FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 33-83740
Diamond Cable Communications Plc
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
England and Wales N/A
- --------------------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Diamond Plaza, Daleside Road
Nottingham NG2 3GG, England N/A
- --------------------------------------------- -------------------
(Address of principal executive offices) (Zip code)
44-115-912-2242
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
The number of shares outstanding of the Registrant's Ordinary Shares of
2.5 pence each outstanding as of March 31, 1999 was 59,138,791.
<PAGE>
DIAMOND CABLE COMMUNICATIONS PLC
INDEX
Page
----
INTRODUCTION ....................................................... 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited condensed consolidated statements of
operations--Three months ended
March 31, 1999 and 1998................................. 5
Condensed consolidated balance sheets--
March 31, 1999 and December 31, 1998.................... 6
Unaudited condensed consolidated statement of
shareholders' equity -- Three months
ended March 31, 1999.................................... 7
Unaudited condensed consolidated statements of cash
flows -- Three months ended March 31, 1999
and 1998................................................ 8
Notes to the unaudited condensed consolidated
financial statements.................................... 9
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition................... 13
Item 3. Quantitative and Qualitative disclosures
about market risk....................................... 23
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.......................... 24
SIGNATURES......................................................... 25
2
<PAGE>
INTRODUCTION
Diamond Cable Communications Plc (the "Company") is a public limited
company (with registered number 2965241) incorporated under the laws of England
and Wales. The Company is a holding company which holds all of the shares of (i)
Diamond Cable Communications (UK) Limited (formerly Diamond Cable (Nottingham)
Limited) ("DCL") and its subsidiaries and (ii) a group of companies comprising
East Midlands Cable Group Limited ("EMCG"), East Midlands Cable Communications
Limited and East Midlands Cable Holdings Limited (collectively "LCL"), in both
cases through intermediate holding companies, Diamond Holdings plc and Jewel
Holdings Limited ("Jewel"). References herein to the "Group" refer to the
Company and its subsidiaries, including, since September 27, 1995, LCL.
The Group operates a telecommunications and cable television business
focused on the East Midlands area of England. The Group is currently
constructing a broadband fiber-optic network to serve the approximately 1.2
million homes and an estimated 60,600 businesses within its contiguous franchise
areas. As of March 31, 1999, the Group's cable television and telecommunications
network had passed by civils construction approximately 722,400 homes and an
estimated 31,700 businesses, of which portions of the network passing
approximately 702,700 homes and an estimated 31,600 businesses had been
activated. As of that date, the Group also had approximately 248,100 residential
telephone lines, 131,100 cable television subscribers and 42,400 business
telephone lines. Through that date, (pound)595 million had been invested (at
original cost) in the construction of the network and related systems.
--------------------
THIS DOCUMENT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS, IDENTIFIED
AS SUCH, WITH RESPECT TO WHICH THE COMPANY IS SEEKING TO UTILIZE THE SAFE HARBOR
PROVIDED BY THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THESE
STATEMENTS ARE ACCOMPANIED BY, AND SHOULD BE READ IN CONJUNCTION WITH, AN
EXPLANATION OF IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS.
3
<PAGE>
The Company operates only in the United Kingdom and, accordingly,
publishes its financial statements in pounds sterling. In this Report,
references to "pounds sterling," "(pound)" "pence" or "p" are to the lawful
currency of the United Kingdom and references to "U.S. dollars," "$" or "(cent)"
are to the lawful currency of the United States. Merely for convenience, this
Report contains translations of certain pound sterling amounts into U.S. dollars
at specified rates. These translations should not be construed as
representations that the pound sterling amounts actually represent such U.S.
dollar amounts or could have been or could be converted into U.S. dollars at the
rate indicated or at any other rate. Unless otherwise indicated, the
translations of pounds sterling into U.S. dollars have been made at $1.6140 per
(pound)1.00, the noon buying rate in The City of New York for cable transfers in
pounds sterling as certified for customs purposes by the Federal Reserve Bank of
New York (the "Noon Buying Rate") on March 31, 1999. On May 7, 1999, the Noon
Buying Rate was $1.6350 per (pound)1.00.
On June 16, 1998, the Company announced that all of the holders of its
outstanding ordinary shares of 2.5p each and deferred shares of 25p each had
agreed to exchange all outstanding shares in the Company for newly issued shares
of common stock of NTL Incorporated ("NTL"), an alternative telecommunications
company in the UK, the common stock of which is quoted on NASDAQ (NTLi). On
March 8, 1999, the share exchange (the "Share Exchange") contemplated by the
Share Exchange Agreement, dated as of June 16, 1998, as amended (the "Share
Exchange Agreement"), among NTL and the shareholders of the Company, was
consummated. As a result of this transaction, all of the issued and outstanding
ordinary shares, par value 2.5p per share (the "Ordinary Shares") of the Company
and all of the issued and outstanding deferred shares, par value 25p per share
(the "Deferred Shares," and together with the Ordinary Shares, the "Company
Shares") of the Company were exchanged for shares of NTL's common stock, par
value $.01 per share (the "NTL Common Stock"). As a result of the Share
Exchange, the Company became a wholly-owned subsidiary of NTL.
In connection with provisions in each of the indentures pursuant to
which the Group's debt securities were issued, which require that offers to
repurchase such debt securities be made to holders of such securities at a price
of 101% of their accreted value or principal amount following a "change of
control", the Company commenced offers to repurchase its outstanding debt
securities on April 1, 1999. The offers expired on April 30, 1999. The Company
will pay approximately $105,000 to repurchase the tendered debt securities.
