TELEWEST COMMUNICATIONS PLC /NEW/, PRE 14A, 1997-03-14

TELEWEST COMMUNICATIONS PLC /NEW/
PRE 14A, 1997-03-14
CABLE & OTHER PAY TELEVISION SERVICES

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SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. __)

[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant

Check the appropriate box:

[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

TELEWEST COMMUNICATIONS PLC
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies:

2) Aggregate number of securities to which transaction applies:

3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):

4) Proposed maximum aggregate value of transaction:

5) Total fee paid

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

1) Amount Previously Paid: $
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:

<PAGE>

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in
any doubt as to the action you should take, please consult an appropriate
independent adviser immediately. If you have sold or otherwise transferred all
of your holding of ordinary shares in Telewest Communications plc, you should
send this document together with the accompanying Form of Proxy, to the
purchaser or transferee or to the stockbroker, bank or other agent through whom
the sale or transfer was effected for transmission to the purchaser or
transferee.

[LOGO]
TELEWEST COMMUNICATIONS PLC

NOTICE OF

ANNUAL GENERAL MEETING

Notice of the Annual General Meeting of the Company to be held at The Grocers'
Hall, Princes Street, London EC2R 8AD on Friday, 9 May 1997 at 10.00 am is set
out on pages 7 to 9. Forms of Proxy for the Annual General Meeting must be
received by the Company's Registrars, Lloyds Bank plc, Registrar's Department,
The Causeway, Worthing, West Sussex, England N99 6DB not later than 10:00 am on
7 May 1997.

<PAGE>

TELEWEST COMMUNICATIONS PLC
(Registered in England and Wales No. 2983307)

Genesis Business Park
Albert Drive, Woking
Surrey GU21 5RW
United Kingdom

26 March 1997

Dear Shareholder.

1997 ANNUAL GENERAL MEETING

The 1997 Annual General Meeting of the Company ("AGM") is to be held on Friday,
9 May 1997 at 10.00 am (United Kingdom time) at The Grocers' Hall, Princes
Street, London 8C2R 8AD. The Notice convening the AGM, the Proxy Card and the
related Proxy Statement accompany this letter. I am writing to give you more
information about the resolutions to be considered at the AGM.

Resolutions 1 to 12 deal with the adoption of the 1996 Directors' Report and
Accounts, and the reappointment of the Directors. Resolutions 13 and 14 deal
with the Directors' authority to allot (i.e., issue) shares and the
disapplication of pre-emption rights. With regard to Resolution 13, under
English company law, a company's directors may not allot shares, unless they are
authorised to do so by an ordinary resolution of the shareholders of the company
or under its articles of association. Resolution 13 renews your Directors'
authority to allot up to 309,189,200 ordinary shares of 10p each in the capital
of the Company ("Telewest shares"), representing just under one third of the
Company's current issued ordinary share capital, which proportion is in
accordance with the U.K. institutional guidelines.

Resolution 14 provides the Board with the power to allot shares for cash without
first offering those shares pro rata to existing shareholders, as otherwise
required by the Companies Act 1985. This would empower your Directors to issue
shares for cash other than pro rata to shareholders in limited circumstances in
connection with a rights issue or open offer and, in addition, to issue for cash
up to an aggregate of 46,378,380 shares, representing just under 5 per cent of
the Company's current issued ordinary share capital, which proportion is also in
accordance with UK institutional guidelines.

The Board considers that it is in the best interests of the Company that it
should have the flexibility sought in Resolutions 13 and 14 although it has no
present intention of allotting Telewest shares thereunder. The authorities
conferred by these resolutions, if passed, will lapse fifteen months after the
AGM or at the conclusion of the 1998 Annual General Meeting, whichever occurs
first.

Resolution 15 deals with the reappointment of KPMG Audit plc, as auditors of the
Company.

