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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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Form 10-K

(Mark One)




| |   |                                              
| | - | ---------------------------------------------
| | þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF
THE SECURITIES EXCHANGE ACT OF 1934


For
the fiscal year ended December 31, 2001

or



| |   |                                                  
| | - | -------------------------------------------------
| | o | 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



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South Hertfordshire United Kingdom Fund,
Ltd.

(Exact name of registrant as specified in its
charter)


|                        |  |                                  
|----------------------- |  | ---------------------------------
|Colorado                |  | #84-1145140                      
|(State of Organization) |  | (IRS Employer Identification No.)

|                                          |  |                                                           
|----------------------------------------- |  | ----------------------------------------------------------
|Bartley Wood Business Park                |  | Secretary, NTL Incorporated                               
|Hook                                      |  | 110 East 59th Street                                      
|Hampshire RG27 9UP                        |  | New York, NY 10022                                        
|United Kingdom                            |  | (212) 906-8440                                            
|(Address of Principal 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:     þ     Yes     o     No

Aggregate market value of the voting stock held
by non-affiliates of the
registrant:     N/A

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of
Regulation S-K (e229 405) is not contained herein, and will
not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any
amendment to this
Form 10-K.     þ

DOCUMENTS INCORPORATED BY REFERENCE:

None




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TABLE OF CONTENTS

|              |  |                                                                                        |    |      |    | 
|------------- |  | -------------------------------------------------------------------------------------- | -- | ---- | -- | 
|              |  |                                                                                        |    | Page
|              |  |                                                                                        |    |     
|PART I       
|Item 1.       |  | Business                                                                               |    |      | 2  | 
|Item 2.       |  | Properties                                                                             |    |      | 11 | 
|Item 3.       |  | Legal Proceedings                                                                      |    |      | 11 | 
|Item 4.       |  | Submission of Matters to a Vote of Security
	Holders                                   |    |      | 11 | 
|PART II      
|Item 5.       |  | Market for the Registrants Common Equity
	and Related Stockholder Matters             |    |      | 12 | 
|Item 6.       |  | Selected Financial Data                                                                |    |      | 12 | 
|Item 7.       |  | Managements Discussion and Analysis of
	Financial Condition and Results of Operations |    |      | 13 | 
|Item 7a.      |  | Quantitative and Qualitative Disclosures about
	Market Risk                            |    |      | 19 | 
|Risk Factors  |  |                                                                                        | 20 |     
|Item 8.       |  | Financial Statements and Supplementary Data                                            |    |      | 23 | 
|Item 9.       |  | Changes in and Disagreements with Accountants on
	Accounting and Financial Disclosure  |    |      | 24 | 
|Item 10.      |  | Directors and Executive Officers of the Registrant                                     |    |      | 24 | 
|PART III     
|Item 11.      |  | Executive Compensation                                                                 |    |      | 25 | 
|Item 12.      |  | Security Ownership of Certain Beneficial Owners
	and Management                        |    |      | 25 | 
|Item 13.      |  | Certain Relationships and Related Transactions                                         |    |      | 25 | 
|PART IV      
|Item 14.      |  | Exhibits, Financial Statement Schedules and
	Reports on Form 8-K                       |    |      | 26 | 
|Exhibit Index |  |                                                                                        | 27 |     
|Signatures    |  |                                                                                        | 28 |     

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

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PART I

Item 1.     Business

South Hertfordshire United Kingdom Fund, Ltd.,
formerly known as Jones United Kingdom Fund, Ltd., (the
Partnership), is a Colorado limited partnership that
was formed in December 1991 pursuant to the public offering of
limited partnership interests (the Interests) in the
Partnership for the purpose of acquiring one or more cable
television/telephony systems in the UK and Northern Ireland.
Upon acquisition of its system, the Partnerships primary
investment objective was to obtain capital appreciation in the
value of its systems over the term they are held by the
Partnership. See Risk Factors beginning on
page 20 for a description of the risks associated with
holding Partnership Interests.

Recent Developments

Recapitalization Process of NTL Incorporated
and its Subsidiaries

On January 31, 2002, NTL Incorporated
(NTL Incorporated and, together with its
consolidated subsidiaries, NTL), which is the
indirect parent of the General Partner of the Partnership,
announced that it had appointed Credit Suisse First Boston, JP
Morgan and Morgan Stanley to advise on strategic and
recapitalization alternatives to strengthen its balance sheet,
reduce debt and put an appropriate capital structure in place
for our business. Since then, NTL has been evaluating various
recapitalization alternatives to effect a comprehensive
consensual recapitalization in a timely manner and to minimize
negative effects on its business operations. NTL has been
engaged in discussions with an unofficial committee of
bondholders, the majority of which hold a majority in principal
amount of the public debt of NTL, and France Telecom, which owns
a significant amount of NTL Incorporateds common and
preferred stock. On April 16, NTL announced that it had
reached an agreement in principle with the unofficial committee
on a comprehensive recapitalization of NTL. See Item 7
Managements Discussion and Analysis of Financial
Condition and Results of Operations  Liquidity and
Capital Resources and Risk Factors for a more
detailed description of the proposed recapitalization plan and
the associated uncertainties.

History

The Partnership was formed upon the receipt of
subscriptions for 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 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 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, the beneficial ownership of all of
the shares of NTL (South Herts) Limited (formerly Cable &
Wireless Communications (South Hertfordshire) Limited and Jones
Cable Group of South Hertfordshire Limited) (NTL South
Herts or the Company) from Jones Global Funds,
Inc. 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

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Partnerships investment in NTL South Herts,
cost reimbursements have been and will continue to be made to
the general partner (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.


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 the 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, Inc.s general partner
interest in 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 (ADSs)) to be issued
by BCM in connection with a planned public equity offering of
ADSs by BCM. At that date, BCM was indirectly owned
80 percent by BCI Telecom Holding Inc (formerly Bell Canada
International Inc.) (BCITH) and 20 percent by
Cable and Wireless plc (C&W).

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
United Kingdom 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 interest in the Partnership. These acquisitions are
collectively referred to herein 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, as of November 1994, NTL South Herts was owned
66.7 percent by the Partnership and 33.3 percent by
BCM, and the general partner of the Partnership was Fawnspring
Limited, a wholly owned subsidiary of BCM (the General
Partner). The General Partner provides consulting services
to the Partnership. The General Partner may delegate some or all
of the consulting services to BCM or to other affiliates.

On October 21, 1996, BCM entered into a
number of agreements relating to the acquisition of control of
the outstanding shares of Videotron Holdings Plc
(Videotron). Prior to the acquisition, BCM owned
26.2% of Videotron and did not control Videotrons
operations. Pursuant to an agreement entered into on
October 21, 1996 and consummated on December 17, 1996,
BCM acquired control of an additional 55.6% of Videotron,
increasing its direct and indirect shareholding in Videotron to
81.8%. Subsequently, certain share options of

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Videotron were exercised, and as of
January 8, 1997, BCM owned 81.7% of Videotrons
ordinary shares. Also on December 17, 1996, a subsidiary of
C&W subscribed for additional shares in BCM, increasing its
stake in the company to 32.5%, with BCIs indirect stake
reducing to 32.5%.


On January 8, 1997, BCM made an offer to
acquire all the remaining public and employee shares of
Videotron and subsequently acquired all of the current issued
ordinary share capital of Videotron.

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
completion of this combination, CWC Comms became the largest
provider of integrated telecommunications and television
entertainment services in the UK.

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, including ownership of the General Partner
	(Fawnspring Limited) and 33.3% of the equity of South Herts
	(CWC ConsumerCo);
|
| | (b) the proposed indirect acquisition by
	C&W of the 47.3 per cent interest in CWC DataCo which is not
	currently attributable to it (thereby achieving 100 per cent
	ownership of CWC DataCo); and                                                                                                                                                                                                                           
|
| | (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
completed on May 30, 2000. Following completion, CWC Comms
changed its name to NTL (CWC) limited (NTL
(CWC)). To fund the cash element of the consideration, NTL
Incorporated placed $4.5 billion of common and preferred
stock with France Telecom.

NTL South Herts is one of a number of franchise
areas which NTL manages and controls from its headquarters in
Hook, Hampshire. 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 it is delegated to other affiliated
companies of NTL. As indirect parent of the General Partner, NTL
believes that returns are maximized by management as an integral
part of a larger group to reap the benefits of synergy. NTL
performs all billing and collection functions and other NTL
group companies procure all services on behalf of NTL South
Herts. 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.

The Partnership does not generate sufficient cash
flow from its operations to fund its operational expenses and
has historically relied upon NTL for the additional cash
necessary for operations. It is likely that NTL will not be able
to provide cash to the Partnership, at least in the short term
future. See Risk Factors regarding the
Partnerships dependency on Funds from its subsidiary and
the parent companies of its general partner to meet its
obligations and the substantial doubt about its ability to
continue as a going concern.

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

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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 91,500 have been 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 percent 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, 2001, approximately 91,500 homes, or 97%
per cent 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. At December 31, 2001, NTL South
Herts serviced 27,231 basic cable television customers including
20,001 digital cable customers, 30,198 residential telephony
lines and 122 Broadband customers. As of December 31, 2001,
NTL South Herts serves a total of 33,402 customers representing
a penetration level of 37%.

Products and
Services

Four main types of service are offered by NTL
South Herts: cable television (mainly to the home but also to
businesses), residential telephony services, Internet access
services and telecommunications services for business customers.

Cable Television
Services.NTL South Herts offers a
range of programming, marketed in a series of packages: basic
packages, which include cable exclusive programming and premium
packages, which are based on films, sporting events, Asian
programming and adult programming. Pay-per-view
(PPV) facilities are also available, providing a way
for customers to buy television programming, including movies,
sports and music events. NTL South Herts uses its return path
network to encourage viewers to order the PPV events directly
using their set top box and remote control, rather than having
to place an order over the telephone, which direct-to-home
(DTH) television subscribers must do. NTL South
Herts has converted a high proportion of its cable television
customers to digital television services. Digital television is
a technology that allows customers to have access to a much
higher channel capacity. The increased capacity can be used for
more broadcast channels, as well as for PPV, near
video-on-demand, broadband Internet access, games, home
shopping/banking and a wide range of other interactive services.
The primary aim of digital television will be to give more
choice to the customer.

Residential Telephony Services.NTL South Herts offers local and long
distance and international telephony services to its customers,
including advanced services such as call monitoring, call
barring, three-way calling, alarm calls, itemized billing, call
waiting, call divert, call screening and speed dialing.

Internet services.With the growth in the home PC market fuelling the rapid growth
in demand for Internet access and other on-line information
services, NTL South Herts is well placed to offer both
narrowband and broadband services into the home, making use of
its sophisticated return path network to offer full
interactivity. Broadband Internet Access provides customers with
a high-speed, always connected Internet service using either the
set top box modem or a stand-alone modem. Broadband Internet
Access

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removes many of the current frustrations of the
standard dial-up Internet access. Currently, NTL offers
customers three speeds 128Kbps, 512Kbps and 1Mbps.


Business Telecommunications Services.NTL South Herts offers businesses a
range of services alongside basic telephony, including fax,
private circuits and virtual private networks. A Centrex
service, which offers customers the facilities they would expect
from a private switchboard without the need to buy or maintain
their own switching equipment, has been introduced.

Pricing

NTL offers within its franchise areas multiple
product cable television and telephony packages (Dual
Product Packages) and together with Broadband Internet
Access (Triple Product Packages). These Dual and
Triple Product Packages provide customers within these areas
with a range of cable television packages integrated with its
telephony and Internet access services. These services are
priced to compete with the prices of similar products offered
separately by BSkyB and BT. They include both a range of basic
television packages together with the option to add certain
Premium channels (including sports and movie
channels) and provide the customer with the additional benefit
of dealing with just one communications company. Both existing
and new customers of NTL take subscriptions with the main
interest being the entry-level package, a mid-range package and
a big basic package. Based on past experience, NTL believes that
customers with both cable television and telecommunications
services are less likely to terminate service than those with
the cable television service only. Add on packages are designed
to provide the consumer with greater choice and flexibility.
They are also intended to increase the rate of uptake of dual
packaged services in addition to stimulating higher penetration
levels.

As a result of the regulation of BTs prices
and increased competition, telephony prices in the UK
telecommunications market have declined significantly over the
past few years. Price remains an important factor in the
residential, small office and home business segments, although
in its other business segments, NTLs pricing strategy is
to sell predominantly on value rather than on price alone.
NTLs tariffs for both domestic and international telephone
calls are set on the basis of per minute rate, which varies
according to the destination and time of call. Except for a
minimum fixed charge, NTL charges customers only for the actual
time elapsed during a call. Leased circuit services are charged
at a fixed rate regardless of usage.

NTL South Herts Network

NTL South Herts cable television/telephony
network passed approximately 97% of homes in the South
Hertfordshire franchise area at December 31, 2001.

Network
Architecture.NTL South Herts
network is designed to take integrated two-way broadband cable
television systems. Such systems will incorporate a digital
overlay telephony network to service the homes and businesses
within the franchise area.

NTL South Herts network makes extensive use
of fiber optic cable. The main benefits of deploying fiber in
place of traditional coaxial cable or copper wire result from
its smaller size, greater capacity, increased functionality and
decreased requirements for periodic amplification of the signal.
These factors contribute to lower installation and maintenance
costs and increase the variety and quality of the services
provided.

The cable television system has the capacity to
carry between 200 and 300 channels of television plus radio,
teletext, telecommunications and other related services. The
network is also capable of conveying video and high speed data
transmissions, thus providing the basis for video conference
facilities, television surveillance services and computer
communications.