4
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
DIAMOND CABLE COMMUNICATIONS PLC
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31,
------------------------------------------------------
1998 1999 1999
---------------- ---------------- ----------------
(note 1)
(in thousands)
<S> <C> <C> <C>
REVENUE
Business telecommunications.................... (pound) 4,332 (pound) 5,733 $ 9,253
Residential telephone.......................... 9,840 14,406 23,251
Cable television............................... 5,459 7,164 11,563
-------------- ------------- --------
19,631 27,303 44,067
-------------- ------------- --------
OPERATING COSTS AND EXPENSES
Telephone...................................... (3,738) (5,581) (9,008)
Programming.................................... (3,025) (3,932) (6,346)
Selling, general, and
administrative............................... (8,729) (11,023) (17,791)
Depreciation and amortization.................. (9,320) (12,568) (20,285)
Other expenses (note 4) ....................... -- (8,533) (13,772)
-------------- ------------- --------
(24,812) (41,637) (67,202)
-------------- ------------- --------
OPERATING LOSS................................. (5,181) (14,334) (23,135)
Interest income................................ 3,006 2,361 3,811
Interest expense and amortization of debt
discount and expenses........................ (18,959) (23,445) (37,840)
Foreign exchange (losses)/gains, net........... 12,497 (19,996) (32,274)
Unrealized loss on derivative financial
instruments.................................. (1,914) -- --
Realized gain on derivative financial
instruments.................................. 24 -- --
-------------- ------------- --------
Loss before income taxes....................... (10,527) (55,414) (89,438)
Income taxes................................... -- -- --
-------------- ------------- --------
NET LOSS....................................... (pound)(10,527) (pound)(55,414) $(89,438)
============== ============= ========
<FN>
See the accompanying notes to the Unaudited Condensed Consolidated Financial Statements.
</FN>
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
DIAMOND CABLE COMMUNICATIONS PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
AT DECEMBER 31, AT MARCH 31,
---------------- -----------------------------
(UNAUDITED)
1998 1999 1999
---------------- -------------- -----------
(NOTE 1)
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents .......................... (pound)164,738 (pound)263,381 $425,097
Trade receivables (net of allowance
for doubtful accounts of (pound)4,775 at
December 31, 1998 and (pound)4,760 at
March 31, 1999)................................... 9,873 12,346 19,926
Other assets........................................ 2,229 3,515 5,673
Deferred financing costs (less
accumulated amortization of
(pound)4,830 at December 31, 1998 and
(pound)5,424 at March 31, 1999)................... 20,322 19,729 31,843
Property and equipment, net (note 5)................ 465,866 482,658 779,010
Goodwill (less accumulated amortization of
(pound)15,764 at December 31, 1998 and
(pound)16,976 at March 31, 1999).................... 81,196 79,984 129,094
Franchise costs (less accumulated
amortization of (pound)142 at December 31,
1998 and (pound)150 at March 31, 1999)............ 397 389 628
-------------- -------------- -----------
TOTAL ASSETS (pound)744,621 (pound)862,002 $1,391,271
============== ============== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable.................................... (pound)28,514 (pound)27,479 $44,351
Accounts payable deposit (note 7)................... -- 116,596 188,186
Other liabilities................................... 20,411 38,604 62,307
Senior discount notes............................... 592,763 628,463 1,014,339
Senior notes........................................ 201,154 203,154 327,891
Capital lease obligations........................... 7,089 6,482 10,462
Mortgage loan....................................... 2,386 2,366 3,819
Shareholders' equity
Ordinary shares (70,000,000 authorized;
59,138,791 issued at December 31, 1998 and
at March 31, 1999).............................. 1,478 1,478 2,385
Non-voting deferred shares (6 shares authorized
and issued at December 31, 1998 and March 31,
1999)............................................. -- -- --
Additional paid-in-capital........................ 134,466 134,466 217,028
Accumulated other comprehensive (loss)/profit..... (1,367) 601 970
Accumulated deficit............................... (242,273) (297,687) (480,467)
-------------- -------------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.......... (pound)744,621 (pound)862,002 $1,391,271
============== ============== ===========
<FN>
See the accompanying notes to the Unaudited Condensed Consolidated Financial Statements.
</FN>
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
DIAMOND CABLE COMMUNICATIONS PLC
UNAUDITED CONDENSED CONSOLIDATED STATEMENT
OF SHAREHOLDERS' EQUITY
ACCUMULATED
NON-VOTING ADDITIONAL OTHER TOTAL
DEFERRED PAID- COMPREHENSIVE ACCUMULATED SHAREHOLDERS'
ORDINARY SHARES SHARES IN-CAPITAL (LOSS)/GAIN DEFICIT DEFICIT
----------------------- ---------- ------------- ------------- ---------------- ----------------
(IN THOUSANDS EXCEPT SHARE DATA)
Number Number
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JANUARY 1, 1999..... 59,138,791 (pound)1,478 6 -- (pound)134,466 (pound)(1,367) (pound)(242,273) (pound)(107,696)
Unrealized gain on securities.. -- -- -- -- -- 1,968 -- 1,968
Net loss....................... -- -- -- -- -- -- (55,414) (55,414)
BALANCE AT MARCH 31, 1999...... 59,138,791 (pound)1,478 6 -- (pound)134,466 (pound) 601 (pound)(297,687) (pound)(161,142)
<FN>
- ---------------
See the accompanying notes to the Unaudited Condensed Consolidated Financial Statements.
</FN>
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
DIAMOND CABLE COMMUNICATIONS PLC
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31,
-----------------------------------------------
1998 1999 1999
--------------- --------------- ---------
(NOTE 1)
(IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss....................................................... (pound)(10,527) (pound)(55,414) $(89,438)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization................................ 9,320 12,568 20,285
Unrealized foreign exchange losses/(gains)................... (12,552) 19,946 32,192
Accretion of Senior Note discount............................ 15,247 17,755 28,657
Provision for losses on accounts receivable.................. 444 (14) (22)
Amortization of deferred financing costs..................... 484 593 957
Change in operating assets and liabilities:
Change in trade receivables................................ (691) (2,459) (3,969)
Change in other assets..................................... 464 (1,287) (2,077)
Change in accounts payable................................. 1,469 2,151 3,472
Change in accounts payable deposit......................... - 116,596 188,186
Change in other liabilities................................ 4,040 18,193 29,363
--------------- --------------- ---------
Net cash provided by operating activities...................... 7,698 128,628 207,606
--------------- --------------- ---------
Cash flows from investing activities:
Cash invested in property and equipment...................... (30,091) (31,160) (50,292)
Proceeds from disposition of assets.......................... 14 -- --
--------------- --------------- ---------
Net cash used in investing activities.......................... (30,077) (31,160) (50,292)
--------------- --------------- ---------
Cash flows from financing activities:
Proceeds of issue of debt.................................... 202,381 -- --
Debt financing costs......................................... (6,225) -- --
Repayment of mortgage loan................................... (10) (20) (32)
Capital element of capital lease repayments.................. (588) (773) (1,248)
--------------- --------------- ---------
Net cash provided by/(used in)financing activities............. 195,558 (793) (1,280)
--------------- --------------- ---------
Net increase in cash and cash equivalents...................... 173,179 96,675 156,034
Cash and cash equivalents at beginning of period............... 75,680 164,738 265,887
Effect of exchange rate changes on cash and cash equivalents... (2,041) 1,968 3,176
--------------- --------------- ---------
Cash and cash equivalents at end of period..................... (pound)246,818 (pound)263,381 $425,097
=============== =============== =========
<FN>
See the accompanying notes to the Unaudited Condensed Consolidated Financial Statements.
