
financial statements because net income and losses of the Partnership accrue
directly to the partners, and its UK subsidiary, NTL South
Herts, has incurred net operating losses. The Partnerships tax returns, the
qualification of the Partnership as such for tax purposes, and the amount of
distributable Partnership income or loss are subject to examination by Federal
and state taxing authorities. If such examinations result in changes with
respect to the Partnerships qualification as such, or in changes with respect
to the Partnerships recorded income or loss, the tax liability of the general
and limited partners would likely be changed accordingly.

UK profits (comprising income and gains) of NTL South Herts will be
subject to UK corporation tax. However, corporations are able to carry forward
losses from operations to be offset against subsequent profits for the same
operations.

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of deferred tax liabilities and assets related to NTL South Herts are as
follows:

|                               |                                 |   |                |            |      |  |                |            |  
|------------------------------ | ------------------------------- | - | -------------- | ---------- | ---- |  | -------------- | ---------- | -
|                               |                                 |   | 2002           |            | 2001
|Deferred tax liabilities:      |                                 | $ |                | $         
|                               | Depreciation                    |   |                | $1,372,405 |      |  |                | $2,890,447 |  
|                               |                                 |   |                |            |      |  |                |           
|Total deferred tax liabilities |                                 |   | 1,372,405      |            |      |  | 2,890,447      |           
|                               |                                 |   |                |            |      |  |                |           
|Deferred tax assets:           |                                 |   |                |            |      |  |                |           
|                               | Short term timing differences   |   |                |           |      |  |                | 893,162    |  
|                               | Net operating loss carryforward |   |                | 1,466,686  |      |  |                | 9,790,823  |  
|                               | Valuation allowance             |   |                | (94,281    | )    |  |                | (7,793,538 | )
|                               |                                 |   |                |            |      |  |                |           
|Net deferred tax assets        |                                 |   | 1,372,405      |            |      |  | 2,890,447      |           
|                               |                                 |   |                |            |      |  |                |           
|Net deferred tax liability     |                                 |   | $             |            |      |  | $             |           
|                               |                                 |   |                |            |      |  |                |           

At December 31, 2002 NTL South Herts has UK net operating loss carry
forwards of approximately $4.8 million. The UK net operating loss carry
forwards are available for utilization in future years and do not expire.
Management has established a valuation allowance for a portion of the net
operating loss carry forwards due to uncertainty regarding realizability.

F-11



---



##### Table of Contents





|(8) |  | IMPACT OF NEW PRONOUNCEMENTS
|--- |  | ----------------------------

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations, effective for the Partnership on January 1, 2003. This
Statement addresses financial accounting and reporting for obligations
associated with the retirement of tangible fixed assets and the associated
asset retirement costs. The adoption of this new standard is not expected to
have a significant effect on the results of operations, financial condition or
cash flows of the Partnership.

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

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections, which is effective for the Partnership on January 1, 2003. The
adoption of SFAS No. 145 will require any gain or loss recognized on the
extinguishment of debt to be classified as income or loss from continuing
operations. Prior to SFAS No. 145, gain or loss from the extinguishment of debt
was classified as an extraordinary item.

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

F-12