Because of the nature of moving picture video,
substantial transmission capacity, known as bandwidth, is
required to provide a cable television program to the customer.
A networks transmission capacity requirement increases
proportionally as additional cable television programs are
broadcast to customers. The inherent bandwidth limitations of
twisted pair copper wire historically used in telephone networks
have to date presented a substantial obstacle to the use of
existing telephone networks for the provision of cable television

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services. Coaxial cable provides substantially
greater bandwidth than twisted pair copper wire and fiber optic
cable can provide substantially greater bandwidth than coaxial
cable.


NTL South Herts telephony network employs
an open architecture, using a combination of SDH and PDH
Technology for system resilience. Voice and high speed data
services may be provided across the network. Multipair copper
cable is used to connect fiber optic nodes serving approximately
600 homes to distribution points housed in street cabinets
serving 40 homes. From these cabinets, twisted pair copper
cable is pulled to the customers home.

NTL South Herts telephony switch has
multiple interconnects to the NTL, C&W and the BT networks.

Network Construction
Costs.Construction of integrated
cable television/telephony systems is capital intensive,
requiring substantial investment for network costs
including construction costs (including trenching
and laying underground ducts, cable television and telephony
plant, network electronics and headend equipment),
customer costs (including converters, customer
electronics and installation of cable from the network to the
customers home), and other costs (such as
switching offices, land and buildings, computers, and
capitalization of pre-operating costs and labor). Total capital
expenditure by NTL South Herts on its cable television/
telephony systems up to December 31, 2001 was approximately
£76.1 million ($110.7 million based on a
December 31, 2001 exchange rate of £1=$1.4543).

Construction costs for the South Herts System
varies depending upon housing density, geographical terrain and
the types of underground conditions encountered. Construction
expenses in the UK have been higher than comparable costs in the
United States, primarily because of the logistics in laying the
fiber optic and coaxial cables for the networks necessitated by
the UKs prohibition on aerial construction. The UK does
not have an infrastructure of existing telephone poles, overhead
lines or electrical conduits in which to run new fiber optic and
coaxial cable. Therefore, nearly all cable installation in the
UK requires hand or machine excavation, backfill to
specification and permanent reinstatement of surfaces in
compliance with the New Roads and Street Works Act 1991 (the
Street Works Act). The Street Works Act has,
however, standardized fees for inspection of construction works
by local government authorities and standardized specifications
for reinstatement of property following excavation. As a result,
construction delays previously experienced by cable operators
because of separate and often lengthy negotiations with local
government authorities have been reduced.

Domestic
Interconnect.Tariffs for national
calls are influenced by interconnect charges payable to BT, the
dominant operator in the UK telecommunications market. BTs
interconnect rates are regulated by OFTEL. BTs
interconnect charges are, at present, controlled through a price
control mechanism linked to the UK Retail Price Index. The
interconnect rate entitles an operator to compensation for
(i) terminating in its network a call that has originated
in another network, (ii) providing its customers with
access to those services of another network operator which are
invoiced by such other network operator, and (iii) transit
of traffic between two networks. Interconnection with other
licensed operators is an important component of NTL network,
since the majority of the traffic handled by NTL originates from
or terminates on BTs or on other licensed operators
networks. NTL operates under interconnection agreements with BT
and a number of other licensed operators, including cellular,
PCN, ISR and cable operators.

International
Interconnect.Turnover from
international telephone services is derived from outgoing calls
made by customers in the United Kingdom and from receipts from
overseas telecommunication operators for incoming calls which
are passed to the NTL South Herts network for delivery to their
final destinations within the United Kingdom or overseas. In
turn, NTL South Herts makes payments to overseas operators for
the international use of their facilities to deliver the
outgoing calls from NTL South Herts customers.

Competition

We face significant competition from established
and new competitors in the areas of residential telephony,
business telecommunications services, Internet and cable
television. We believe that competition will intensify in each
of these business areas, particularly business
telecommunications and Internet.

7



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##### 



Consumer Services

We compete 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 ours.
According to the Office of Telecommunications, or OFTEL, in
September 2001, BT serviced 81.29% of UK residential telephone
exchange line customers. Our growth in telecommunications
services, therefore, depends upon our ability to convince
BTs customers to switch to our telecommunications
services. We believe 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 we intend to remain competitive,
in the future we may be unable to offer residential telephone
services at rates lower than those offered by BT. In this case,
we 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 us. In addition to BT, other telecommunications
competitors could prevent us from increasing our 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 us.

We believe that we have a competitive advantage
in the residential market because we offer 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. 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.

British Sky Broadcasting Limited, or 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.

Our 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 us 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. We expect that, in the future, we
may face competition from programming provided by
video-on-demand services.

Business
Telecommunications

BT and Cable & Wireless are our
principal competitors in providing business telecommunications
services. In the future, we may compete with additional entrants
to the business telecommunications market. Competition is based
on price, range and quality of services, and we expect price
competition to intensify if existing and other new market
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 our
existing markets or that we will be able to continue to compete
successfully with such competitors in the business
telecommunications market.



| |           
| | ----------
| | 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

8



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##### 



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

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 Autumn 1999,
OFTEL began the process of examining what price controls, if
any, should apply to BT after 2001. In February 2001, OFTEL
announced that current retail price controls would be extended
until July 2002 with a roll over provision for a further year.
In January 2002, OFTEL issued a new consultation setting out
proposals for the progressive removal of price controls along
with certain new measures to stimulate further retail
competition.

NTL is not subject to the same scrutiny and
control by OFTEL of its retail telephone prices as BT, given
NTLs non-dominant status in the market. However, NTL is
subject to prohibitions on undue preference and undue
discrimination in its cable television pricing. NTL is 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 are now in the process
of negotiating more service establishment 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 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. In practice, few
companies have taken up the LLU option.

In February 2002, BT announced reductions in its
wholesale charges to ISPs (including its own tied ISP) for
wholesale ADSL services. These reductions will lead to
commensurate reductions in retail rates.

Interconnection

Other subsidiaries of NTL, namely NTL Group Ltd.
and National Transcommunications Limited, have Annex II
status giving them rights of interconnection at wholesale rates
to other operators with similar status.

9



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##### 



Open Access
to Cable Infrastructure

In April 2000, OFTEL issued a public consultation
document on regulated access to cable infrastructure (open
access). The preliminary conclusion reached by OFTEL was
that no case existed for mandating open access to cable
infrastructure at that time.

BSkyB

In December 2000, the Office of Fair
Trading (OFT) announced that it was commencing an
investigation under the UK Competition Act into BSkyBs
activities, in particular the wholesale prices offered to rival
distributors of pay television services. This investigation is
ongoing. In December 2001, the OFT announced its preliminary
finding that BSkyB had been abusing its market power through its
pricing practices. The OFT also said that it was aiming to
complete the investigation into BSkyBs pricing by summer
2002.

In addition, in February 2002, the OFT announced
that it had decided not to give a decision on whether an
agreement entered into by NTL with BSkyB for the carriage of
programming at discounted rates, notice of which was given to
the OFT in October 2000, was anti-competitive. The OFTs
investigation into BSkyBs behavior continues.

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 which are inconsistent with EC law.

Mobile Phone
Termination Charges

On December 12, 2001, OFTEL announced that
it has referred to the Competition Commission its proposal to
impose a cap on the amount mobile phone operators can charge for
receiving calls, onto 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 has proposed a charge cap
on future termination rates of RPI (12)% over four years.

The Competition Commission has six months to
reach a decision, which can be extended for a further six months.



| |                           
| | --------------------------
| | European Union Legislation

In addition to direct UK legislation the
activities of NTL are further regulated by the EU under various
European Commission Directives. In February 2002, the European
Union Commission 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 proposed
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.

10



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##### 





| |                    
| | -------------------
| | Communications Bill

A White Paper issued in December 2000 
A New Future for Communications  proposed the
creation of 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.

Item 2.     Properties

NTL South Herts owns a freehold property located
at Greycaine Road, Watford, United Kingdom 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 which 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 Partners during the quarter ended December 31,
2001.

11



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##### 



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
Interests, and it is not expected that such a market will
develop in the future. As of March 31, 2002, the
approximate number of holders of the Partnership Interests was
5,200.

Item 6.     Selected
Financial Data

South Hertfordshire United Kingdom Fund,
Ltd.

|                                                                  |  |                         |             |      |  |      |             |      |  |      |             |   |  |   |             |   |  |   |             |  
|----------------------------------------------------------------- |  | ----------------------- | ----------- | ---- |  | ---- | ----------- | ---- |  | ---- | ----------- | - |  | - | ----------- | - |  | - | ----------- | -
|                                                                  |  |                        
|                                                                  |  | Years Ended December 31
|                                                                  |  |                        
|                                                                  |  | 2001                    |             | 2000 |  | 1999 |             | 1998 |  | 1997
|                                                                  |  |                         |             |      |  |      |             |      |  |     
|Income Statement Data:                                            |  |                         |             |      |  |      |             |      |  |      |             |   |  |   |             |   |  |   |             |  
|Revenues                                                          |  | $                       | 28,354,653  |      |  | $    | 26,310,898  |      |  | $    | 28,345,316  |   |  | $ | 28,396,020  |   |  | $ | 23,603,312  |  
|Cost of Goods Sold                                                |  |                         | (12,277,725 | )    |  |      | (10,366,295 | )    |  |      | (10,837,197 | ) |  |   | (11,785,683 | ) |  |   | (11,474,356 | )
|Selling, General and Administrative                               |  |                         | (253,634    | )    |  |      | (99,892     | )    |  |      | (224,211    | ) |  |   | (228,330    | ) |  |   | (2,174,490  | )
|Management Fees and Allocations from General
	Partner             |  |                         | (11,901,237 | )    |  |      | (13,128,873 | )    |  |      | (10,447,802 | ) |  |   | (8,173,374  | ) |  |   | (6,058,801  | )
|Depreciation and Amortization                                     |  |                         | (14,629,055 | )    |  |      | (4,759,437  | )    |  |      | (6,279,976  | ) |  |   | (4,119,297  | ) |  |   | (6,177,968  | )
|Write down of fixed assets                                        |  |                         |            |      |  |      |            |      |  |      |            |   |  |   |            |   |  |   | (6,562,400  | )
|                                                                  |  |                         |             |      |  |      |             |      |  |      |             |   |  |   |             |   |  |   |             |  
|Operating (Loss)/Income                                           |  |                         | (10,706,998 | )    |  |      | (2,043,599  | )    |  |      | 556,130     |   |  |   | 4,089,336   |   |  |   | (8,844,703  | )
|Interest Income                                                   |  |                         |            |      |  |      |            |      |  |      |            |   |  |   | 39,777      |   |  |   | 78,749      |  
|Interest Expense                                                  |  |                         | (1,577,428  | )    |  |      | (3,217,052  | )    |  |      | (3,322,569  | ) |  |   | (3,743,532  | ) |  |   | (3,599,912  | )
|Restructuring costs                                               |  |                         | (2,307,942  | )    |  |      |            |      |  |      |            |   |  |   |            |   |  |   |            |  
|                                                                  |  |                         |             |      |  |      |             |      |  |      |             |   |  |   |             |   |  |   |             |  
|Net (Loss)/Income before Minority Interests                       |  |                         | (14,592,368 | )    |  |      | (5,260,651  | )    |  |      | (2,766,439  | ) |  |   | 385,581     |   |  |   | (12,365,866 | )
|Minority Interests                                                |  |                         | 4,723,504   |      |  |      | 1,665,805   |      |  |      | 797,107     |   |  |   | (249,713    | ) |  |   | 3,975,339   |  
|                                                                  |  |                         |             |      |  |      |             |      |  |      |             |   |  |   |             |   |  |   |             |  
|Net (Loss)/Income                                                 |  | $                       | (9,868,864  | )    |  | $    | (3,594,846  | )    |  | $    | (1,969,332  | ) |  | $ | 135,868     |   |  | $ | (8,390,527  | )
|                                                                  |  |                         |             |      |  |      |             |      |  |      |             |   |  |   |             |   |  |   |             |  
|Net (Loss)/Income per Limited Partnership Unit                    |  | $                       | (171.60     | )    |  | $    | (62.51      | )    |  | $    | (34.24      | ) |  | $ | 2.36        |   |  | $ | (145.90     | )
|Weighted Average Number of Limited Partnership
	Units Outstanding |  |                         | 56,935      |      |  |      | 56,935      |      |  |      | 56,935      |   |  |   | 56,935      |   |  |   | 56,935      |  
|Balance Sheet Data:                                               |  |                         |             |      |  |      |             |      |  |      |             |   |  |   |             |   |  |   |             |  
|Total Assets                                                      |  | $                       | 59,167,848  |      |  | $    | 70,366,262  |      |  | $    | 73,021,980  |   |  | $ | 77,814,972  |   |  | $ | 76,963,343  |  
|Accounts Payable to Affiliates and Related Parties                |  |                         | 58,145,703  |      |  |      | 32,690,227  |      |  |      | 21,114,583  |   |  |   | 19,157,847  |   |  |   | 18,335,570  |  
|Long-term debt                                                    |  |                         |            |      |  |      | 21,618,413  |      |  |      | 29,014,559  |   |  |   | 32,028,350  |   |  |   | 31,756,220  |  
|General Partners Deficit                                         |  |                         | (489,488    | )    |  |      | (390,799    | )    |  |      | (354,851    | ) |  |   | (335,158    | ) |  |   | (336,517    | )
|Limited Partners Capital                                         |  |                         | 540,874     |      |  |      | 10,311,049  |      |  |      | 13,869,947  |   |  |   | 15,819,586  |   |  |   | 15,685,077  |  
|Minority Interests                                                |  |                         | 739,160     |      |  |      | 5,645,599   |      |  |      | 7,883,670   |   |  |   | 8,912,532   |   |  |   | 8,588,899   |  

12



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

Liquidity and Capital Resources

Recapitalization
Process and Ability to Continue Operations

The Partnership required significant amounts of
capital to finance construction of its networks, connection of
customers to the networks, other capital expenditures and for
working capital needs. The Partnership historically met these
liquidity requirements through issuances of limited partnership
units and by borrowing from commercial banks and NTL. Both the
equity and debt capital markets have recently experienced
periods of significant volatility, particularly for securities
issued by telecommunications and technology companies. The
ability of telecommunications companies to access those markets
as well as their ability to obtain financing provided by bank
lenders and equipment suppliers has become more restricted and
financing costs have increased. During some recent periods, the
capital markets have been largely unavailable to new issues of
securities by telecommunications companies. NTL
Incorporateds public equity is no longer trading on the
New York Stock Exchange, and NTLs public debt securities
are trading at or near all time lows. These factors, together
with the Partnerships substantial leverage, mean the
Partnership does not currently have access to its historic
sources of capital.