Resolution 16 proposes the approval by ordinary resolution of two new share
plans, the Telewest Equity Participation Plan and the Telewest Long Term
Incentive Plan. The Equity Participation Plan is a plan linked to the Company's
annual performance related cash bonus scheme. Under this plan an employee can
elect to acquire Telewest shares using part of his bonus ("Bonus shares") and
the Company then provisionally allocates matching shares for no consideration to
the employee. Retention of the matching shares by the employee is dependent on
the employee remaining employed by the Company and retaining the Bonus shares
for three years after the date of the grant of the matching award. The Long Term
Incentive Plan is designed to replace the Telewest Restricted Share Scheme.
Executive employees will be made provisional allocations of Telewest shares
which will not vest unless performance criteria based upon total shareholder
return are met. Awards granted under the scheme shall not be pensionable.
Participants in either of these plans will (save in exceptional circumstances)
cease to be eligible for the grant of new options under the Telewest 1995 (No.
1) Executive Share Option Scheme and the Telewest 1995 (No. 2) Executive Share
Option Scheme. A summary of the rules of these plans is set out in the Appendix.

<PAGE>

Given the considerable expansion of the Company's operations, the Company is
taking this opportunity to increase its borrowing powers under the Articles of
Association. Resolution 17 is a special resolution to alter the Company's
Articles of Association to increase the borrowing powers of the Company to the
greater of (pound)4 billion and five times the adjusted Capital and reserves (as
defined in the Articles of Association). The Company's borrowing powers were
previously limited to the greater of (pound)2 billion and four times the
adjusted capital and reserves.

ACTION TO BE TAKEN
If you are unable to attend the AGM, I urge you to vote at the meeting by proxy.
A Proxy Card for use by holders of ordinary shares at the AGM is enclosed.
Holders of ordinary shares are advised to complete and return the Proxy Card in
accordance with the instructions printed on it so as to arrive at the Company's
Registrars as soon as possible, but in any event not later than 10.00 am on
Wednesday, 7 May 1997. The return of the Proxy Call will not preclude a holder
of ordinary shares from attending and voting in person at the AGM if he or she
so wishes. Details concerning proxy voting are set out in the Proxy Statement.

THE DIRECTORS CONFIRM THAT THEY BELIEVE THE PROPOSALS CONTAINED IN THE NOTICE OF
AGM ARE IN THE BEST INTERESTS OF SHAREHOLDERS AS A WHOLE AND RECOMMEND THAT
SHAREHOLDERS VOTE FOR THE RESOLUTIONS.

Refreshments will be available prior to the meeting and my fellow Directors and
I look forward to meeting you then.

Yours sincerely

FRED VIERRA
Chairman

<PAGE>

APPENDIX

PART 1

SUMMARY OF THE TELEWEST EQUITY PARTICIPATION PLAN (THE "EPP")

1 ELIGIBILITY
Any Director or employee of a participating company who is required to devote
the whole or substantially the whole of his working time to the service of a
participating company may be invited to participate in the EPP [other than a
person who is within two years of the date in which he is bound to retire in
accordance with the terms of his contract of employment]. It is currently
expected tha the plan will be made available to members of middle management and
above. Based on current employment levels, approximately 400 persons are
expected to be invited to participate in the EPP.

2 AWARDS
Under the Telewest annual performance-related Short Term Incentive Plan ("STIP")
participants may be due a cash bonus. Under Part A of the EPP, at the
Remuneration Committee's discretion, a participant can agree to forgo up to 50%
of the bonus payable to him (or such other percentage as the Remuneration
Committee may determine), before deduction of tax, and receive instead a
conditional right to acquire Bonus shares (the "Bonus Option"). In return the
participant is provisionally allocated a matching number of shares ("Matching
Shares") which will be transferred for no payment after three years.