</FN>
</TABLE>
8
<PAGE>
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
Diamond Cable Communications Plc (the "Company") owns and operates
cable television and telecommunications systems through its subsidiaries. The
unaudited consolidated financial statements of the Company and its subsidiaries
(the "Group") have been prepared in accordance with U.S. generally accepted
accounting principles and the rules and regulations of the Securities and
Exchange Commission (the "SEC"). Accordingly, certain information and footnote
disclosures normally included in consolidated financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. The consolidated financial statements are stated in pounds sterling
((pound)). Merely for convenience the consolidated financial statements contain
translations of certain pound sterling amounts into U.S. dollars at $1.6140 per
(pound)1.00, the noon buying rate in the City of New York for cable transfers in
pounds sterling as certified for customs purposes by the Federal Reserve Bank of
New York on March 31, 1999.
2. RESPONSIBILITY FOR INTERIM FINANCIAL STATEMENTS
The financial statements as of and for the periods ended March 31, 1999
and 1998 are unaudited. However, in the opinion of the management, such
statements include all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation of the results for the periods
presented. The results of operations for any interim period are not necessarily
indicative of the results for the full year. The interim financial statements
should be read in conjunction with the financial information included in the
Company's 1998 Annual Report on Form 10-K filed with the SEC.
3. COMPREHENSIVE LOSS
Comprehensive loss for the three-month periods to March 31, 1998 and
1999 is shown below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
------------------------------------------------
1998 1999 1999
--------------- --------------- ---------
(NOTE 1)
(IN THOUSANDS)
<S> <C> <C> <C>
Net loss.......................................... (pound)(10,527) (pound)(55,414) $(89,438)
Other comprehensive (loss)/profit net of tax:-
Unrealized (loss)/profit on securities.......... (2,041) 1,968 3,176
--------------- --------------- ---------
Comprehensive loss................................ (pound)(12,568) (pound)(53,446) $(86,262)
=============== =============== =========
</TABLE>
4. OTHER EXPENSES
9
<PAGE>
Other expenses of (pound)8.5 million consist of costs incurred in
connection with the Share Exchange Agreement, including fees of (pound)7.4
million paid to Goldman, Sachs & Co. and Columbia Management for their role as
joint financial advisors to the Company in examining potential business
opportunities and other strategic alternatives leading up to the Share Exchange.
5. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
LAND AND CABLE OFFICE MOTOR
BUILDINGS NETWORK EQUIPMENT VEHICLES TOTAL
------------ -------------- ------------ ---------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ACQUISITION COSTS
Balance at January 1, 1999....... (pound)7,483 (pound)538,472 (pound)11,637 (pound)961 (pound)558,553
Additions........................ 141 26,761 1,075 164 28,141
Dispositions..................... -- -- -- -- --
------------ -------------- ------------ ---------- --------------
Balance at March 31, 1999........ 7,624 565,233 12,712 1,125 586,694
------------ -------------- ------------ ---------- --------------
ACCUMULATED DEPRECIATION
Balance at January 1, 1999....... 680 85,385 6,373 249 92,687
Charge for period................ 58 10,642 584 65 11,349
Dispositions..................... -- -- -- -- --
------------ -------------- ------------ ---------- --------------
Balance at March 31, 1999........ 738 96,027 6,957 314 104,036
------------ -------------- ------------ ---------- --------------
MARCH 31, 1999 NET BOOK VALUE.... 6,886 469,206 5,755 811 482,658
============ ============== ============ ========== ==============
DECEMBER 31, 1998 NET BOOK VALUE (pound)6,803 (pound)453,087 (pound)5,264 (pound)712 (pound)465,866
============ ============== ============ ========== ==============
</TABLE>
6. COMMITMENTS AND CONTINGENCIES
The Company is obligated under the terms of its existing licenses, and
under the milestone requirements of its local delivery licenses ("LDLs"), to
construct cable systems passing a predetermined number of premises. Should the
Company fail to achieve these milestones, without license modifications, the
Director General could commence proceedings to require compliance. Similarly,
the Independent Television Commission ("ITC") may commence proceedings to
require compliance with the build milestones in the LDLs. If the Company is
unable to comply, its licenses in respect of which milestones have not been met
could be revoked, which could have a material adverse effect on the Company.
10
<PAGE>
7. JOINT PURCHASING ALLIANCE AGREEMENT
The Company and NTL entered into a Joint Purchasing Alliance Agreement
(the "Alliance Agreement") on March 5, 1999, pursuant to which the Company acts
as purchasing agent on behalf of a number of subsidiaries of NTL. Under the
terms of the Alliance Agreement, on March 8, 1999, the Company received a
deposit of purchasing funds of (pound)137 million from various subsidiaries of
NTL to act as agent for capital purchases. Funds held by the Company under the
Alliance Agreement are recorded on the balance sheet as Cash and Cash
Equivalents and Accounts Payable-Deposits.