In addition, NTLs UK credit facilities are
fully drawn and NTLs Swiss subsidiaries are currently
unable to draw the remaining undrawn amounts under their credit
facility. NTL Communications Corp., a wholly-owned subsidiary of
NTL Incorporated, did not pay cash interest on certain series of
its notes that was due on April 1, 2002 and April 15,
2002. NTL Incorporated and NTL (Delaware), Inc., a wholly-owned
subsidiary of NTL Incorporated, also did not pay cash interest
and related fees on a series of their notes that was due on
April 15, 2002. As of December 31, 2001, NTL had
approximately $505 million in cash and cash equivalents on hand
and, on April 4, 2002, received approximately
$303 million net cash proceeds from the sale of its
Australian business. NTL and the Partnership will require cash
for working capital and capital expenditures in 2002. If NTL
makes scheduled and overdue interest payments on its notes, then
NTL and the Partnership will not have sufficient cash resources
to meet its liquidity needs through the third quarter of 2002.

These liquidity concerns raise substantial doubt
about the Partnerships ability to continue as a going
concern in view of the Partnerships dependency upon NTL.

NTL needs to restructure its outstanding debt
and/or raise new funds through the issuance of equity or
additional debt. On January 31, 2002, NTL Incorporated
announced that it had appointed Credit Suisse First Boston,
JP Morgan and Morgan Stanley to advise on strategic and
recapitalization alternatives to strengthen NTLs balance
sheet and reduce debt and put an appropriate capital structure
in place for its business. Since then, NTL has been evaluating
various recapitalization alternatives to effect a comprehensive
consensual reorganization in a timely manner to minimize
negative effects on its business operations.

On April 16, 2002, NTL Incorporated
announced that NTL and an unofficial committee of its public
bondholders had reached an agreement in principle on a
comprehensive recapitalization of NTL. The members of the
committee hold in the aggregate over 50% of the face value of
NTL and its subsidiaries public bonds. The
recapitalization would result in a conversion of approximately
$10.6 billion in debt into equity.

To implement the proposed recapitalization, NTL
Incorporated, NTL (Delaware), Inc., NTL Communications Corp.,
Diamond Cable Communications Limited and Diamond Holdings
Limited would file a pre-negotiated recapitalization plan in a
Chapter 11 case under the U.S. Bankruptcy Code. NTLs
operating subsidiaries would not be included in the
Chapter 11 filing. The agreement in principle is subject to
various conditions, including mutually acceptable terms with
NTLs bank lenders. The recapitalization transaction
contemplates that the bank debt will remain in place as part of
the recapitalization.

To facilitate the recapitalization, certain
members of the unofficial committee of bondholders would commit
to provide up to $500 million of new debt financing to
NTLs UK and Ireland operations during the Chapter 11
process and for the post-recapitalized NTL. The new financing
will ensure that NTLs business operations have access to
sufficient liquidity to continue ordinary operations.

13



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##### 



Under the agreement in principle, NTL would be
split into two companies, one tentatively called NTL UK and
Ireland and holding all of its UK and Ireland assets, and one
tentatively called NTL Euroco and holding certain of its
continental European and other assets.

Holders of notes of NTL Incorporated, NTL
(Delaware), Inc., NTL Communications Corp. and Diamond Cable
Communications Limited would in the aggregate receive 100% of
the initial common stock of NTL UK and Ireland and
approximately 86.5% of the initial common stock of NTL Euroco.
NTL (Delaware), Inc. bondholders would have the option to
reinvest all or a portion of NTL (Delaware), Inc. cash in
additional shares of NTL UK and Ireland common stock, or to
receive such cash in the recapitalization. Notes of Diamond
Holdings Limited and NTL (Triangle) LLC would remain outstanding
and will be kept current in interest payments. Current preferred
and common stockholders, including France Telecom, would
participate in a package of rights (to be priced at a
$10.5 billion enterprise value) and warrants entitling them
to purchase primary common stock of NTL UK and Ireland at
the consummation of the proposed plan, in the case of the
rights, and for the duration of the eight-year warrants at
prescribed prices. If fully exercised, those rights and warrants
would entitle the current preferred stockholders to acquire
approximately 23.6% and the current common stockholders to
acquire approximately 8.9% of the entitys primary common
stock.

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

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

Bank
Waivers

Before NTL could commence negotiations with the
unofficial committee of bondholders, it was necessary to obtain
waivers from the lenders under its credit facilities. Effective
March 8, 2002, these lenders granted waivers which, until
March 29, 2002, provided that the commencement of
negotiations with bondholders with a view to rescheduling its
debt would not constitute an event of default under the credit
facilities.

But for the initial waivers, the commencement of
negotiations with bondholders would have been an event of
default under the credit facilities. If an event of default were
to occur, it would entitle the lenders under the credit
facilities to declare the principal amount of the outstanding
debt immediately due and payable. If this right was exercised,
it would result in an event of default under all of NTLs
outstanding notes, except for those issued by Diamond Cable
Communications, Diamond Holdings and NTL Triangle, entitling the
trustee or 25% of the holders of a series to accelerate the
repayment of that series of notes. NTL does not have sufficient
cash resources to repay its outstanding indebtedness if it is
declared immediately due and payable.

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



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

14



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##### 



Effective March 28, 2002, the lenders under
the credit facilities agreed to amend the initial waivers. The
amendments to the initial waivers extend the duration of the
initial waivers to April 30, 2002 in the case of the UK
credit facilities or May 14 in the case of the Cablecom
facility, unless the missed interest payments on April 1,
2002 are remedied or a sufficient number of bondholders agree to
forbear in respect of such non-payment, in which case, the UK
credit facilities waivers will be extended to May 14, 2002.
As a condition to the waivers continuing effectiveness,
the UK lenders required NTL Delaware to loan
£90 million to NTL (UK) Group, Inc. following
receipt of the proceeds from the sale of NTL Australia. This
loan is structurally senior to the outstanding public notes
issued by NTL Communications Corp. but contractually
subordinated to the UK credit facilities. In connection with the
amendments to the waivers, NTL affirmed the provisions of the
initial waivers and in addition, NTL agreed, among other things,
to:



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

The amended waivers prevent NTL from making an
exchange offer with respect to its outstanding notes or from
entering into an agreement with bondholders without the consent
of the lenders under each of the credit facilities. The amended
waivers also prohibit NTL from commencing voluntary dissolution
proceedings, including proceedings under Chapter 11 of the
U.S. bankruptcy code, without the consent of these lenders.

As a consequence, NTL cannot enter into a binding
agreement with the unofficial bondholder committee or implement
the proposed plan without the consent of its bank lenders.

Cablecom GmbH is the principal trading company of
NTLs Swiss group. There are a number of technical defaults
under the Swiss credit facility made available to Cablecom and
various of its subsidiaries. In addition, as of
December 31, 2001, Cablecoms and various of its
subsidiaries liabilities exceeded their respective assets.
As a consequence, under Swiss law, those entities were deemed to
be overindebted. This also constituted an event of
default under the Cablecom credit facility which entitles the
lenders to accelerate repayment. Such an acceleration would
result in an event of default under NTL Incorporateds and
NTL Delawares 5.75% convertible subordinated notes due
2011 and 5.75% convertible subordinated notes due 2009,
entitling the trustee or the holders of 25% of each series of
notes to accelerate repayment. Under Swiss law, unless the over
indebtedness is rectified, those entities would be required to
commence an insolvency proceeding in Switzerland. A plan has
been formulated to rectify this overindebtedness. Implementation
of this plan prior to April 30, 2002 will mean those
entities will not be required to commence an insolvency
proceeding. Those proceedings would likely either be a court
supervised moratorium in which an independent administrator, or
commissioner, would be appointed to supervise the running of
each company during a restructuring or, if there is no viable
restructuring plan, a bankruptcy. The commencement of those
insolvency proceedings would also constitute an immediate event
of default and acceleration of the maturity of the convertible
subordinated notes referred to above.

NTL is currently in discussions with the lenders
under the Swiss credit facility regarding proposals to resolve
the over indebtedness issue as well as requesting that they
waive various additional covenant breaches under the credit
facility. There can be no assurance that NTL will reach
agreement on the resolution of the over indebtedness issue
within the time period required or obtain the requested waivers.

15



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Interest
Payments on Public Notes

NTL has substantial interest payment obligations
under its existing indebtedness. NTL Communications Corp. did
not make scheduled interest payments due April 1, 2002, in
the aggregate amount of $74.3 million, in respect of its
9 1/2% notes due 2008, 11 1/2% notes due 2008 and
11 7/8% notes due 2010. In addition, NTL Communications did
not make interest payments falling due on April 15, 2002,
totaling $20.2 million, in respect of the 12 3/4%
Senior Deferred Coupon Notes due 2005 and NTL Incorporated and
NTL Delaware did not make interest payments and payment of
related fees falling due on April 15, 2002 in respect of
their 5 3/4% Convertible Subordinated Notes due 2011. Those
payments were not made after consideration by NTL of requests by
the unofficial bondholder committee not to make those payments.
Interest payments of $18.9 million were made, when due, on
April 2, 2002 in respect of Diamond Cable Communications
13.25% senior discount notes due 2004. On May 15, 2002,
interest totaling $94.0 million is due on outstanding notes
of NTL Triangle and NTL Communications.

If the applicable issuer does not pay interest on
these notes after a 30 day grace period expires (on
April 30, 2002 in the case of the missed interest payments
due April 1, 2002), there is an event of default under the
indenture in respect of the notes on which the interest is due
and unpaid. An event of default entitles the trustee under the
indenture or the holders of 25% of the outstanding notes to
declare the principal amount of those notes to be immediately
due and payable. Even if the maturity of those notes is not
accelerated after April 30, 2002, such an event of default
would also result in an event of default in respect of other
debt (commonly called cross defaults) under all of NTLs
other notes, except for those issued by NTL Triangle, Diamond
Cable Communications or Diamond Holdings. As a result, upon the
expiration of the grace period, on April 30, 2002, events
of default for failure to pay interest would occur under the
relevant indentures at NTL Communications and,
contemporaneously, cross defaults would occur under NTLs
other indentures at NTL Communications, NTL Delaware, NTL
Incorporated and under NTLs UK credit facilities and could
occur under NTLs Cablecom facility. This would give
holders of the outstanding series of debt at these entities the
right to accelerate repayment of those debts by declaring the
principal amount of the debts to be immediately due and payable
unless NTL obtains waivers or forbearance agreements from
sufficient percentages of its creditors. If that right to
accelerate was exercised, NTL would not have sufficient cash
resources to repay those debts, which could ultimately lead to
voluntary or involuntary bankruptcy proceedings relating to the
entities so affected. In addition, the lenders under NTLs
UK credit facilities have security over the assets of NTLs
UK operating subsidiaries, except for the Diamond and NTL
Triangle groups of companies. In the event that there was an
event of default under those facilities, the lenders could seek
to take control of those assets under applicable UK insolvency
law.

Credit Rating
Downgrades

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

Sale of NTL
Australia

On April 2, 2002, NTL announced that it had
completed the previously announced sale of its Australian
broadcast business to Macquarie Bank for A$850 million
(US$448 million) in an all cash transaction. The net
proceeds from the sale were approximately A$574 million
(US$303 million). At that time, the business bank
debt outstanding totaled A$227 million
(US$119 million).

On April 7, 2002, NTL Delaware loaned
£90 million to NTL (UK) Group Limited, which loan
was funded by the proceeds of the sale of NTL Australia. This
loan is subordinated to NTLs UK credit facilities. The
remaining proceeds of the sale of NTL Australia remain at NTL
Delaware and it is currently anticipated that such proceeds will
form a portion of the consideration to be offered to bondholders
of NTL Delaware and NTL Incorporated in satisfaction of their
claims against NTL Delaware as part of the proposed plan of
reorganization.

16



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##### 



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, 2001 the Partnership had current liabilities
of $2,255,487 of which $1,801,825 was owing to NTL group
companies, and consolidated current liabilities of $58,599,365,
of which $58,145,703 was owing 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
NTL South Herts 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. It is also unlikely that NTL
will provide funds to NTL South Herts at least in the short
term. As a result, NTL South Herts may not be able to continue
operations as a going concern.