Part B of the EPP provides that, at the Remuneration Committee's discretion, a
participant can use up to 50% of the bonus payable to him (or such other
percentage as the Remuneration Committee may determine), after deduction of tax,
to buy Telewest shares ("Bonus shares"). He must deposit the Bonus shares with
the trustee ("Trustee") of the Telewest employees' share ownership plan (the
"ESOP"), an independent trustee currently located in Jersey. In return, the
participant is granted an award of the right to conditionally be transferred a
matching number of Telewest shares ("Matching Shares") (after grossing up the
value of the Bonus shares) for no payment.

3 MAKING OF AWARDS
Awards may be made during the six weeks following the 1996 Annual General
Meeting and thereafter during the six weeks following the announcement of the
Company's final, interim and quarterly results (and at other times in
exceptional circumstances). No awards may be made more than ten years following
the adoption of the EPP. Awards made under the EPP are personal to the
participant and, except on the death of the participant, may not be transferred.

4 RECEIPT OF SHARES
Under Part A, a Bonus Option may be exercised at any time but the Matching
Shares may only be transferred after three years and only if the Bonus Option
has not been exercised before the third anniversary of the date of grant of the
Bonus Option and the participant is still a Director or employee of the Group on
the third anniversary. If a participant ceases to be an employee of the Group
before the third anniversary because of his death, injury, disability,
redundancy or retirement at normal retirement age or because the company or
business which employs the participant is transferred out of the Group, Matching
Shares may be transferred early. If the Bonus Option has been partially
exercised before the third anniversary of the date of the grant of the Bonus
Option, the extent to which Matching Shares shall be transferred shall be
reduced proportionately. Special provisions apply if there is a take-over,
reconstruction or winding-up of the Company, whereby shares can be transferred
early.

Under Part B, Bonus shares may be withdrawn by the participant at his discretion
at any time after the date of the award but the Matching Shares provisionally
allocated by the Company may only be transferred after the third anniversary of
this date and only if the Bonus shares have not been withdrawn before such third
anniversary and the participant is still a Director or employee of the Group on
the third anniversary. If a participant ceases to be an employee of the Group
before the third anniversary for the same reasons listed above in relation to
Part A, Matching Shares may be transferred early. The number of Matching Shares
so transferred will be reduced proportionately to the number of Bonus shares
that are withdrawn before the third anniversary of the date of grant. Special
provisions apply if there is a take-over, reconstruction or winding-up of the
Company, whereby shares can be transferred early.

4
<PAGE>

APPENDIX

5 VARIATION OF CAPITAL
In the event of any increase or variation in the share capital of the Company,
the Remuneration Committee may make such adjustments as it considers appropriate
to the number of shares which may be acquired under the award.

6 LIMITS AND SUBSCRIPTION FOR SHARES
The ESOP may subscribe for or purchase Telewest shares for the purposes of the
EPP or the Company may grant an option to the ESOP to subscribe for Telewest
shares for the purposes of the EPP. The Board does not intend to issue Telewest
shares to the ESOP at a price below the middle market quotation for a Telewest
share on the dealing day before the date of grant or, if issued other than on
exercise of an option, on the dealing day before the date of issue. In addition,
the following limits apply to the EPP:

(a) in any ten year period, the number of Telewest shares which may be
issued under the EPP, the Telewest Long Term Incentive Share Plan, and
on the exercise of options under any executive share option scheme may
not exceed 5% of the issued ordinary share capital of the Company;

(b) in the period of three years commencing 1997 and in any subsequent
three year period, not more than 3% of the issued ordinary share
capital of the Company may be issued under the EPP, the Telewest Long
Term Incentive Plan, and on the exercise of options under any
executive share option scheme;

(c) in the period of five years commencing 1997 and in any subsequent five
year period, not more than 5% of the issued ordinary share capital of
the Company may be issued under the EPP, the Telewest Long Term
Incentive Plan, and pursuant to any employees' share scheme;

(d) in any ten year period, the number of shares which may be issued under
the EPP, the Telewest Long Term Incentive Share Plan, and pursuant to
any employees' share scheme may not exceed 10% of the issued ordinary
share capital of the Company.