8. SHARE EXCHANGE AGREEMENT
On June 16, 1998, the Company announced that all of the holders of its
outstanding ordinary shares of 2.5p each and deferred shares of 25p each had
agreed to exchange all outstanding shares in the Company for newly issued shares
of common stock of NTL. On March 8, 1999, the Share Exchange contemplated by the
Share Exchange Agreement, among NTL and the shareholders of the Company, was
consummated. As a result of this transaction, all of the Company Shares were
exchanged for NTL Common Stock, and the Company became a wholly-owned subsidiary
of NTL.
In connection with provisions in each of the indentures pursuant to
which the Group's debt securities were issued, which require that offers to
repurchase such debt securities be made to holders of such securities at a price
of 101% of their accreted value or principal amount following a "change of
control", the Company commenced offers to repurchase its outstanding debt
securities on April 1, 1999. The offers expired on April 30, 1999. The Company
will pay approximately $105,000 to repurchase the tendered debt securities.
9. SUMMARIZED FINANCIAL INFORMATION
On February 6, 1998, Diamond Holdings plc ("Diamond Holdings"), a
subsidiary of the Company, issued (pound)135,000,000 in principal amount of its
10% Senior Notes due February 1, 2008 and $110,000,000 in principal amount of
its 91/8% Senior Notes due February 1, 2008 (together, the "1998 Notes".) The
1998 Notes have been fully and unconditionally guaranteed by the Company as to
principal, interest and other amounts due. Net proceeds received by Diamond
Holdings amounted to approximately (pound)195 million after issuance costs of
approximately (pound)7 million.
11
<PAGE>
The following table presents summarized consolidated financial
information for Diamond Holdings as of and for the three months ended March 31,
1999. This summarized financial information is being provided pursuant to
Section G of Topic 1 of Staff Accounting Bulletin No. 53-- "Financial Statement
Requirements in Filings Involving the Guarantee of Securities by a Parent". The
Company will continue to provide such summarized financial information for
Diamond Holdings for as long as the 1998 Notes remain outstanding and guaranteed
by the Company.
Diamond Holdings plc (note a)
--------------------
Year ended Three months ended
December 31, 1998 March 31, 1999
------------------- -------------------
(in thousands)
SUMMARIZED CONSOLIDATED INCOME
STATEMENT INFORMATION
Revenue............................ (pound) 88,756 (pound)27,303
Operating costs and expenses....... 105,914 33,646
Net loss for the period............ (pound)(87,556) (pound)(47,078)
==================== ===================
December 31, 1998 March 31, 1999
----------------- --------------
(in thousands)
SUMMARIZED CONSOLIDATED BALANCE
SHEET INFORMATION
Fixed and noncurrent assets........ (pound)553,740 (pound)569,140
Current assets..................... 148,415 17,022
-------------------- -------------------
Total assets....................... (pound)702,155 (pound)586,162
==================== ===================
Current liabilities................ (pound)48,030 (pound)50,933
Noncurrent liabilities............. 849,750 776,886
Shareholders deficit............... (195,625) (241,657)
-------------------- -------------------
Total liabilities and
shareholders interest.............. (pound)702,155 (pound)586,162
==================== ===================
(a) Diamond Holdings was incorporated on December 15, 1997 and is a wholly-
owned, direct subsidiary of Diamond Cable Communications Plc. On January
16, 1998 Diamond Holdings became the intermediate holding company which
holds all of the shares of all Group companies. The Summarized Financial
Information shows operating results as if Diamond Holdings became the
intermediate holding company on January 1, 1998.
12
<PAGE>
DIAMOND CABLE COMMUNICATIONS PLC
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
The Group expended net cash to fund investing activities of
(pound)134.3 million and (pound)31.2 million in the year ended December 31, 1998
and the first three months of 1999, respectively. The Group's investing
activities consisted almost exclusively of the ongoing construction of the
network. Net cash provided by financing activities in the year ended December
31, 1998 was (pound)193.1 million and in the first three months of 1999 net cash
used in financing activities was (pound)0.8 million. The Group's net cash
provided by operating activities was (pound)31.4 million in the year ended
December 31, 1998 and (pound)128.7 million in the three months to March 31,
1999, of which (pound)116.6 million relates to funds received in connection with
the Alliance Agreement. The Group's cash and funding requirements historically
have been met principally through the issuance of the Company's senior discount
notes in September 1994, December 1995 and February 1997 (collectively, the
"Discount Notes"), as well as from equity capital, advances from its
shareholders, and from bank and lease financing. In February 1998, a subsidiary
of the Company, Diamond Holdings, issued the 1998 Notes, raising net proceeds of
approximately (pound)195 million. The 1998 Notes are guaranteed by the Company
as to payment of principal, interest and any other amounts due. In connection
with the issuance of the 1998 Notes, the Group terminated its existing bank
facility.
The further development and construction of the Group's cable
television and telecommunications network will require substantial capital
investment. The Group is obligated by the milestones in its telecommunications
licenses and its LDLs to construct and activate a network passing an aggregate
of 1,021,894 premises within prescribed time periods. Failure by the Group to
meet its milestones could potentially subject the Group to enforcement orders
from OFTEL or the ITC, which could lead to revocation of the relevant licenses
or a shortening of an LDL period or fines. The Group has met the final milestone
obligations under all of its telecommunications licenses except in respect of
the Leicester and Loughborough franchise. The Group met the required quarterly
milestone obligation under its telecommunications license for the Leicester and
Loughborough franchise as at March 31, 1999. Principally because of delays by
the Department of Trade and Industry in granting the Group a national
telecommunications license, and consequent delays in the commencement of
construction, the Group did not meet its annual milestones in six of its seven
LDL franchises at the end of 1997, although construction has now commenced in
all LDL franchises. Following an application by the Group to the ITC, on March
26, 1998 the ITC formally modified the annual build milestone obligations in all
of the Group's LDL franchise areas except Vale of Belvoir. The Group has met
13
<PAGE>
the modified milestones in all of its LDL franchises at December 31, 1998,
except for its Ravenshead franchise.