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 obligations of NTL South Herts under the
South Herts Credit Agreement were secured by first fixed and
floating charges over all of the assets of NTL South Herts. In
addition, there is a pledge of all of the share capital of NTL
South Herts given by BCM and the Partnership as additional
security for the facility. Drawdowns of £19.3 million
have occurred under the South Herts Credit Agreement since April
1995, partly to repay the temporary loans made to NTL South
Herts by BCM since November 1994. The facility was repaid in
full on February 21, 2001.

The net cash outflow in the year ended
December 31, 2001 was $nil. The cash inflow from operating
activities was $26,331,074, which reflects the increase in
accounts payable to affiliates and related parties of
$26,108,536 in 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 in the year ended
December 31, 2001. In addition repayments of the principal
on the loan amounted to $20,919,270 in the year ended
December 31, 2001. Payments under finance leases during the
year amounted to $nil compared to $33,411 in 2000, reflecting
the fact that all finance leases have now been repaid.

NTL South Herts had current liabilities of
$56,343,878 as of December 31, 2001.

Inflation

On average, inflation rates in the UK economy
have been relatively low over the past few 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.

Results of Operations

2001 compared
to 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. The increase is mainly due to an
increase in the number of customers taking digital cable
television services and price increases instigated in the first
quarter of 2001. In 2001, the number of digital cable television
customers increased by 6,985 from 13,016 customers at
December 31, 2000 to 20,001 customers at December 31,
2001.

17



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##### 



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

Cost 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 partially attributable to
the increase in revenues.

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.

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 business of South Herts had been managed as an
integral part of CWC Comms, and from May 2000, 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 synergy. In the final quarter of 1999, CWC Comms
separated its business Internet protocol and wholesale
operations (CWC DataCo) and its residential cable, business
cable, indirect residential telephony, residential internet and
digital development and services businesses (CWC ConsumerCo).
During 2000, NTL South Herts was only allocated a
proportion of these costs directly attributable to CWC
ConsumerCo and did not benefit from the synergies of the CWC
Comms Group prior to separation.

Depreciation and amortization expense 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 (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 which 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. The impact on depreciation expense in
2001 from the reduction in the useful economic life of these
assets was $712,176.

Interest expense 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 loan previously outstanding.

Net cash outflow in the year ended
December 31, 2001 was $nil. The cash inflow from operating
activities was $26,331,074, which reflects the increase in
accounts payable to affiliates and related parties of
$26,108,536 in 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 in the year ended
December 31, 2001. In addition repayments of the principal
on the loan amounted to $20,919,270 in the year ended
December 31, 2001. Payments under finance leases during
2001 amounted to $nil as compared with $33,411 in 2000,
reflecting the fact that all finance leases have now been repaid.

2000 compared
to 1999

Revenues of the Partnership decreased $2,034,418
for the year ended December 31, 2000, from $28,345,316 in
1999 to $26,310,898 in 2000. The decrease is mainly due to the 6
per cent decrease in the twelve month average exchange rate from
$1.6148 in 1999 to $1.5187 in 2000. The South Herts System
served approximately 27,011 basic cable television customers and
33,945 residential telephony lines at December 31, 2000,
compared to 24,717 basic cable television customers and 30,309
residential telephony lines at December 31, 1999.

18



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In sterling terms revenue fell by 1 per cent in
the year ended December 31, 2000 which reflects three
factors. Firstly the decrease in the basic access cable
television package from £9.99 to £9.25 per month for
analog. Secondly the introduction of the basic access digital
cable television package which generated revenue of £10 per
month and finally the reduction in the cost of the full cable
package which includes all premium channels from
£60 to £48 per month.

Costs of goods sold decreased $470,902 or 4.3%
for the year ended December 31, 2000 over the similar
period in 1999 from $10,837,197 in 1999 to $10,366,295 in 2000.
The decrease in operating expenses is attributable to the 6 per
cent decrease in the twelve month average exchange rate from
$1.6148 in 1999 to $1.5187 in 2000.

Selling, general and administrative expenses
decreased $124,319 for the year ended December 31, 2000
from $224,211 in 1999 to $99,892 in 2000.

Management fees and allocated overhead from the
General Partner increased $2,681,071 for the year ended
December 31, 2000 from $10,447,802 in 1999 to $13,128,873
in 2000. The increase in management fees and overhead was due to
NTL South Herts being attributed costs from the larger CWC
Comms, which incorporated CWC DataCo and CWC ConsumerCo in 1999,
whereas in 2000 the costs have been attributed from CWC
ConsumerCo alone. NTL addressed its cost base in the UK
following completion of the Transaction on May 30, 2000,
which led to lower management fees and allocated overhead for
NTL South Herts in 2001.

Depreciation and amortization expense decreased
$1,520,539 for the year ended December 31, 2000 from
$6,279,976 in 1999 to $4,759,437 in 2000. The decrease is due to
the $894,341 write down of analogue set top boxes to $nil net
book value in the year ended December 31, 1999, no further
write down was required in the year ended December 31, 2000.

Interest expense decreased $105,517 for the year
ended December 31, 2000 from $3,322,569 in 1999 to
$3,217,052 in 2000. The decrease was due to repayments of the
principal on the loan and a reduction in UK interest rates.

Net cash outflow in the year was $273,189. The
cash inflow from operating activities was $13,091,998 which
reflects the increase in accounts payable to related parties of
$13,332,685 in the year ended December 31, 2000. The inflow
was applied to investment in the roll out of digital services to
customers, which amounted to $8,036,361 in the year ended
December 31, 2000. In addition repayments of the principal
on the loan amounted to $5,275,848 in the year ended
December 31, 2000. Payments under finance leases during the
year amounted to $33,411 compared to $280,982 in 1999,
reflecting the fact that all finance leases have now been repaid.



|         |                                                            
|-------- | -----------------------------------------------------------
|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. In order to partially fund
capital expenditure on the system, the company arranged a credit
facility denominated in UK pounds sterling. The balance
outstanding on the facility at December 31, 2001 was
£nil ($nil at the closing rate of
£1 = $1.4543). On February 21, 2001 the
facility was repaid.

This loan represented the Funds principal
exposure to market risk, specifically to variations in the
sterling LIBOR interest rate and in the UK pound
sterling  US dollar exchange rate. Exposure to
foreign exchange risk is, however, partially mitigated by the
fact that the loan is denominated in the functional currency of
NTL South Herts.

The facility was repaid in full with related
party funding from NTL on February 21, 2001 which
eliminates all interest rate risk to NTL South Herts.

The aggregate potential loss from a hypothetical
one percent fall in the UK£/US$ exchange rate is $141,966
for the year ended December 31, 2001.

19



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RISK FACTORS

The Partnership is dependent upon receipt
of sufficient funds from its subsidiary or the parent companies
of its general partner to meet its obligations. Unless
NTLs proposed recapitalization plan is implemented, it is
likely that NTL will not be able to provide the Partnership with
cash in the future, at least in the short-term.

The Partnership has no independent operations or
significant assets other than investments in and advances to NTL
South Herts and does not generate sufficient cash flow from its
operations to fund its operational expenses. The Partnership has
historically met its cash requirements through issuances of
limited partnership units and borrowing from banks and NTL.
Given NTLs liquidity situation, unless its proposed
recapitalization plan is implemented it is likely that NTL will
not be able to provide the Partnership with cash at least for
the short-term. Given NTLs high leverage and current
liquidity situation, NTL may not be able to raise cash through
the issuance of debt or equity from banks or other third-party
lenders on reasonable terms or at all. If NTL is unable to find
alternative sources of cash, the Partnership may become subject
to bankruptcy proceedings in the U.S. or the UK.

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

We have limited liquidity. NTL does not currently
have access to its historic sources of liquidity in the capital
markets and its credit facilities are either fully drawn or NTL
is currently unable to access remaining undrawn amounts. If NTL
makes scheduled payments of interest and overdue payments of
interest, then it and the Partnership will not have sufficient
cash resources to meet its liquidity needs through the third
quarter of 2002. As a consequence, NTL needs to restructure its
outstanding debt and/or raise new funds. If NTL cannot
restructure its indebtedness or obtain additional liquidity in a
timely manner, we may face the possibility of insolvency
proceedings in the UK or the U.S.

The successful implementation of the
proposed recapitalization plan will require the support of
NTLs creditors.

The completion of the proposed recapitalization
contemplated by the agreement in principle with the unofficial
bondholder committee will require support from NTLs
creditors. The proposed recapitalization plan would be
implemented pursuant to a Chapter 11 bankruptcy proceeding.
Consummation of such a plan will require a favorable vote by
impaired classes of creditors, satisfaction of bankruptcy law
requirements and confirmation by the bankruptcy court, which, as
a court of equity, may exercise substantial discretion and
choose not to confirm any plan of reorganization NTL agrees with
its creditors. Even if such a plan received the necessary
support from NTLs creditors, there can be no assurance
that it would be completed. If a protracted reorganization was
to occur, or a liquidation would be necessary, there is a risk
that the value of our business would be eroded to the detriment
of some or all our stakeholders.

We cannot be certain that NTLs bank
lenders will consent to the proposed recapitalization plan or
grant it any new waivers NTL may need.

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

The waivers prohibit NTL from making an exchange
offer with respect to its outstanding notes or from entering
into an agreement with bondholders without the consent of the
lenders under each of the credit facilities. The waivers also
prohibit NTL from commencing voluntary dissolution proceedings,
including proceedings under Chapter 11 of the U.S.
Bankruptcy Code, without the consent of these lenders. If NTL is
unable to obtain the consent of the lenders, it will not be able
to make a voluntary Chapter 11 filing as contemplated in
connection with the proposed plan.

20



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The waivers in respect of the UK credit
facilities, if not extended, will terminate on April 30,
2002, unless NTLs missed interest payments on
April 1, 2002 are remedied or a sufficient number of
noteholders have agreed to waive or forbear from exercising any
rights in respect of such non-payment, in which case, the
waivers will be extended to May 14, 2002. If the waivers
terminate and NTL continues to negotiate with bondholders or the
non-payment of interest is not cured, there will be events of
default under its credit facilities that will entitle the
lenders to accelerate repayment. NTL does not have sufficient
cash resources to repay its outstanding indebtedness if it is
declared immediately due and payable. In addition, the lenders
could also seek to take control over the assets over which they
hold security in an insolvency proceeding.

NTL did not pay interest due on some of its
outstanding notes on April 1 and April 15, 2002; NTL
may not cure the existing event of default. NTL may not make
future interest payments on most its outstanding
notes.

NTL Incorporated, NTL (Delaware), Inc. and NTL
Communications did not make scheduled interest payments and
payments of related fees due April 1 and April 15,
2002.

If NTL fails to pay interest on these notes after
a 30 day grace period expires (on April 30, 2002 in
the case of the missed interest payments due April 1,
2002), events of default for failure to pay interest would occur
under the relevant indentures and, contemporaneously, cross
defaults would occur under other of the indentures at NTL
Communications, NTL Delaware, NTL Incorporated and under
NTLs UK credit facilities and could occur under NTLs
Cablecom facility. This would give holders of the outstanding
series of debt at these entities the right to accelerate
repayment of those debts by declaring the principal amount of
the debts to be immediately due and payable unless NTL obtains
waivers or forbearance agreements from sufficient percentages of
its creditors. If that right to accelerate was exercised, NTL
would not have sufficient cash resources to repay those debts,
which could ultimately lead to bankruptcy proceedings relating
to the entities so affected.

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

NTL has no current ability to borrow under its
existing UK credit facilities as it has borrowed the full
amounts available. Neither the Partnership nor NTL South Herts
currently has any credit facilities.

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

Media speculation regarding NTLs financial
condition and potential outcomes of any recapitalization process
could have an adverse effect on parts of our business.
Similarly, negative press about the financial condition of
alternative telecom carriers in general may affect our
reputation. For example, one of NTLs 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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. Even if NTL successfully completes the
recapitalization process, there is no assurance that it will not
adversely impact our results of operations or have a long-term
effect on our brand.

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

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

NTLs senior managers and directors have
needed to spend significant amounts of their time dealing with
the negotiations with bondholders, bank lenders and other
stakeholders in connection with the recapitalization process and
it is likely that they will continue to devote significant
amounts of their time to this process for the

21



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##### 



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


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

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

Our growth has been curtailed by funding
constraints.

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

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

One of our key strategies is to reduce customer
churn. In order to reduce churn in the future, we aim to improve
our customer service. This improvement will be difficult to
obtain without an integrated billing system and a customer
database across the entire NTL network. NTL does not as yet have
an integrated billing and operational platform.

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

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

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

We are dependent upon a small number of key
personnel.

A small number of key executive officers manage
our businesses. The loss of one or more of these executive
officers could have a material adverse effect on us. We believe
that our future success will depend in large part on our
continued ability to attract and retain highly skilled and
qualified personnel. We have not

22



---



##### 



entered into written employment contracts or
non-compete agreements with, nor have we obtained life insurance
policies covering those key executive officers.


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

Our 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
our competitors, such as licensing requirements, changes in
price regulation and deregulation of interconnection
arrangements, could have a material adverse effect on us.

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

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

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

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

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



|        |                                             
|------- | --------------------------------------------
|Item 8. | Financial Statements and Supplementary
	Data

The consolidated financial statements of the
Company are filed under this Item commencing on page F-1 of
this Report.