7 AMENDMENTS
The Remuneration Committee may at any time amend the EPP, or the terms of any
award granted under it, save that the prior approval of the Company in a general
meeting will be required for amendments to the advantage of the participants; to
the eligibility requirements; to the limits on the number of Telewest shares
that can be issued under awards; to the maximum entitlement for any one
participant and to the rule concerning adjustments in the event of a variation
of capital.

PART 2

SUMMARY OF THE TELEWEST LONG TERM INCENTIVE PLAN (THE "LTIP")

1 ELIGIBILITY
Any director or employee of a participating company who is required to devote
the whole or substantially the whole of his working time to the service of a
participating company may be invited to participate other than a person who is
within two years of the date in which he is bound to retire in accordance with
the terms of his contract of employment. It is currently expected that the plan
will be made available to members of senior management. Based on current
employment levels, approximately 60 employees are expected to be invited to
participate in the LTIP.

2 AWARDS
An award consists of a right to receive Telewest shares for no payment, 50% of
the shares vesting being transferred on the third anniversary of the award date
and the remaining 50% of the shares vesting being transferred on the fourth
anniversary of the award date.

3 PERFORMANCE CONDITIONS
Vesting of an award is dependent on meeting performance conditions. The award is
divided equally, with vesting of 50% depending on the Company's total
shareholder return ("TSR") meeting a performance condition relating to the TSR
of FT-SE 100 companies and the remaining 50% depending on meeting a performance
condition relating to the TSR of a group of comparative companies (i.e.,
telecommunications, broadcasting and cable companies operating in the U.K. with
shares listed on the London Stock Exchange and cable companies operating in the
U.K. with shares listed on the Nasdaq National Market), in each case over a
three year period. If the Company's TSR is in the top quartile of the FT-SE 100
companies over that period, the participant will receive 50% of the number of
shares awarded to him; if the Company's TSR is 50th place in the FT-SE 100, the
participant will receive 12 1/2% of the number of shares awarded him; if below
50th place in the FT-SE 100, the participant will receive nothing in respect of
this portion of the award. Similarly, if the Company's TSR is in the top
quartile of the group of comparative companies, over that period, the
participant will receive 50% of the

5
<PAGE>

APPENDIX

number of shares awarded to him; if the Company's TSR is at the median position,
the participant will receive 12 1/2% of the number of shares awarded to him; if
below the median position, the participant will receive nothing in respect of
that portion of the award. In either test, a proportionate number of shares will
be received for intermediate positions. TSR in each case will be calculated by
reference to the cash flow generated by dividends and capital appreciation on a
share purchased at the beginning and sold at the end of the period. The purchase
and sale price will be taken to be the average middle-market quotation for the
period of three months preceding the time in question.

4 GRANT OF AWARDS
Awards may be granted during the six weeks following the 1997 Annual General
Meeting and thereafter during the six weeks following the announcement of the
Company's final, interim and quarterly results (and at other times in
exceptional circumstances). No award may be granted more than ten years
following the adoption of the LTIP. Awards granted under the LTIP are personal
to the participant and, except on the death of the participant, may not be
transferred.

5 TRANSFER OF SHARES
If the participant remains employed by the Group and subject to the satisfaction
of the performance criteria, 50% of the shares subject to the award will be
transferred after three years from the date of grant, and 50% after four years
from the date of grant. However, early transfer is permitted in the event of
death, or cessation of employment through injury, disability, redundancy or
retirement at normal contractual retirement age, or because the company or
business which employs the participant is transferred out of the Group but only
in respect of a time-apportioned number of shares. Special provisions apply if
there is a take-over, reconstruction or winding-up of the Company, whereby
shares can be transferred early.

6 VARIATION OF CAPITAL
In the event of any increase of variation in the share capital of the Company,
the Remuneration Committee may make such adjustments as it considers appropriate
to the number of shares which may be acquired under the award.