The Company expects that the Group's residential cable network will
extend approximately 14,300 kilometers (plus 920 kilometers to interconnect the
residential build) and pass approximately 1.2 million homes once completed. The
Group expects the network to be substantially completed by the end of 2004. The
Company currently estimates that the additional capital expenditures from April
1, 1999 required for the Group to substantially complete construction sufficient
to satisfy its aggregate milestone obligations of approximately 1.02 million
premises (including estimated subscriber connection expenses) will be
approximately (pound)282 million, although further capital expenditures would be
required to substantially complete the network. These expenditures could vary
significantly depending on the number of customers actually connected to the
network, the availability of construction resources, the impact of competition
from other cable or telecommunications operators or television delivery
platforms, the pace of the Group's construction program and other factors,
including those described below.
At March 31, 1999, the Group had constructed and activated a network
comprising approximately 72% of its aggregate milestones. The Group estimates
that existing cash resources and estimated future cash flows from operations
will be sufficient to complete the construction and activation of its network to
almost 84% of its aggregate final milestones, which level the Group estimates it
will achieve by the end of the second quarter of 2000. Thereafter, the Group
will be required to obtain further debt and/or equity financing to complete
construction sufficient to satisfy its aggregate milestones. To the extent that
(i) the amounts required to construct the Group's network to meet its milestones
exceed its estimates, (ii) the Group's cash flow does not meet expectations or
(iii) the Group continues its construction of the network beyond its milestone
obligations, the amount of further debt and/or equity financing required will
increase. There can be no assurance that any such debt or equity financing will
be available to the Group on acceptable commercial terms or at all.
The foregoing information with regard to expected completion times,
future capital expenditures and the sufficiency of funding is forward-looking in
nature. Due to a number of factors, including those identified in the preceding
paragraph and below, actual results may differ materially from expected results.
In particular, the anticipated further funding requirements will depend upon the
Group's cash flow which, in turn, will depend upon a number of variables,
including revenue generated from business telecommunications, residential
telephone and cable television services, churn, expenses such as programming
costs and interconnect charges, network construction and development
expenditures and financing costs. Adverse developments in any of these or other
areas could adversely affect the Group's cash flow. Moreover, there can be no
assurance that (i) conditions precedent to the availability of funds under any
future debt instruments will be satisfied when funds are
14
<PAGE>
required; (ii) the Group will be able to generate sufficient cash
from operations to meet any unfunded portion of its capital requirements when
required; (iii) the cost of constructing and activating the network will not
increase significantly; (iv) the Group will not acquire additional franchise
areas, which would require additional capital expenditures; or (v) the Group
will not incur losses from foreign currency transactions or its exposure to
foreign currency exchange rate fluctuations, each of which factors would
increase the Group's funding needs.
In connection with change of control provisions in each of the
indentures pursuant to which the Group's debt securities were issued, which
require that offers to repurchase such debt securities be made to holders of
such securities at a price of 101% of their accreted value or principal amount,
the Company commenced offers to repurchase its outstanding debt securities on
April 1, 1999. The offers expired on April 30, 1999. The Company will pay
approximately $105,000 to repurchase the tendered debt securities.
SELECTED OPERATING DATA
The following table sets forth certain data concerning the Group's
franchises at and for the years ended December 31, 1997 and 1998 and at and for
the three-month period ended March 31, 1999.
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
--------------------------- ------------
1997 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
Homes passed by civils construction(1)............ 536,110 699,682 722,417
Homes activated(2)................................ 508,801 677,407 702,696
Homes marketed(3)................................. 405,787 584,457 603,757
Student services rooms marketed(4)................ 1,805 9,908 9,915
BUSINESS TELECOMMUNICATIONS
Business customers accounts....................... 5,723 7,649 8,511
Business lines connected.......................... 27,124 37,473 42,364
Private circuits(5)............................... 258 331 511
Average lines per business(6)..................... 4.7 4.9 5.0
Average monthly revenue per line(7)(8)............ (pound)46.26 (pound)43.07 (pound)42.04
Pro-forma average monthly revenue per line(8)..... (pound)46.26 (pound)43.26 (pound)42.04
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
--------------------------- ------------
1997 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
RESIDENTIAL TELEPHONE(4)
Residential lines connected....................... 157,171 232,059 248,132
Penetration rate of homes marketed(9)............. 38.6% 39.0% 40.4%
Average monthly revenue per line(8)(10)........... (pound)18.75 (pound)18.82 (pound)19.54
Pro-forma average monthly revenue per line(8)..... (pound)18.75 (pound)18.89 (pound)19.54
Churn(11)......................................... 16.3% 13.5% 11.8%
CABLE TELEVISION
Basic service subscribers......................... 83,793 117,290 131,056
Penetration rate of homes marketed(12)............ 20.6% 20.1% 21.7%
Average monthly revenue per subscriber(13)........ (pound)19.84 (pound)19.46 (pound)18.38
Churn(11)......................................... 32.7% 22.4% 15.2%
</TABLE>
- --------------------
(1) Homes passed by civils is the number of homes (excluding student services
rooms) that have had ducting buried outside.
(2) Homes activated is the number of homes (excluding student services rooms)
that are capable of receiving cable service without further extension of
transmission lines, apart from the final connection to the home.
(3) Homes marketed is the number of homes activated (excluding student services
rooms) for which the initial marketing phase (including door to door direct
marketing) has been completed.
(4) During 1997 the Group began to provide telephone services and internet
access to students at a number of large educational establishments in its
franchise area. Academic terms make this business seasonal in nature. In
order to fairly present the results, the Company has adopted the following
policy: (i) rental revenue is recognized evenly over a full twelve month
period (or the balance of the period to the start of the next academic year
if shorter), (ii) call revenue is recognized in the month in which it is
earned and is incorporated in residential telephone average monthly revenue
per line, (iii) a student services line is recognized as the equivalent of
3/4 of a residential line, (iv) each student room at which service is
available is treated as a home marketed and incorporated in the calculation
of residential telephone penetration and, (v) any net decrease in the
number of students taking the service between one academic year and another
is ignored for the purposes of calculating residential telephone churn.
(5) Private circuits are point-to-point customer specific connections for which
a fixed annual rental charge is made.