23



---



##### 



The following is a summary of the quarterly
results of operations for the years ended December 31, 2001
and 2000.

|                        |                  |                    |            |         |  |              |            |             |  |   |            |   |  |   |            |   | 
|----------------------- | ---------------- | ------------------ | ---------- | ------- |  | ------------ | ---------- | ----------- |  | - | ---------- | - |  | - | ---------- | - | 
|                        |                  |                   
|                        |                  | Three Months Ended
|                        |                  |                   
|                        |                  | March 31           |            | June 30 |  | September 30 |            | December 31
|                        |                  |                    |            |         |  |              |            |            
|2001                    |                  |                    |            |         |  |              |            |             |  |   |            |   |  |   |            |  
|Revenues                |                  | $                  | 7,023,325  |         |  | $            | 7,030,445  |             |  | $ | 6,912,705  |   |  | $ | 7,388,178  |  
|Operating (loss) income |                  |                    | (8,800,948 | )       |  |              | (1,344,389 | )           |  |   | (883,167   | ) |  |   | 321,506    |  
|Net loss                |                  |                    | (6,278,312 | )       |  |              | (1,132,564 | )           |  |   | (802,219   | ) |  |   | (1,655,769 | )
|Net loss per Limited    |                  |                    | (109.17    | )       |  |              | (19.70     | )           |  |   | (13.95     | ) |  |   | (28.79     | )
|                        | Partnership unit |                    |            |         |  |              |            |             |  |   |            |   |  |   |            |   | 
|2000                    |                  |                    |            |         |  |              |            |             |  |   |            |   |  |   |            |  
|Revenues                |                  | $                  | 7,135,542  |         |  | $            | 6,729,484  |             |  | $ | 6,356,597  |   |  | $ | 6,089,275  |  
|Operating income/(loss) |                  |                    | 363,163    |         |  |              | (666,060   | )           |  |   | (701,567   | ) |  |   | (1,039,135 | )
|Net loss                |                  |                    | (370,154   | )       |  |              | (1,036,855 | )           |  |   | (1,067,246 | ) |  |   | (1,120,591 | )
|Net loss per Limited    |                  |                    | (6.44      | )       |  |              | (18.03     | )           |  |   | (18.56     | ) |  |   | (19.49     | )
|                        | Partnership unit |                    |            |         |  |              |            |             |  |   |            |   |  |   |            |   | 



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

At a meeting held in December 2000, the General
Partner of the Partnership approved the engagement of
Ernst & Young as its independent auditor for the fiscal
years ending December 31, 2000 and 2001 to replace the firm
of Arthur Andersen who resigned as auditors as a result of the
acquisition of CWC ConsumerCo by NTL.

The report of Arthur Andersen on the
Partnerships financial statements for year ended
December 31, 1999 did not contain an adverse opinion or a
disclaimer of opinion and was not qualified or modified as to
uncertainty, audit scope or accounting principles.

In connection with the audit of the
Partnerships financial statements for the fiscal year
ended December 31, 1999, there were no disagreements with
Arthur Andersen on any matters of accounting principles or
practices, financial statement disclosure, auditing scope and
procedures which, if not resolved to the satisfaction of Arthur
Andersen, would have caused Arthur Andersen to make reference to
the matter in their report.



|         |                                                    
|-------- | ---------------------------------------------------
|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    |  |     | 45 |                                    |  |  | Director          | 
|John Gregg       |  |     | 39 |                                    |  |  | Director          | 
|Robert Mackenzie |  |     | 41 |                                    |  |  | Company 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. In addition,
Mr. Knapp was also Executive Vice President, Chief
Operating Officer, Chief Financial Officer and a director of
CCI, until the CCI Merger, and was Executive Vice President and
Chief Operating Officer of Cellular Communications
International, Inc. (CCII) until June 1998.
Mr. Knapp was also President, Chief Executive Officer and a
director of Cellular Communications of Puerto Rico, Inc.
(CCPR), until its sale in August 1999 and is the
Chairman of the board of directors of CoreComm Limited. Mr.
Knapp is also a

24



---



##### 



director of Bredbandsbolaget, a Swedish company
in which NTL holds a 34% interest and Cablecom, a Swiss company
which is an indirect wholly-owned subsidiary of NTL Incorporated.


John Gregghas been
a Director of the General Partner since February 21, 2002.
He has been the NTLs Chief Financial Officer since June
1999 and Vice President of Corporate Development since August of
1996. He joined NTL in 1994 as Managing Director of Corporate
Development. He is Vice Chairman and a director of Virgin Net, a
joint venture between NTL and Virgin Communications Group, a
director of Bredbandsbolaget, a Swedish company in which NTL
holds a 34% interest, a director of iesy Hessen GmbH, a German
company in which NTL holds a 32.5% interest and a director of
Noos S.A., in which NTL owns a 27% interest. Mr. Gregg is
also a director of Two Way TV, an interactive programming
company. Prior to his employment by NTL, Mr. Gregg was
employed by Golder, Thoma & Cressey, a venture capital firm.

Robert Mackenziehas
been the Company Secretary of the General Partner since
May 30, 2000. He joined International CableTel in 1993,
which was subsequently acquired by NTL and is now the Group
Legal Director. Prior to joining NTL he worked for Theodore
Goddard as a Solicitor in the corporate finance department
between 1988 and 1993. He graduated in law from Kings
College, University of London.



PART III




|         |                       
|-------- | ----------------------
|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, the cost of such employment is charged by
NTL and its affiliates to the Partnership as a direct
reimbursement item. See Item 13.



|         |                                                                
|-------- | ---------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial
	Owners and Management

No person or entity owns more than 5 percent
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. The General Partner believes that the terms of such
transactions, which are set forth in 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 percent of construction costs.
After completion of construction of each portion of the system,
the consulting fee for the completed portion is 5 percent
of gross revenues, excluding revenues from the sale of cable
television/telephony systems. Consulting fees paid or payable by
the Partnership for the year ended December 31, 2001 totaled
$1,528,773.

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, 2001 amounted
to $102,099.

25



---



##### 



PART IV



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

(a)     (1) Financial
Statements



| |                                                                                     
| | ------------------------------------------------------------------------------------
| | See index to financial statements at
	page F-1 for the list of financial statements.

(2)     Financial
Statement Schedule



| |     
| | ----
| | None

(3)     Exhibits



| |                              
| | -----------------------------
| | See Exhibit Index on page 27.

(b)     Reports on
Form 8-K



| |                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------
| | The Partnership has not filed a report on
	Form 8-K during the last fiscal quarter of the period for
	which this Form 10-K is filed.

26



---



##### 



EXHIBIT INDEX

|        |   |             |  |                                                                             
|------- | - | ----------- |  | ----------------------------------------------------------------------------
|Exhibit |   |            
|Number  |   | Description
|        |   |            
|        | 3 | .1          |  | Certificate of Limited Partnership dated December
	31, 1991*                
|        | 3 | .2          |  | Amendment to the Certificate of Limited
	Partnership dated January 31, 1995*
|        | 4 | .1          |  | Limited Partnership Agreement dated December 31,
	1991**                    
|        | 4 | .2          |  | Amendment No. 1 to Limited Partnership Agreement
	dated October 20, 1992*   



---



|  |                                                                                                                        
|- | -----------------------------------------------------------------------------------------------------------------------
|* | Incorporated by reference to the
	Registrants Form 10-K for the year ended December 31,
	1994, filed on March 31, 1995



|   |                                                                                                                                     
|-- | ------------------------------------------------------------------------------------------------------------------------------------
|** | 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)

27



---



##### 



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 
|
| | DIRECTORS OF FAWNSPRING LIMITED



| |     |                  
| | --- | -----------------
| | By: | /s/ BARCLAY KNAPP

| |                               
| | ------------------------------
| |                               
| | Barclay Knapp                 
| | Director of Fawnspring Limited



| |     |               
| | --- | --------------
| | By: | /s/ JOHN GREGG

| |                               
| | ------------------------------
| |                               
| | John Gregg                    
| | Director of Fawnspring Limited

Date:     April 18,
2002

28



---



##### 



FORM 10K  ITEM 14(a)(1)

SOUTH HERTFORDSHIRE UNITED KINGDOM FUND,
LTD.

CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2001, and 2000


and for the Years Ended December 31, 2001,
2000, and 1999


INDEX

|                                                                                         |  |      |     | 
|---------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                         |  | Page
|                                                                                         |  |     
|Ernst &Young LLP Independent Auditors
	Report                                           |  |      | F-2 | 
|Arthur Andersen Independent Auditors Report                                             |  |      | F-3 | 
|Consolidated Balance Sheets                                                              |  |      | F-4 | 
|Consolidated Statements of Operations and
	Consolidated Statements of Comprehensive Loss |  |      | F-5 | 
|Consolidated Statements of (Deficit)/Capital                                             |  |      | F-6 | 
|Consolidated Statements of Cash Flows                                                    |  |      | F-7 | 
|Notes to Consolidated Financial Statements                                               |  |      | F-8 | 

F-1



---



##### 



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, 2001 and 2000, and the related consolidated
statements of operations, comprehensive loss, partners
capital/(deficit) and cash flows for each of the two years in
the period ended December 31, 2001. 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
provides a reasonable basis for our opinion.

In our opinion, the consolidated 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, 2001 and 2000, and the consolidated results of
their operations and their consolidated cash flows for each of
the two years in the period ended December 31, 2001, in
conformity with accounting principles generally accepted in the
United States.

The accompanying financial statements have been
prepared assuming that South Hertfordshire United Kingdom Fund,
Ltd. will continue as a going concern. As more fully described
in Note 2, the Partnership has incurred recurring operating
losses and negative operating cash flows, and has a working
capital deficiency. Without further capital injections from the
Limited Partners, the Partnership is reliant upon the continuing
support from NTL Incorporated and certain of its subsidiaries
(NTL). NTLs substantial leverage, its current
debt and equity trading levels and its non-compliance with
certain debt covenants in 2002 have eliminated access to
NTLs historic sources of capital. NTL has initiated a
recapitalization process, the success of which is dependent upon
adequate liquidity to complete the process as well as agreement
of NTLs creditors and preferred stockholders. These
conditions raise substantial doubt about the Partnerships
ability to continue as a going concern. The plans of NTLs
management in regard to these matters are also described in Note
2. The financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of
liabilities that may result from the outcome of this uncertainty.



| |                  
| | -----------------
| | ERNST & YOUNG LLP

London, England

April 15, 2002


F-2



---



##### 



INDEPENDENT AUDITORS REPORT

The Partners

South Hertfordshire United Kingdom Fund, Ltd.


We have audited the accompanying consolidated
statements of operations, comprehensive income, partners
capital and cash flows of South Hertfordshire United Kingdom
Fund, Ltd. (a Colorado limited partnership) and its subsidiary
for the year ended December 31, 1999. 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 audit.

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

In our opinion, the consolidated statements of
operations, comprehensive income, partners capital and
cash flows to above present fairly, in all material respects,
the results of operations and cash flows for South Hertfordshire
United Kingdom Fund, Ltd. and its subsidiary for the year ended
December 31, 1999, in conformity with generally accepted
accounting principles in the United States.



| |                
| | ---------------
| | ARTHUR ANDERSEN

London, England

March 30, 2000


F-3



---



##### 



SOUTH HERTFORDSHIRE UNITED KINGDOM FUND,
LTD.

(A Limited Partnership)


CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                             |                                                                                   |             |            |             |   |   |            |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------------------------------------------------- | ----------- | ---------- | ----------- | - | - | ---------- | ----------- | -
|                                                                                                                                                             |                                                                                   |            
|                                                                                                                                                             |                                                                                   | December 31
|                                                                                                                                                             |                                                                                   |            
|                                                                                                                                                             |                                                                                   | 2001        |            | 2000       
|                                                                                                                                                             |                                                                                   |             |            |            
|ASSETS                                                                                                                                                      
|Plant, property and equipment (net of accumulated
	depreciation and amortization of $51,716,191 and $37,994,401 at
	December 31, 2001 and 2000 respectively) |                                                                                   | $           | 58,962,082 |             |   | $ | 70,066,182 |            
|Other assets                                                                                                                                                 |                                                                                   |             | 205,766    |             |   |   | 300,080    |            
|                                                                                                                                                             |                                                                                   |             |            |             |   |   |            |            
|Total assets                                                                                                                                                 |                                                                                   | $           | 59,167,848 |             |   | $ | 70,366,262 |            
|                                                                                                                                                             |                                                                                   |             |            |             |   |   |            |            
|LIABILITIES AND PARTNERS
	(DEFICIT)/CAPITAL                                                                                                                
|Current liabilities                                                                                                                                          |                                                                                   |             |            |             |   |   |            |            
|Accounts payable to affiliates and related parties                                                                                                           |                                                                                   | $           | 58,145,703 |             |   | $ | 32,690,227 |            
|Accrued liabilities                                                                                                                                          |                                                                                   |             | 453,662    |             |   |   | 362,125    |            
|Current installments on loan facility                                                                                                                        |                                                                                   |             |           |             |   |   | 7,206,138  |            
|                                                                                                                                                             |                                                                                   |             |            |             |   |   |            |            
|Total current liabilities                                                                                                                                    |                                                                                   |             | 58,599,365 |             |   |   | 40,258,490 |            
|Long-term debt                                                                                                                                               |                                                                                   |             |           |             |   |   | 14,412,275 |            
|                                                                                                                                                             |                                                                                   |             |            |             |   |   |            |            
|Total liabilities                                                                                                                                            |                                                                                   |             | 58,599,365 |             |   |   | 54,670,765 |            
|                                                                                                                                                             |                                                                                   |             |            |             |   |   |            |            
|MINORITY INTERESTS                                                                                                                                           |                                                                                   |             | 739,160    |             |   |   | 5,645,599  |            
|PARTNERS (DEFICIT)/CAPITAL                                                                                                                                  |                                                                                   |             |            |             |   |   |            |            
|General Partner                                                                                                                                             |                                                                                   |             |            |             |   |   |            |            
|                                                                                                                                                             | Contributed capital                                                               |             |            | 1,000       |   |   |            | 1,000       |  
|                                                                                                                                                             | Accumulated deficit                                                               |             |            | (490,488    | ) |   |            | (391,799    | )
|                                                                                                                                                             |                                                                                   |             |            |             |   |   |            |            
|                                                                                                                                                             |                                                                                   |             | (489,488   | )           |   |   | (390,799   | )          
|                                                                                                                                                             |                                                                                   |             |            |             |   |   |            |            
|Limited Partners                                                                                                                                            |                                                                                   |             |            |             |   |   |            |            
|                                                                                                                                                             | Net contributed capital (56,935 units outstanding
	at December 31, 2001 and 2000) |             |            | 48,817,997  |   |   |            | 48,817,997  |  
|                                                                                                                                                             | Accumulated deficit                                                               |             |            | (48,277,123 | ) |   |            | (38,506,948 | )
|                                                                                                                                                             |                                                                                   |             |            |             |   |   |            |            
|                                                                                                                                                             |                                                                                   |             | 540,874    |             |   |   | 10,311,049 |            
|                                                                                                                                                             |                                                                                   |             |            |             |   |   |            |            
|Accumulated comprehensive (loss)/income                                                                                                                      |                                                                                   |             | (222,063   | )           |   |   | 129,648    |            
|                                                                                                                                                             |                                                                                   |             |            |             |   |   |            |            
|Total (deficit)/capital                                                                                                                                      |                                                                                   |             | (170,677   | )           |   |   | 10,049,898 |            
|                                                                                                                                                             |                                                                                   |             |            |             |   |   |            |            
|TOTAL LIABILITIES AND PARTNERS
	(DEFICIT)/CAPITAL                                                                                                           |                                                                                   | $           | 59,167,848 |             |   | $ | 70,366,262 |            
|                                                                                                                                                             |                                                                                   |             |            |             |   |   |            |            