7 LIMITS AND SUBSCRIPTION FOR SHARES
The provisions set out in paragraph 6 of Part 1 apply equally. The value of
shares awarded under the LTIP in any financial year to any individual may not
exceed 100% of his annual salary (excluding benefits in kind), save in
exceptional circumstances.

8 AMENDMENTS
The Remuneration Committee may at any time amend the LTIP, or the terms of any
award granted under it, save that the prior approval of the Company in general
meeting will be required for amendments to the advantage of participants; to the
eligibility requirements; to the limits on the number of shares that can be
issued under awards; to the maximum entitlement for any one participant and to
the rule concerning adjustments in the event of a variation of capital.

NOTE:
This Appendix summarises the main features of the rules of the Telewest Equity
Participation Plan and the Telewest Long Term Incentive Plan, but does not form
part of them and should not be taken as affecting the interpretation of the
detailed terms and conditions constituting the rules. Copies of the draft rules
will be available for inspection at the registered office of the Company and at
the offices of the Company's solicitors, Clifford Chance, at 200 Aldersgate
Street, London EC1A 4JJ during usual business hours on weekdays (Saturdays and
public holidays excepted) up to the date of the 1997 Annual General Meeting and
at the meeting itself. The Remuneration Committee reserves the right up to the
time of the meeting to make such amendments and additions as it may consider
necessary or desirable, provided that such amendments and additions do not
conflict in any material respect with the summaries set out in this Appendix.

<PAGE>

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the Annual General Meeting of Telewest
Communications plc (the "Company") will be held on Friday, 9 May 1997, at 10.00
am (United Kingdom time) at The Grocers' Hall, Princes Street, London EC2R 8AD
for the purpose of considering and, if thought fit, passing the resolutions set
out below. Resolutions 1 to 13, 15 and 16 will be proposed as Ordinary
Resolutions and Resolutions 14 and 17 will be proposed as Special Resolutions.

ORDINARY BUSINESS

1 To adopt the Directors' Report and Accounts of the Company for the year
ended 31 December 1996.

2 To reappoint Fred A. Vierra as a Director, who is retiring by rotation at
the forthcoming Annual General Meeting in accordance with the Company's
Articles of Association.

3 To reappoint Anthony W.P. Stenham as a Director, who is retiring by
rotation at the forthcoming Annual General Meeting in accordance with the
Company's Articles of Association.

4 To reappoint Arthur G. Ames as a Director, who is retiring by rotation at
the forthcoming Annual General Meeting in accordance with the Company's
Articles of Association.

5 To reappoint John A. Atterbury III as a Director, who is retiring by
rotation at the forthcoming Annual General Meeting in accordance with the
Company's Articles of Association.

6 To reappoint Lord Borrie QC as a Director, who is retiring by rotation at
the forthcoming Annual General Meeting in accordance with the Company's
Articles of Association.

7 To reappoint Charles J. Burdick as a Director, who is retiring by rotation
at the forthcoming Annual General Meeting in accordance with the Company's
Articles of Association.

8 To reappoint Stephen J. Davidson as a Director, who is retiring by rotation
at the forthcoming Annual General Meeting in accordance with the Company's
Articles of Association.

9 To reappoint Lord Griffiths of Fforestfach as a Director, who is retiring
by rotation at the forthcoming Annual General Meeting in accordance with
the Company's Articles of Association.

10 To reappoint Charles M. Lillis as a Director, who is retiring by rotation
at the forthcoming Annual General Meeting in accordance with the Company's
Articles of Association.

11 To reappoint James O. Robbins as a Director, who is retiring by rotation at
the forthcoming Annual General Meeting in accordance with the Company's
Articles of Association.

12 To reappoint Adam N. Singer as a Director, who is retiring by rotation at
the forthcoming Annual General Meeting in accordance with the Company's
Articles of Association.