(6) Average lines per business account is calculated by dividing the number of
business lines connected on the given date by the number of business
customer accounts on such date.
(7) The average monthly business telecommunications revenue per line is
calculated by dividing (i) business telecommunications line and equipment
rental, outgoing call charges and incoming call charges (including revenue
from private circuits) for the period by (ii) the average number of
business telecommunications lines and private circuits (calculated as a
simple average of the number of subscribed lines and private circuits at
the end of each month during the period) and dividing that amount by 12
(for the years ended December 31, 1997 and 1998), or by three (for the
three months ended March 31, 1999).
(8) The calculation of the average monthly revenue per line (for both
residential telephone and business telecommunication revenues) for the year
to December 31, 1998 reflects the reduction in revenues stemming from
rebates to BT on incoming termination revenues relating in part to 1995 and
1996 but recorded against revenues in 1998. The rebates were calculated in
accordance with revised interconnect agreements with BT that were made
effective retroactively from April 1995. The pro-forma average monthly
revenue per line (for both residential telephone and business
telecommunications revenues) gives effect to the revised interconnect
agreements as if they had been in effect from April 1995 and allocates to
each period the portion of the rebates that relates to such period.
(9) Penetration rate of homes marketed is calculated by dividing the number of
residential lines, including student services lines recognized at the
equivalent of 3/4 of a residential line connected on the given date by the
total number of homes marketed and student services rooms marketed as of
such date, expressed as a percentage.
(10) The average monthly revenue per residential telephone line is calculated by
dividing (i) line and equipment rental, outgoing call charges and incoming
call charges for the period by (ii) the average number of residential
telephone lines (calculated as a simple average of the number of subscribed
lines at the end of each month during the period) and dividing that amount
by 12 (for the years ended December 31, 1997 and 1998), or by three (for
the three months ended March
16
<PAGE>
31, 1999). Call revenue from student services lines is recognized in the
month in which it is earned and is incorporated in residential telephone
average monthly revenue per line, with each student services line
recognized as the equivalent of 3/4 of a residential line.
(11) Churn is calculated by dividing net disconnections (total disconnections
less the number of disconnected accounts for which service is later
restored) in a period by the average number of subscribers in the period
(calculated as a simple average of the number of subscribers at the end of
each month during the period). Churn for the three months ended March 31,
1999 is annualized by multiplying the amount as calculated above by four.
(12) Penetration rate of homes marketed is calculated by dividing the number of
homes receiving basic cable television on the given date by the total
number of homes marketed as of such date, expressed as a percentage.
(13) The average monthly revenue per cable television subscriber is calculated
by dividing total cable television subscriber revenues (excluding
installation revenues) for the period by the average number of cable
television subscribers (calculated as a simple average of the number of
basic service subscribers at the end of each month during the period) and
dividing that amount by 12 (for the years ended December 31, 1997 and
1998), or by three (for the three months ended March 31, 1999).
RESULTS OF OPERATIONS FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1998 AND 1999
The Group continued to experience increases in its subscribers,
revenues and expenses during the three-month period ended March 31, 1999. In
general, these increases were attributable to the Group's continued network
construction, activation and marketing of new homes and businesses. Homes passed
by civils construction increased by 22,735 (3.2%) and homes activated increased
by 25,289 (3.7%) from December 31, 1998 to March 31, 1999. The Group has met the
final milestone obligations under all of its telecommunications licences except
in respect of the Leicester and Loughborough franchise. The Group met the
required quarterly milestone obligation under its telecommunications license for
the Leicester and Loughborough franchise as at March 31, 1999.
Sales performance has continued to be affected by increased competitive
activity, in particular from BT, CWC, BSkyB and, in the relevant period, Ionica.
At March 31, 1999, residential telephone line penetration increased to 40.4%,
compared to 39.0% as at December 31, 1998. Cable television penetration at March
31, 1999 also increased to 21.7% from 20.1% at December 31, 1998. Penetration
rates for residential telephone and cable television were 38.5% and 19.8%,
respectively, at March 31, 1998.
REVENUE
For the three months ended March 31, 1999, total revenues were
(pound)27.3 million, a 39% increase over total revenues of (pound)19.6 million
for the comparable period in 1998. This growth is attributable to increases in
revenues in all three of the Group's primary lines of business.
Business Telecommunications. Business telecommunications revenues were
(pound)5.7 million for the three months ended March 31, 1999 compared to
(pound)4.3 million for the comparable period in 1998 representing
17
<PAGE>
an increases of 32%. The growth in reported revenues is due primarily to an
increase in the number of business lines installed from 29,571 at March 31, 1998
to 42,364 at March 31, 1999, an increase of 43%. The average monthly revenue per
line decreased from (pound)45.88 in the three months to March 31, 1998 to
(pound)42.04 in the comparable period in 1999. The decrease was due to a
combination of, (i) continued increases in centrex lines which have a lower
average revenue per line than other business customer lines (centrex services
represented 46.2% and 49.2% of the total number of business lines at March 31,
1998 and March 31, 1999, respectively) and (ii) reductions in certain tariffs in
response to price reductions by competitors, offset in part by increased call
usage per line. The Company may lower prices in the future if necessary for
competitive reasons.
Residential Telephone. Residential telephone revenues were (pound)14.4
million for the three months to March 31, 1999 compared to (pound)9.8 million
for the comparable period in 1998, representing an increase of 46%. The growth
in residential telephone revenue is due primarily to a 40% increase in the
number of residential telephone lines from 177,612 at March 31, 1998 to 248,132
at March 31, 1999. Average monthly revenue per line was (pound)18.77 in the
three-month period to March 31, 1998 and (pound)19.54 in the comparable period
in 1999. The increase in the level of average revenues was largely due to
increased call usage which offset reductions in call and incoming termination
tariffs during 1998 and the first three months of 1999. The churn rate
(annualized) reduced to 11.8% for the three months to March 31, 1999 from 12.6%
in the comparable period in 1998.