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

F-4



---



##### 



SOUTH HERTFORDSHIRE UNITED KINGDOM FUND,
LTD.

(A Limited Partnership)


CONSOLIDATED STATEMENTS OF
OPERATIONS

|                                                                                                                                              |  |                         |             |      |  |      |             |   |  |   |             |  
|--------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ----------- | ---- |  | ---- | ----------- | - |  | - | ----------- | -
|                                                                                                                                              |  |                        
|                                                                                                                                              |  | Years Ended December 31
|                                                                                                                                              |  |                        
|                                                                                                                                              |  | 2001                    |             | 2000 |  | 1999
|                                                                                                                                              |  |                         |             |      |  |     
|REVENUES                                                                                                                                      |  | $                       | 28,354,653  |      |  | $    | 26,310,898  |   |  | $ | 28,345,316  |  
|COSTS AND EXPENSES                                                                                                                            |  |                         |             |      |  |      |             |   |  |   |             |  
|Cost of goods sold (exclusive of items shown
	separately below)                                                                               |  |                         | (12,277,725 | )    |  |      | (10,366,295 | ) |  |   | (10,837,197 | )
|Selling, general and administrative                                                                                                           |  |                         | (253,634    | )    |  |      | (99,892     | ) |  |   | (224,211    | )
|Management fees and allocated overhead from the
	General Partner                                                                              |  |                         | (11,901,237 | )    |  |      | (13,128,873 | ) |  |   | (10,447,802 | )
|Depreciation and amortization                                                                                                                 |  |                         | (14,629,055 | )    |  |      | (4,759,437  | ) |  |   | (6,279,976  | )
|                                                                                                                                              |  |                         |             |      |  |      |             |   |  |   |             |  
|OPERATING (LOSS)/ INCOME                                                                                                                      |  |                         | (10,706,998 | )    |  |      | (2,043,599  | ) |  |   | 556,130     |  
|OTHER EXPENSE                                                                                                                                 |  |                         |             |      |  |      |             |   |  |   |             |  
|Interest expense (interest payable to related
	parties amounted to $1,228,360, $1,075,982 and $886,671 in 2001,
	2000 and 1999, respectively) |  |                         | (1,577,428  | )    |  |      | (3,217,052  | ) |  |   | (3,322,569  | )
|Restructuring costs                                                                                                                           |  |                         | (2,307,942  | )    |  |      |            |   |  |   |            |  
|                                                                                                                                              |  |                         |             |      |  |      |             |   |  |   |             |  
|NET LOSS BEFORE MINORITY INTERESTS                                                                                                            |  |                         | (14,592,368 | )    |  |      | (5,260,651  | ) |  |   | (2,766,439  | )
|Minority interests                                                                                                                            |  |                         | 4,723,504   |      |  |      | 1,665,805   |   |  |   | 797,107     |  
|                                                                                                                                              |  |                         |             |      |  |      |             |   |  |   |             |  
|NET LOSS                                                                                                                                      |  |                         | (9,868,864  | )    |  |      | (3,594,846  | ) |  |   | (1,969,332  | )
|                                                                                                                                              |  |                         |             |      |  |      |             |   |  |   |             |  
|ALLOCATION OF NET LOSS (Note 1)                                                                                                               |  |                         |             |      |  |      |             |   |  |   |             |  
|General Partner                                                                                                                               |  | $                       | (98,689     | )    |  | $    | (35,948     | ) |  | $ | (19,693     | )
|Limited Partners                                                                                                                              |  | $                       | (9,770,175  | )    |  | $    | (3,558,898  | ) |  | $ | (1,949,639  | )
|                                                                                                                                              |  |                         |             |      |  |      |             |   |  |   |             |  
|NET LOSS                                                                                                                                      |  | $                       | (9,868,864  | )    |  | $    | (3,594,846  | ) |  | $ | (1,969,332  | )
|                                                                                                                                              |  |                         |             |      |  |      |             |   |  |   |             |  
|NET LOSS PER LIMITED PARTNERSHIP UNIT                                                                                                         |  | $                       | (171.60     | )    |  | $    | (62.51      | ) |  | $ | (34.24      | )
|                                                                                                                                              |  |                         |             |      |  |      |             |   |  |   |             |  
|WEIGHTED AVERAGE NUMBER OF LIMITED PARTNERSHIP
	UNITS OUTSTANDING                                                                             |  |                         | 56,935      |      |  |      | 56,935      |   |  |   | 56,935      |  
|                                                                                                                                              |  |                         |             |      |  |      |             |   |  |   |             |  

CONSOLIDATED STATEMENTS OF COMPREHENSIVE
LOSS

|                                         |  |                         |             |      |  |      |            |   |  |   |            |  
|---------------------------------------- |  | ----------------------- | ----------- | ---- |  | ---- | ---------- | - |  | - | ---------- | -
|                                         |  |                        
|                                         |  | Years Ended December 31
|                                         |  |                        
|                                         |  | 2001                    |             | 2000 |  | 1999
|                                         |  |                         |             |      |  |     
|NET LOSS                                 |  | $                       | (9,868,864  | )    |  | $    | (3,594,846 | ) |  | $ | (1,969,332 | )
|Foreign currency translation adjustments |  |                         | (351,711    | )    |  |      | (1,143,736 | ) |  |   | (463,556   | )
|                                         |  |                         |             |      |  |      |            |   |  |   |            |  
|COMPREHENSIVE LOSS                       |  | $                       | (10,220,575 | )    |  | $    | (4,738,582 | ) |  | $ | (2,432,888 | )
|                                         |  |                         |             |      |  |      |            |   |  |   |            |  

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

F-5



---



##### 



SOUTH HERTFORDSHIRE UNITED KINGDOM FUND,
LTD.

(A Limited Partnership)


CONSOLIDATED STATEMENTS OF
(DEFICIT)/CAPITAL

|                                         |  |                          |            |      |  |      |            |   |  |   |            |  
|---------------------------------------- |  | ------------------------ | ---------- | ---- |  | ---- | ---------- | - |  | - | ---------- | -
|                                         |  |                         
|                                         |  | Years Ended December 31,
|                                         |  |                         
|                                         |  | 2001                     |            | 2000 |  | 1999
|                                         |  |                          |            |      |  |     
|GENERAL PARTNER:                         |  |                          |            |      |  |      |            |   |  |   |            |  
|Balance, beginning of year               |  | $                        | (390,799   | )    |  | $    | (354,851   | ) |  | $ | (335,158   | )
|Net loss for year                        |  | $                        | (98,689    | )    |  |      | (35,948    | ) |  |   | (19,693    | )
|                                         |  |                          |            |      |  |      |            |   |  |   |            |  
|Balance, end of year                     |  | $                        | (489,488   | )    |  | $    | (390,799   | ) |  | $ | (354,851   | )
|                                         |  |                          |            |      |  |      |            |   |  |   |            |  
|LIMITED PARTNERS:                        |  |                          |            |      |  |      |            |   |  |   |            |  
|Balance, beginning of year               |  | $                        | 10,311,049 |      |  | $    | 13,869,947 |   |  | $ | 15,819,586 |  
|Net loss for year                        |  |                          | (9,770,175 | )    |  |      | (3,558,898 | ) |  |   | (1,949,639 | )
|                                         |  |                          |            |      |  |      |            |   |  |   |            |  
|Balance, end of year                     |  | $                        | 540,874    |      |  | $    | 10,311,049 |   |  | $ | 13,869,947 |  
|                                         |  |                          |            |      |  |      |            |   |  |   |            |  
|Accumulated comprehensive income/ (loss) |  |                          | (222,063   | )    |  |      | 129,648    |   |  |   | 1,273,384  |  
|                                         |  |                          |            |      |  |      |            |   |  |   |            |  
|Total (deficit)/ capital                 |  | $                        | (170,677   | )    |  | $    | 10,049,898 |   |  | $ | 14,788,480 |  
|                                         |  |                          |            |      |  |      |            |   |  |   |            |  

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

F-6



---



##### 



SOUTH HERTFORDSHIRE UNITED KINGDOM FUND,
LTD.

(A Limited Partnership)


CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                                                                |  |                          |             |      |  |      |            |   |  |   |            |  
|------------------------------------------------------------------------------- |  | ------------------------ | ----------- | ---- |  | ---- | ---------- | - |  | - | ---------- | -
|                                                                                |  |                         
|                                                                                |  | Years Ended December 31,
|                                                                                |  |                         
|                                                                                |  | 2001                     |             | 2000 |  | 1999
|                                                                                |  |                          |             |      |  |     
|CASH FLOWS FROM OPERATING
	ACTIVITIES:                                          |  |                          |             |      |  |      |            |   |  |   |            |  
|Net loss                                                                        |  | $                        | (9,868,864  | )    |  | $    | (3,594,846 | ) |  | $ | (1,969,332 | )
|Adjustments to reconcile net loss to net cash
	provided by operating activities |  |                          |             |      |  |      |            |   |  |   |            |  
|Minority interests                                                              |  |                          | (4,723,504  | )    |  |      | (1,665,805 | ) |  |   | (797,107   | )
|Depreciation and amortization                                                   |  |                          | 14,629,055  |      |  |      | 4,759,437  |   |  |   | 6,279,976  |  
|Change in operating assets and
	liabilities                                     |  |                          |             |      |  |      |            |   |  |   |            |  
|Decrease in other assets                                                        |  |                          | 94,314      |      |  |      | 83,527     |   |  |   | 65,641     |  
|Increase in accounts payable to affiliates and
	related parties                 |  |                          | 26,108,536  |      |  |      | 13,332,685 |   |  |   | 2,428,123  |  
|Increase in accrued liabilities                                                 |  |                          | 91,537      |      |  |      | 177,000    |   |  |   | 9,346      |  
|                                                                                |  |                          |             |      |  |      |            |   |  |   |            |  
|Net cash provided by operating
	activities                                      |  |                          | 26,331,074  |      |  |      | 13,091,998 |   |  |   | 6,016,647  |  
|                                                                                |  |                          |             |      |  |      |            |   |  |   |            |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                            |  |                          |             |      |  |      |            |   |  |   |            |  
|Construction payments for cable television/
	telephony system                   |  |                          | (5,398,631  | )    |  |      | (8,036,361 | ) |  |   | (3,355,383 | )
|                                                                                |  |                          |             |      |  |      |            |   |  |   |            |  
|Net cash used in investing
	activities                                          |  |                          | (5,398,631  | )    |  |      | (8,036,361 | ) |  |   | 3,355,383  |  
|                                                                                |  |                          |             |      |  |      |            |   |  |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                            |  |                          |             |      |  |      |            |   |  |   |            |  
|Decrease in loans                                                               |  |                          | (20,919,270 | )    |  |      | (5,275,848 | ) |  |   | (2,181,651 | )
|Principal payments under capital leases                                         |  |                          |            |      |  |      | (33,411    | ) |  |   | (280,982   | )
|                                                                                |  |                          |             |      |  |      |            |   |  |   |            |  
|Net cash used in financing
	activities                                          |  |                          | (20,919,270 | )    |  |      | (5,309,259 | ) |  |   | (2,462,633 | )
|                                                                                |  |                          |             |      |  |      |            |   |  |   |            |  
|Increase/ (decrease) in cash and cash equivalents
	before exchange rate changes |  |                          | 13,173      |      |  |      | (253,622   | ) |  |   | 198,631    |  
|Effect of exchange rate changes on cash                                         |  |                          | (13,173     | )    |  |      | (19,567    | ) |  |   | (1,779     | )
|                                                                                |  |                          |             |      |  |      |            |   |  |   |            |  
|Net (decrease)/ increase in cash and cash
	equivalents                          |  |                          |            |      |  |      | (273,189   | ) |  |   | 196,852    |  
|Cash and cash equivalents, beginning of year                                    |  |                          |            |      |  |      | 273,189    |   |  |   | 76,337     |  
|                                                                                |  |                          |             |      |  |      |            |   |  |   |            |  
|Cash and cash equivalents, end of year                                          |  |                          |            |      |  |      |           |   |  |   | 273,189    |  
|                                                                                |  |                          |             |      |  |      |            |   |  |   |            |  
|SUPPLEMENTAL CASH FLOW DISCLOSURES                                              |  |                          |             |      |  |      |            |   |  |   |            |  
|Interest paid                                                                   |  | $                        | 261,886     |      |  | $    | 2,070,948  |   |  | $ | 2,329,509  |  
|                                                                                |  |                          |             |      |  |      |            |   |  |   |            |  

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

F-7



---



##### 



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, pursuant to a public
offering. The Partnership was formed to acquire, construct,
develop, own and operate cable television/ telephony systems in
the United Kingdom. Fawnspring Limited, a UK corporation
(Fawnspring), a subsidiary of NTL (CWC), is the
general partner of the Partnership (the General
Partner). The indirect parent of the General Partner of
the Partnership is NTL Incorporated (NTL
Incorporated and together with its consolidated
subsidiaries, NTL).