13 To approve the following Ordinary Resolution:

THAT in substitution for all previous authorities which are hereby revoked, the
Directors be generally and unconditionally authorised pursuant to Section 80 of
the Companies Act 1985 (the "Act") to exercise all or any powers of the Company
to allot relevant securities (within the meaning of Section 80(2) of the Act) up
to an aggregate nominal amount of (pound)30,918,920, such authority to expire
(unless previously renewed, varied or revoked by the Company in a general
meeting) on the earlier of 8 August 1998 or the conclusion of the Annual General
Meeting of the Company to be held in 1998, but the Company may make an offer or
agreement which would or might require relevant securities to be allotted after
the expiry of this authority and the Directors may allot relevant securities in
pursuance of that offer or agreement.

<PAGE>

14 To approve the following Special Resolution:

THAT in substitution for all previous authorities which are hereby revoked,
and subject to the passing of Resolution 13, the Directors be empowered
pursuant to Section 95 of the Act to allot equity securities (within the
meaning of Section 94(2) of the Act) for cash pursuant to the authority
conferred by Resolution 13 as if Section 89(1) of the Act did not apply to
any such allotment. This power:

(i) expires on the earlier of 8 August 1998 or the conclusion of the
Annual General Meeting of the Company to be held in 1998, but the
Company may make an offer or agreement which would or might require
equity securities to be allotted after the expiry of this authority
and the Directors may allot equity securities in pursuance of that
offer or agreement; and

(ii) is limited to:

A allotment of equity securities where such securities have been offered
(whether by way of a rights issue, open offer or otherwise) to holders
of ordinary shares of 10p each in the capital of the Company
("Ordinary Shares") and, if in accordance with their rights, the
Directors so determine, to holders of other equity securities of any
class, in proportion (as nearly as may be) to their existing holdings
of Ordinary Shares or (as the case may be) other equity securities of
the class on the basis of their rights to receive such offer or,
failing which, on the basis that their holdings have been converted
into or that they have subscribed for Ordinary Shares on the basis
then applicable, subject to the Directors having a right to make such
exclusions or other arrangements in connection with the offer as they
deem necessary or expedient:

(a) to deal with equity securities representing fractional
entitlements; and

(b) to deal with legal or practical problems under the laws of, or
the requirements of any recognised regulatory body or any stock
exchange in any territory; and

B allotments of equity securities for cash otherwise than pursuant to
paragraph A up to an aggregate nominal amount of (pound)4,637,838.00.

15 To appoint KPMG Audit plc, as auditors, to serve from the conclusion of the
forthcoming Annual General Meeting to the Annual General Meeting of the
Company to be held in 1998, and to authorise the Directors to fix the
remuneration of the auditors.

SPECIAL BUSINESS

16 To approve the following Ordinary Resolution:

THAT:

(a) the Telewest Equity Participation Plan (the "EPP"), in the form set
out in the draft rules of the EPP produced to the meeting and for the
purposes of identification initialled by the Chairman and the main
features of which are summarised in the Appendix to the Chairman's
letter, be and is hereby approved, and the Board be and is hereby
authorised to do all acts and things which it may consider necessary
or desirable to carry the same into effect (including the provision of
funds to the Trustee of the Telewest employees' share ownership plan
or any other employees' trust for the acquisition of Ordinary Shares
in the Company to be awarded under the EPP).

(b) the Telewest Long Term Incentive Plan (the "LTIP"), in the form set
out in the draft rules of the LTIP produced to the meeting and for the
purposes of identification initialled by the Chairman and the main
features of which are summarised in the Appendix to the Chairman's
letter, be and is hereby approved, and the Board be and is hereby
authorised to do all acts and things which it may consider necessary
or desirable to carry the same into effect (including the provision of
funds to the Trustee of the Telewest employees' share ownership plan
or any other employees' trust for the acquisition of Ordinary Shares
in the Company to be awarded under the LTIP).

(c) the Directors may be counted in the quorum and vote in respect of any
matter connected with the EPP and the LTIP, notwithstanding that they
may be interested in the same (except that no Director may be counted
in the quorum or vote in respect of any matter solely concerning his
own participation in the EPP or LTIP).