Cable Television. Cable television revenues increased 31% from
(pound)5.5 million for the three months to March 31, 1998 to (pound)7.2 million
in the comparable period in 1999. This growth in cable television revenue was
primarily due to an increase in the number of the Company's cable television
subscribers which rose 45% from 90,498 at March 31 1998 to 131,056 at March 31,
1999. The Company's average monthly revenue per subscriber, however, decreased
from (pound)19.95 for the three months to March 31, 1998 to (pound)18.38 for the
comparable period in 1999. The decrease in average revenue per subscriber is
primarily due to the introduction of new, lower-priced program packages during
1997 and 1998.
The Group's churn rates fell substantially to 15.2% for the three
months to March 31, 1999 as compared to 29.2% in the comparable period in 1998.
The Group believes that the reduction in churn this year is largely the result
of new policies introduced by the Group to reduce churn, including that it now
requires subscribers to pay an installation fee in connection with new
residential services. In addition, the Group introduced other policies which
contributed to the reducing trend in churn between comparable periods including
improvements in the management and quality of the sales force, the introduction
of more program packaging choice for customers and increased focus on the
retention of customers.
18
<PAGE>
OPERATING COSTS AND EXPENSES
Telephone expenses, consisting principally of interconnect charges
payable to BT, Mercury, Energis and Global One were (pound)5.6 million in the
three-month period to March 31, 1999, and (pound)3.7 million in the three-month
period to March 31, 1998. As a percentage of combined business
telecommunications and residential telephone revenues, these direct costs
remained relatively stable at 28% in the three-month period to March 31, 1999,
compared to 27% in the comparable period in 1998.
Direct costs for cable television programming, which generally depend
on the number of subscribers and per-subscriber rates charged by programming
suppliers, increased from (pound)3.0 million in the three-month period to March
31, 1998, to (pound)3.9 million in the comparable period in 1999. As a
percentage of cable television revenues, these direct costs were 55% both in the
three-month period ended March 31, 1998 and in the comparable period in 1999.
Selling, general and administrative expenses as a percentage of total
revenues in the three-month period to March 31, 1998 were 44% compared to 40% in
the comparable period in 1999. These costs increased by 26%, from the
three-month period to March 31, 1998 to the comparable period in 1999. The
increase was due to higher administration and sales force costs associated with
the expansion of the Company's business, together with additional LDL cash bid
payments which commenced in 1999.
Depreciation and amortization expenses increased by 35% from the
three-month period to March 31, 1998 to the comparable period in 1999. This
increase was attributable to the increasing size of the Company's network.
Other expenses of (pound)8.5 million in the three month period to March
31, 1999 relate to costs incurred in connection with the Share Exchange
Agreement, including fees of (pound)7.4 million paid to Goldman, Sachs & Co. and
Columbia Management for their role as joint financial advisors to the Company in
examining potential business opportunities and other strategic alternatives
leading up to the Share Exchange.
INTEREST INCOME/EXPENSE
Interest expense was (pound)23.4 million in the three-month period
ended March 31, 1999, compared to (pound)19.0 million in the comparable period
in 1998. The increase is due primarily to the accretion on the Discount Notes of
(pound)17.8 million in the three-month period to March 31, 1999 compared to
(pound)15.4 million in the comparable period in 1998 and interest on the 1998
Notes of (pound)4.9 million in the three-month period to March 31, 1999,
compared to (pound)3.0 million in the comparable period in 1998. In addition,
amortization of debt financing costs was (pound)0.6 million and other interest
expense was (pound)0.2 million in the three months to March 31, 1999, compared
to (pound)0.4 million and (pound)0.2 million, respectively, in the three months
to March 31, 1998. Interest received was (pound)2.4 million in the
19
<PAGE>
three months to March 31, 1999 compared to (pound)3.0 million in the three
months to March 31, 1998.
FOREIGN EXCHANGE
A substantial portion of the Group's existing debt obligations are
denominated in U.S. dollars, while the Group's revenues and accounts are
generated and stated in pounds sterling. Foreign currency translation gains and
losses, except for unrealized gains and losses on available-for-sale securities,
are reported as part of the profit or loss of the Group. In the three months
ended March 31, 1998, the Group recognized net foreign exchange gains of
(pound)12.5 million, primarily due to the unrealized gain on translation of its
liability on the Discount Notes. Because of changes in prevailing rates, during
the three months ended March 31, 1999, the Group recorded a net foreign exchange
loss of (pound)20.0 million primarily due to the unrealized losses on
translation of its liability on the Discount Notes and 1998 Notes.
DERIVATIVE FINANCIAL INSTRUMENTS
Realized gains on derivative financial instruments of (pound)24,000 in
the three months to March 31, 1998 consists of the mark-to-market closing
valuation of an interest rate swap commitment which was closed in March 1998.
The Company entered into a foreign exchange forward contract on June
23, 1997 for settlement on June 25, 1998 to sell (pound)50 million at a rate of
$1.6505 to (pound)1. The Company also entered into a foreign exchange forward
contract on June 27, 1997 for settlement on July 1, 1998 to sell (pound)50
million at a rate of $1.6515 to (pound)1. On June 16, 1998 two offsetting
agreements were entered into at rates of $1.6326 and $1.6322 to (pound)1. The
offsetting contracts were settled on June 17, 1998 with a payment of (pound)1.1
million to the Company. An unrealized loss of (pound)1.9 million was recorded in
the three months to March 31, 1998 on these two contracts. The Company continues
to monitor conditions in the foreign exchange market and may from time to time
enter into foreign currency contracts based on its assessment of foreign
currency market conditions and their effect on the Company's operations and
financial condition. Therefore, changes in currency exchange rates may continue
to have a material effect on the results of operations of the Group and may
materially affect the Company's ability to satisfy its obligations, including
obligations under outstanding debt instruments, as they become due.
NET LOSS
As a result of the foregoing factors, the Group had net losses of
(pound)55.4 million in the three-month period ended March 31, 1999, compared to
net losses of (pound)10.5 million in the comparable period of 1998.
20
<PAGE>
INFORMATION SYSTEMS - YEAR 2000
The future operations of the Group depend on its network infrastructure
and certain other systems performing correctly over the change of millennium and
on subsequent dates. The correct handling of date information is therefore
essential and detailed test programs are underway for all crucial
telecommunications and cable television network and systems infrastructure.