The General Partner has complete and unrestricted
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 (Deficit)/
Capital. 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 per cent to the
Limited Partners and 1 per cent to the General Partner
until the Limited Partners have received distributions equal to
100 per cent of their capital contributions plus an annual
return thereon of 12 per cent, cumulative and
non-compounded. Thereafter, profits and distributions will
generally be allocated 75 per cent to the Limited Partners
and 25 per cent to the General Partner. Interest income
earned prior to the formation of the Partnership was allocated
100 per cent to the Limited Partners.

The profits and losses allocated to the Limited
Partners and General Partner is the net profit or loss rather
than the comprehensive income or loss. 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 per
cent of the net profit or loss to the General Partner. In the
year ended December 31, 2001 the loss per Limited Partner
unit amounted to $171.60.

NTL (South
Hertfordshire) Limited

NTL (South Hertfordshire) Limited (formerly
C&W Comms (South Herts) Limited) (NTL South
Herts) is a United Kingdom 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 north-west
perimeter of Greater London, England (the South Herts
System).

NTL South Herts is owned 66.7 percent by the
Partnership and 33.3 percent by the General Partner,
Fawnspring. 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-8



---



##### 



SOUTH HERTFORDSHIRE UNITED KINGDOM FUND,
LTD.


(A Limited Partnership)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(2) Liquidity and Ability to Continue
Operations

Recapitalization
Process and Ability to Continue Operations

In this Note 2, the Partnership,
we, us and our refer to
South Hertfordshire United Kingdom Fund, Ltd. and its
consolidated subsidiary, NTL (South Herts) Limited, except where
the context otherwise requires. The Partnership required
significant amounts of capital to finance construction of its
networks, connection of customers to the networks, other capital
expenditures and for working capital needs. The Partnership
historically met these liquidity requirements through issuances
of limited partnership units and by borrowing from commercial
banks and NTL. Both the equity and debt capital markets have
recently experienced periods of significant volatility,
particularly for securities issued by telecommunications and
technology companies. The ability of telecommunications
companies to access those markets as well as their ability to
obtain financing provided by bank lenders and equipment
suppliers has become more restricted and financing costs have
increased. During some recent periods, the capital markets have
been largely unavailable to new issues of securities by
telecommunications companies. NTL Incorporateds public
equity is no longer trading on the New York Stock Exchange, and
NTLs public debt securities are trading at or near all
time lows. These factors, together with the Partnerships
substantial leverage, mean the Partnership does not currently
have access to its historic sources of capital.

In addition, NTLs UK credit facilities are
fully drawn and NTLs Swiss subsidiaries are currently
unable to draw the remaining undrawn amounts under their credit
facility. NTL Communications Corp., a wholly-owned subsidiary of
NTL Incorporated, did not pay cash interest on certain series of
its notes that was due on April 1, 2002 and April 15,
2002. NTL Incorporated and NTL (Delaware), Inc., a wholly-owned
subsidiary of NTL Incorporated, also did not pay cash interest
and related fees on a series of their notes that was due on
April 15, 2002. As of December 31, 2001, NTL had
approximately $505 million in cash and cash equivalents on hand
and, on April 4, 2002, received approximately
$303 million net cash proceeds from the sale of its
Australian business. NTL and the Partnership will require cash
for working capital and capital expenditures in 2002. If NTL
makes scheduled and overdue interest payments on its notes, then
NTL will not have sufficient cash resources to meet its
liquidity needs through the third quarter of 2002.

These liquidity concerns raise substantial doubt
about the Partnerships ability to continue as a going
concern in view of the Partnerships dependency upon NTL.

NTL needs to restructure its outstanding debt
and/or raise new funds through the issuance of equity or
additional debt. On January 31, 2002, NTL Incorporated
announced that it had appointed Credit Suisse First Boston,
JP Morgan and Morgan Stanley to advise on strategic and
recapitalization alternatives to strengthen NTLs balance
sheet and reduce debt and put an appropriate capital structure
in place for its business. Since then, NTL has been evaluating
various recapitalization alternatives to effect a comprehensive
consensual reorganization in a timely manner to minimize
negative effects on its business operations.

On April 16, 2002, NTL Incorporated
announced that NTL and an unofficial committee of its public
bondholders had reached an agreement in principle on a
comprehensive recapitalization of NTL. The members of the
committee hold in the aggregate over 50% of the face value of
NTL and its subsidiaries public bonds. The
recapitalization would result in a conversion of approximately
$10.6 billion in debt into equity.

To implement the proposed recapitalization, NTL
Incorporated, NTL (Delaware), Inc., NTL Communications Corp.,
Diamond Cable Communications Limited and Diamond Holdings
Limited would file a pre-negotiated recapitalization plan in a
Chapter 11 case under the U.S. Bankruptcy Code. NTLs
operating subsidiaries would not be included in the
Chapter 11 filing. The agreement in principle is subject to
various conditions, including mutually acceptable terms with
NTLs bank lenders. The recapitalization transaction
contemplates that the bank debt will remain in place as part of
the recapitalization.

F-9



---



##### 



SOUTH HERTFORDSHIRE UNITED KINGDOM FUND,
LTD.


(A Limited Partnership)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

To facilitate the recapitalization, certain
members of the unofficial committee of bondholders would commit
to provide up to $500 million of new debt financing to
NTLs UK and Ireland operations during the Chapter 11
process and for the post-recapitalized NTL. The new financing
will ensure that NTLs business operations have access to
sufficient liquidity to continue ordinary operations.

Under the agreement in principle, NTL would be
split into two companies, one tentatively called NTL UK and
Ireland and holding all of its UK and Ireland assets, and one
tentatively called NTL Euroco and holding certain of its
continental European and other assets.

Holders of notes of NTL Incorporated, NTL
(Delaware), Inc., NTL Communications Corp. and Diamond Cable
Communications Limited would in the aggregate receive 100% of
the initial common stock of NTL UK and Ireland and
approximately 86.5% of the initial common stock of NTL Euroco.
NTL (Delaware), Inc. bondholders would have the option to
reinvest all or a portion of NTL (Delaware), Inc. cash in
additional shares of NTL UK and Ireland common stock, or to
receive such cash in the recapitalization. Notes of Diamond
Holdings Limited and NTL (Triangle) LLC would remain outstanding
and will be kept current in interest payments. Current preferred
and common stockholders, including France Telecom, would
participate in a package of rights (to be priced at a
$10.5 billion enterprise value) and warrants entitling them
to purchase primary common stock of NTL UK and Ireland at
the consummation of the proposed plan, in the case of the
rights, and for the duration of the eight-year warrants at
prescribed prices. If fully exercised, those rights and warrants
would entitle the current preferred stockholders to acquire
approximately 23.6% and the current common stockholders to
acquire approximately 8.9% of the entitys primary common
stock.

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

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

Bank
Waivers

Before NTL could commence negotiations with the
unofficial committee of bondholders, it was necessary to obtain
waivers from the lenders under its credit facilities. Effective
March 8, 2002, these lenders granted waivers which, until
March 29, 2002, provided that the commencement of
negotiations with bondholders with a view to rescheduling its
debt would not constitute an event of default under the credit
facilities.

But for the initial waivers, the commencement of
negotiations with bondholders would have been an event of
default under the credit facilities. If an event of default were
to occur, it would entitle the lenders under the credit
facilities to declare the principal amount of the outstanding
debt immediately due and payable. If this right was exercised,
it would result in an event of default under all of NTLs
outstanding notes, except for those issued by Diamond Cable
Communications, Diamond Holdings and NTL Triangle, entitling the
trustee or 25% of the holders of a series to accelerate the
repayment of that series of notes. NTL does not have sufficient
cash resources to repay its outstanding indebtedness if it is
declared immediately due and payable.

F-10



---



##### 



SOUTH HERTFORDSHIRE UNITED KINGDOM FUND,
LTD.


(A Limited Partnership)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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



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

Effective March 28, 2002, the lenders under
the credit facilities agreed to amend the initial waivers. The
amendments to the initial waivers extend the duration of the
initial waivers to April 30, 2002 in the case of the UK
credit facilities or May 14 in the case of the Cablecom
facility, unless the missed interest payments on April 1,
2002 are remedied or a sufficient number of bondholders agree to
forbear in respect of such non-payment, in which case, the UK
credit facilities waivers will be extended to May 14, 2002.
As a condition to the waivers continuing effectiveness, the UK
lenders required NTL Delaware to loan £90 million to
NTL (UK) Group, Inc. following receipt of the proceeds from
the sale of NTL Australia. This loan is structurally senior to
the outstanding public notes issued by NTL Communications Corp.
but contractually subordinated to the UK credit facilities. In
connection with the amendments to the waivers, NTL affirmed the
provisions of the initial waivers and in addition, NTL agreed,
among other things, to:



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

The amended waivers prevent NTL from making an
exchange offer with respect to its outstanding notes or from
entering into an agreement with bondholders without the consent
of the lenders under each of the credit facilities. The amended
waivers also prohibit NTL from commencing voluntary dissolution
proceedings, including proceedings under Chapter 11 of the
U.S. bankruptcy code, without the consent of these lenders.

As a consequence, NTL cannot enter into a binding
agreement with the unofficial bondholder committee or implement
the proposed plan without the consent of its bank lenders.

Cablecom GmbH is the principal trading company of
NTLs Swiss group. There are a number of technical defaults
under the Swiss credit facility made available to Cablecom and
various of its subsidiaries. In addition, as of
December 31, 2001, Cablecoms and various of its
subsidiaries liabilities exceeded their respective assets.
As a consequence, under Swiss law, those entities were deemed to
be overindebted. This also constituted an event of
default under the Cablecom credit facility which entitles the
lenders to accelerate repayment. Such an acceleration would
result in an event of default under NTL Incorporateds and
NTL Delawares 5.75% convertible subordinated notes due
2011 and 5.75% convertible subordinated notes due 2009,
entitling the trustee or the holders of 25% of each series of
notes to accelerate repayment. Under Swiss law, unless the over
indebtedness is rectified, those entities would be required to
commence an insolvency proceeding in Switzerland. A plan has
been formulated to rectify this overindebtedness. Implementation
of

F-11



---



##### 



SOUTH HERTFORDSHIRE UNITED KINGDOM FUND,
LTD.


(A Limited Partnership)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

this plan prior to April 30, 2002 will mean
those entities will not be required to commence an insolvency
proceeding. Those proceedings would likely either be a court
supervised moratorium in which an independent administrator, or
commissioner, would be appointed to supervise the running of
each company during a restructuring or, if there is no viable
restructuring plan, a bankruptcy. The commencement of those
insolvency proceedings would also constitute an immediate event
of default and acceleration of the maturity of the convertible
subordinated notes referred to above.

NTL is currently in discussions with the lenders
under the Swiss credit facility regarding proposals to resolve
the over indebtedness issue as well as requesting that they
waive various additional covenant breaches under the credit
facility. There can be no assurance that NTL will reach
agreement on the resolution of the over indebtedness issue
within the time period required or obtain the requested waivers.

Interest
Payments on Public Notes

NTL has substantial interest payment obligations
under its existing indebtedness. NTL Communications Corp. did
not make scheduled interest payments due April 1, 2002, in
the aggregate amount of $74.3 million, in respect of its
9 1/2% notes due 2008, 11 1/2% notes due 2008 and
11 7/8% notes due 2010. In addition, NTL Communications did
not make interest payments falling due on April 15, 2002,
totaling $20.2 million, in respect of the 12 3/4%
Senior Deferred Coupon Notes due 2005 and NTL Incorporated and
NTL Delaware did not make interest payments and payment of
related fees falling due on April 15, 2002 in respect of
their 5 3/4% Convertible Subordinated Notes due 2011. Those
payments were not made after consideration by NTL of requests by
the unofficial bondholder committee not to make those payments.
Interest payments of $18.9 million were made, when due, on
April 2, 2002 in respect of Diamond Cable Communications
13.25% senior discount notes due 2004. On May 15, 2002,
interest totaling $94.0 million is due on outstanding notes
of NTL Triangle and NTL Communications.

If the applicable issuer does not pay interest on
these notes after a 30 day grace period expires (on
April 30, 2002 in the case of the missed interest payments
due April 1, 2002), there is an event of default under the
indenture in respect of the notes on which the interest is due
and unpaid. An event of default entitles the trustee under the
indenture or the holders of 25% of the outstanding notes to
declare the principal amount of those notes to be immediately
due and payable. Even if the maturity of those notes is not
accelerated after April 30, 2002, such an event of default
would also result in an event of default in respect of other
debt (commonly called cross defaults) under all of NTLs
other notes, except for those issued by NTL Triangle, Diamond
Cable Communications or Diamond Holdings. As a result, upon the
expiration of the grace period, on April 30, 2002, events
of default for failure to pay interest would occur under the
relevant indentures at NTL Communications and,
contemporaneously, cross defaults would occur under NTLs
other indentures at NTL Communications, NTL Delaware, NTL
Incorporated and under NTLs UK credit facilities and could
occur under NTLs Cablecom facility. This would give
holders of the outstanding series of debt at these entities the
right to accelerate repayment of those debts by declaring the
principal amount of the debts to be immediately due and payable
unless NTL obtains waivers or forbearance agreements from
sufficient percentages of its creditors. If that right to
accelerate was exercised, NTL would not have sufficient cash
resources to repay those debts, which could ultimately lead to
voluntary or involuntary bankruptcy proceedings relating to the
entities so affected. In addition, the lenders under NTLs
UK credit facilities have security over the assets of NTLs
UK operating subsidiaries, except for the Diamond and NTL
Triangle groups of companies. In the event that there was an
event of default under those facilities, the lenders could seek
to take control of those assets under applicable UK insolvency
law.

F-12



---



##### 



SOUTH HERTFORDSHIRE UNITED KINGDOM FUND,
LTD.


(A Limited Partnership)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Credit Rating
Downgrades

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

Sale of NTL
Australia

On April 2, 2002, NTL announced that it had
completed the previously announced sale of its Australian
broadcast business to Macquarie Bank for A$850 million
(US$448 million) in an all cash transaction. The net
proceeds from the sale were approximately A$574 million
(US$303 million). At that time, the business bank
debt outstanding totaled A$227 million
(US$119 million).

On April 7, 2002, NTL Delaware loaned
£90 million to NTL (UK) Group Limited, which loan
was funded by the proceeds of the sale of NTL Australia. This
loan is subordinated to NTLs UK credit facilities. The
remaining proceeds of the sale of NTL Australia remain at NTL
Delaware and it is currently anticipated that such proceeds will
form a portion of the consideration to be offered to bondholders
of NTL Delaware and NTL Incorporated in satisfaction of their
claims against NTL Delaware as part of the proposed plan of
reorganization.

(3) 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 reporting
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.

Currency
Exchange Rates

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 (loss)/income in partners (deficit)/capital
and in minority interests (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

F-13



---



##### 



SOUTH HERTFORDSHIRE UNITED KINGDOM FUND,
LTD.


(A Limited Partnership)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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.

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
which 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. The impact on depreciation expense in 2001 from
the reduction in the useful economic life of these assets was
$712,176.

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.

Turnover and
Revenue Recognition

Turnover, which excludes United Kingdom value
added tax, represents the amount receivable in respect of
services provided to customers in each year and is recognized as
follows:

|              |  |                                                                                                                                                                                                                                                                                                                            
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Telephony     |  | Revenue is recognized in respect of services
	provided to customers as the service is used. At the end of each
	quarter adjustments are recorded to defer revenue with respect
	to services invoiced in advance and to accrue for unbilled
	services.                                                                      
|CATV          |  | Revenue is recognized in respect of services
	provided to customers as the service is used. At the end of each
	quarter adjustments are recorded to defer revenue with respect
	to services invoiced in advance and to accrue for unbilled
	services.                                                                      
|Rentals       |  | Revenue is recognized in respect of line rentals
	and rental equipment provided to customers on a straight-line
	basis over the term of the rental agreement. At the end of each
	quarter adjustments are recorded to defer revenue with respect
	to rentals invoiced in advance and to accrue for unbilled rental
	income.
|Installations |  | Installation fees are recognized as revenue
	whenever the cost of installations exceeds the installation fee.
	Where the installation fee exceeds the cost of installation, the
	installation fee is deferred and recognized as revenue over the
	expected life of the contract                                            

F-14



---



##### 



SOUTH HERTFORDSHIRE UNITED KINGDOM FUND,
LTD.


(A Limited Partnership)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Advertising
expense

Advertising expenses are expensed as incurred.
Advertising costs were $774,835, $1,472,866 and $1,148,122 in
2001, 2000 and 1999, 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.

(4) 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 percent of construction costs. Since completion
of construction of each portion of the system, the consulting
fee for the completed portion has been 5 percent 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, 2001, 2000 and
1999 were $1,528,773, $1,423,603 and $1,424,290 respectively.
These amounts were expensed each year.

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 percent to the limited partners and
1 percent 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 percent to the limited partners
and 1 percent to the General Partner until any negative
balances in the limited partners capital accounts are
reduced to zero; 100 percent to the General Partner until
any negative balance in its capital account is reduced to zero;
99 percent to the limited partners and 1 percent to
the General Partner until the balance in the limited
partners capital accounts is equal to their adjusted
capital contribution plus a 12 percent return;
100 percent 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 percent to the limited partners and 25 percent 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, 2001, 2000 and 1999,
reimbursement made by NTL South Herts and the

F-15



---



##### 



SOUTH HERTFORDSHIRE UNITED KINGDOM FUND,
LTD.


(A Limited Partnership)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Partnership to the General Partner or its
affiliates for any allocable direct and indirect expenses
totaled $10,766,997, $11,705,270 and $8,999,513 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, 2001, 2000 and 1999, interest on deferred fees
of $1,126,261, $978,761 and $802,205 respectively, was charged
by an affiliate of the General Partner, and interest on advances
of $102,099, $97,221 and $84,466 respectively, was charged by
the General Partner.

(5) Restructuring Costs

The restructuring charge for the year ended
31 December 2001 relates to 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 provision allocated to NTL (South Herts) includes
employee severance and related costs of $1.4 million and
$0.9 million of contract termination and lease exit costs.

(6) Plant, Property &
Equipment

Plant, property and equipment consists of (in
$000s):

|                                           |                           |             |            |              |  |              |             |             |  |  |             |             | 
|------------------------------------------ | ------------------------- | ----------- | ---------- | ------------ |  | ------------ | ----------- | ----------- |  |  | ----------- | ----------- | 
|                                           |                           | Estimated   |            | December 31, |  | December 31,
|                                           |                           | Useful Life |            | 2001         |  | 2000        
|                                           |                           |             |            |              |  |             
|Cable network & other electronic equipment |                           |             | 3-40 Years |              |  |              | 103,096,046 |             |  |  | 100,413,461 |            
|Freehold buildings                         |                           |             | 40 Years   |              |  |              | 3,284,583   |             |  |  | 3,357,485   |            
|Office equipment and other fixed assets    |                           |             | 3-10 Years |              |  |              | 3,099,388   |             |  |  | 3,080,323   |            
|                                           |                           |             |            |              |  |              |             |             |  |  |             |            
|                                           | Total Operating Equipment |             |            |              |  |              |             | 109,480,017 |  |  |             | 106,851,269 | 
|Construction in progress                   |                           |             |            |              |  |              | 1,198,256   |             |  |  | 1,209,314   |            
|                                           |                           |             |            |              |  |              |             |             |  |  |             |            
|                                           |                           |             |            |              |  |              | 110,678,273 |             |  |  | 108,060,583 |            
|Accumulated depreciation                   |                           |             |            |              |  |              | (51,716,191 | )           |  |  | (37,994,401 | )          
|                                           |                           |             |            |              |  |              |             |             |  |  |             |            
|                                           |                           |             |            |              |  |              | 58,962,082  |             |  |  | 70,066,182  |            
|                                           |                           |             |            |              |  |              |             |             |  |  |             |            

(7) 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.

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 could 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

F-16



---



##### 



SOUTH HERTFORDSHIRE UNITED KINGDOM FUND,
LTD.


(A Limited Partnership)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

facility at December 31, 2000 was
£14,475,500 and this amount was all drawn under
Facility B. The facility was repayable in equal quarterly
installments ending on December 31, 2003. At
December 31, 2000, the sterling LIBOR was 5.90%.

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. Such support may not continue, at least in the
short term (see Note 2).

The South Herts Credit Agreement contained
various covenants including financial covenants such as a
cumulative revenue test, bank debt ratio, interest cover ratio,
a fixed charges ratio and a pro-forma debt service ratio and
other covenants such as restrictions on disposals and on the
creation of indebtedness and encumbrances. The South Herts
Credit Agreement also included a restriction on the payment of
dividends which provided that dividends or distributions in
respect of its issued share capital and payments in respect of
certain intercompany loans could not be made prior to
December 31, 1997. Such payments were permitted thereafter
only if the bank debt ratio for the previous two accounting
quarters was less than 5.5:1 and no event of default or
potential event of default had occurred and continued at such
time and the payment of such dividend or distribution did not
give rise to an event of default or potential default.

The South Herts Credit Agreement contained
certain events of default including non-payment of amounts due
under the South Herts Credit Agreement, breaches of
representations and covenants (including financial ratios)
contained in the South Herts Credit Agreement, cross-default to
certain other indebtedness of NTL South Herts, certain
bankruptcy and insolvency events and certain changes of
ownership.

The obligations of NTL South Herts under the
South Herts Credit Agreement were secured by first fixed and
floating charges over all of the assets of NTL South Herts. In
addition, there was a pledge of all of the share capital of NTL
South Herts given by NTL (CWC) and the Partnership as
additional security for the facility.

(8) 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 the Partnership and its United Kingdom subsidiary,
NTL South Herts, have 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.

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

F-17



---



##### 



SOUTH HERTFORDSHIRE UNITED KINGDOM FUND,
LTD.


(A Limited Partnership)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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:

|                               |                                 |      |            |           |  |  |            |            | 
|------------------------------ | ------------------------------- | ---- | ---------- | --------- |  |  | ---------- | ---------- | 
|                               |                                 | 2001 |            | 2000     
|                               |                                 |      |            |          
|Deferred tax liabilities:      |                                 |      |            |           |  |  |            |           
|                               | Depreciation                    |      | $          | 2,890,447 |  |  | $          | 8,028,357  | 
|                               |                                 |      |            |           |  |  |            |           
|Total deferred tax liabilities |                                 |      | 2,890,447  |           |  |  | 8,028,357  |           
|                               |                                 |      |            |           |  |  |            |           
|Deferred tax assets:           |                                 |      |            |           |  |  |            |           
|                               | Short term timing differences   |      |            | 893,162   |  |  |            |           | 
|                               | Net operating loss carryforward |      |            | 9,790,823 |  |  |            | 12,709,932 | 
|Valuation allowance            |                                 |      | (7,793,538 | )         |  |  | (4,681,575 | )         
|                               |                                 |      |            |           |  |  |            |           
|Net deferred tax assets        |                                 |      | 2,890,447  |           |  |  | 8,028,357  |           
|                               |                                 |      |            |           |  |  |            |           
|Net deferred tax liability     |                                 |      |           |           |  |  |           |           
|                               |                                 |      |            |           |  |  |            |           

At December 31, 2001 NTL South Herts has UK
net operating loss carry forwards of approximately
$47.5 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.

(9) Impact of New
Pronouncements

Effective January 1, 2001, the Partnership
and NTL South Herts adopted FAS No. 133, Accounting
for Derivative Instruments and Hedging Activities, as
amended by FAS Nos. 137 and 138. The new accounting
standard requires that all derivative instruments be recorded on
the balance sheet at fair value. Changes in the fair value of
derivatives are recorded each period in the results of
operations or in other comprehensive income (loss), depending on
whether a derivative is designated as a fair value or cash flow
hedge. The ineffective portion of all hedges will be recognized
in the results of operations. There were no derivative
instruments outstanding at December 31, 2000, therefore the
adoption of this standard had no effect on the financial
position or results of operations.

In June 2001, FASB issued Statements of Financial
Accounting Standards No. 141, Business Combinations
(FAS 141), and No. 142, Goodwill and Other
Intangible Assets (FAS 142). FAS 141 requires
that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001. FAS 141
also includes guidance on the initial recognition and
measurement of goodwill and other intangible assets arising from
business combinations completed after June 30, 2001.
FAS 142 prohibits the amortization of goodwill and
intangible assets with indefinite useful lives. FAS 142
requires that these assets be reviewed for impairment at least
annually. Intangible assets with finite lives will continue to
be amortized over their estimated useful lives. Additionally,
FAS 142 requires that goodwill included in the carrying
value of equity investments no longer be amortized.

In August 2001, FASB issued Statement of
Financial Accounting Standards No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets (FAS 144),
which addresses financial accounting and reporting for the
impairment or disposal of long-lived assets and supersedes SFAS
No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of, and the accounting
and reporting provisions of APB Opinion No. 30, Reporting
the Results of Operations for a disposal of a segment of a
business. FAS 144 is effective for fiscal years beginning
after December 15, 2001.

The Partnership and NTL South Herts will adopt
FAS 141, FAS 142 and 144 beginning in the first
quarter of 2002. Upon adoption, it is expected that there will
be no impact on their financial position or results of
operations.

F-18