The Group has had an overall program in place since 1997. The Group has
split its business into the following areas, which encompass IT systems and
non-IT systems containing embedded technology:
o Network and switches
o MIS
o Network construction
o Facilities
o Suppliers
o CATV network
o Customer equipment
o Internet
A project leader has been nominated in each business area with overall
responsibility for the Year 2000 computer problem for that area. Each Business
unit's plan addresses the specific phases to be undertaken, including
identification and awareness, evaluation/impact analysis, strategy development,
implementation, and testing. Every project leader is a member of the Year 2000
Compliance Committee, sponsored by the Managing Director and chaired by the IT
Director. Additionally, to ensure a rigorous and cohesive approach, a Program
Manager is responsible for coordinating and monitoring the entire program
against defined plans to completion.
The Group has installed year 2000 compliant software for the
telecommunications switches and network control systems. The cable television
infrastructure that is not currently year 2000 compliant is on schedule to be
upgraded by the end of June 1999.
Other systems critical to business operations, such as the subscriber
management system and the financial and accounting systems, are maintained by
the vendors. With the exception of the subscriber management system, the vendors
have supplied versions of these critical systems which are designed to be Year
2000 compliant and were subject to a thorough testing program that was completed
in 1998. The vendors have expressed confidence that any problems that may
currently exist can be rectified in a timely manner. New applications and
upgrades of the subscriber management system have recently been installed and
they are
21
<PAGE>
currently undergoing testing for Year 2000 compliance. This testing is targeted
for completion in the second quarter of 1999. Other than these recent upgrades
and applications, management believes the subscriber management system is Year
2000 compliant. The personal computer and local area network infrastructures are
being surveyed and tested, and non-compliant elements should be replaced by the
end of June 1999.
The Group depends, to some extent, on third party suppliers for the
supply of telecommunications, cable television, systems for customer service and
billing, as well as building facilities and supplies. Maintenance contracts
exist for critical elements and assurance has been sought from all suppliers of
critical services that they will continue to supply the services without
interruption. Where no satisfactory response has been forthcoming, alternative
suppliers have been sought that can give the assurances the Group and its
customers require.
Costs incurred in connection with year 2000 compliance are not expected
to be material. Software upgrades to the network, cable television and systems
infrastructure are supplied as part of the normal maintenance contracts. Minimal
cost has been incurred to date, and it is estimated that a further
(pound)160,000 will be required for replacement of local area network, personal
computer elements and program management and associated costs. Other components
being replaced are otherwise due for replacement through obsolescence.
Should the telecommunications network fail to operate correctly over
the date change, the business of the Group would be materially adversely
affected. Similarly, should the cable television network or the subscriber
management system and personal computer network fail to operate correctly, this
could also have materially adverse consequences to the Group. The impact of
failure of the critical network, cable television and system components could be
significant. Therefore, significant effort is being devoted to rigorous testing
programs to ensure that any potential problems are identified and rectified in a
timely manner. Despite the efforts being expended by the Group, there can be no
assurance that Year 2000 compliance issues will not have a material adverse
effect on the Group's operations.
Preparatory contingency planning has been performed to address critical
issues of customer support, technical support, and management representation. A
Group-wide review has been completed to assess the suitability of current
arrangements. Detailed contingency plans are targeted for completion in each
business area by the end of the second quarter of 1999. Risks and uncertainties
and their associated contingency plans relate to systems, software, equipment,
and all
22
<PAGE>
services which the group has assessed as being critical to business operations,
financial impact, customer service, and safety. Significant effort has also been
devoted to verify and assist in the Year 2000 remediation efforts of the Group's
trading partners and suppliers where they could have an effect on the Group's
operations. Additionally, normal business continuity, contingency, and disaster
recovery plans will be verified, and where necessary, augmented to specifically
address Year 2000 contingencies. Appropriate training will be given to people
where new or modified processes are in place to deal with millennium issues, and
rapid response teams and increased levels of support will also be considered as
required.
RECENT DEVELOPMENTS
Provisions in each of the indentures pursuant to which the Group's debt
securities were issued require that offers to repurchase such debt securities be
made to holders of such securities at a price of 101% of their accreted value or
principal amount following a "change of control". Following completion of the
Share Exchange Agreement, the Company commenced offers to repurchase its
outstanding debt securities on April 1, 1999. These offers expired on April 30,
1999. The Company will pay approximately $105,000 to repurchase the tendered
debt securities.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
There have been no material changes in the reported market risks since
the end of the most recent fiscal year.
23
<PAGE>
DIAMOND CABLE COMMUNICATIONS PLC
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits -
None.
(b) Reports on Form 8-K -
None.
24
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DIAMOND CABLE COMMUNICATIONS PLC
Date: May 7, 1999 By: /s/ Leigh C. Wood
-----------------------------
Leigh C. Wood
(Chief Operating Officer)
Date: May 7, 1999 By: /s/ Ronald McKellar
-----------------------------
Ronald McKellar
(Principal Financial Officer)
Date: May 7, 1999 By: /s/ Duncan Craig
-----------------------------
Duncan Craig
(Principal Accounting Officer)
25
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEC
FORM 10-Q DATED March 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> POUNDS STERLING
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1.6140
<CASH> 263,381
<SECURITIES> 0
<RECEIVABLES> 17,106
<ALLOWANCES> 4,760
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 586,694
<DEPRECIATION> 104,036
<TOTAL-ASSETS> 862,002
<CURRENT-LIABILITIES> 0
<BONDS> 831,617
0
0
<COMMON> 1,478
<OTHER-SE> 162,620
<TOTAL-LIABILITY-AND-EQUITY> 862,002
<SALES> 0
<TOTAL-REVENUES> 27,303
<CGS> 0
<TOTAL-COSTS> 41,637
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (14)
<INTEREST-EXPENSE> 23,445
<INCOME-PRETAX> 55,414
<INCOME-TAX> 0
<INCOME-CONTINUING> 55,414
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 55,414
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