17 To approve the following Special Resolution:

THAT the Articles of Association of the Company be altered by:

8
<PAGE>

(i) the deletion in Article 104(B)(i) of "(pound)2,000,000,000" and the
substitution for it of "(pound)4,000,000,000"; and

(ii) the deletion in Article 104(B)(ii) of the word "four" and the
substitution for it of the word "five."

This Notice and the related proxy materials are being mailed to shareholders on
the record at the close of business on 26 March 1997. All shareholders on the
record at the time of the Annual General Meeting (or any postponements or
adjournments thereof) will be entitled to vote at the meeting (or such
postponements or adjournments).

By Order of the Board of Directors

V. Hull, LLB
Company Secretary

Registered Office: Telewest Communications plc
Genesis Business Park
Albert Drive, Woking
Surrey GU21 5RW
United Kingdom

26 March 1997

NOTES:
1 For information with respect to the voting requirements for Ordinary
Resolutions and Special Resolutions, see "Voting Requirements" in the Proxy
Statement accompanying this Notice.
2 A shareholder entitled to attend and vote at the Annual General Meeting is
also entitled to appoint one or more proxies to attend and, on a poll taken
at the meeting, vote instead of him or her. A proxy need not be a
shareholder of the Company.
3 To be effective, the instrument appointing a proxy and any authority under
which it is executed (or a notarially certified copy of each authority)
must be deposited at the offices of Lloyds Bank plc, Registrar's
Department, The Causeway, Worthing, West Sussex, England BN99 6DB, not less
than 48 hours before the time of the Annual General Meeting. A Proxy Card
is enclosed with this Notice. Completion and return of the Proxy Card will
not preclude a shareholder from attending and voting in person at the
meeting.
4 Copies of all the Directors' service contracts and the Register of
Directors' interests kept by the Company under Section 325 of the Act will
be available for inspection at the registered office of the Company during
normal business hours on any weekday (Saturday excluded) from the date of
this Notice until the close of the meeting and at the place of the Annual
General Meeting for at least 15 minutes before, and during, the meeting.

EACH SHAREHOLDER'S VOTE IS IMPORTANT

PLEASE COMPLETE, DATE, SIGN AND RETURN THE ACCOMPANYING PROXY CARD PROMPTLY

9
<PAGE>

TELEWEST COMMUNICATIONS PLC
Genesis Business Park
Albert Drive, Woking
Surrey GU21 5RW
United Kingdom

PROXY STATEMENT

This Proxy Statement and the accompanying proxy card are first being mailed on
March 26, 1997 to holders of ordinary shares of 10 pence each (the "Ordinary
Shares") of Telewest Communications plc (the "Company") in connection with the
solicitation of proxies by the Board of Directors of the Company to be used at
the 1997 Annual General Meeting of Shareholders. The Annual General Meeting will
be held on Friday, May 9, 1997 at 10:00 a.m. (United Kingdom time) at The
Grocers' Hall, Princes Street, London EC2R 8AD. Ordinary Shares can be voted at
the Annual General Meeting only if the shareholder is represented by proxy or is
present in person. All shareholders on the share register at the time of the
Annual General Meeting (or any postponements or adjournments thereof) will be
entitled to vote at the meeting (or such postponements or adjournments).

EACH SHAREHOLDER'S VOTE IS IMPORTANT. ACCORDINGLY, SHAREHOLDERS ARE URGED TO
SIGN AND RETURN THE ACCOMPANYING PROXY CARD REGARDLESS OF WHETHER THEY PLAN TO
ATTEND THE ANNUAL GENERAL MEETING. To be effective, the proxy card (together
with any authority under which it is executed (or a notarially certified copy of
each such authority)) must be received at the Office of Lloyds Bank plc,
Registrar's Department, The Causeway, Worthing, West Sussex BN99 6DB, United
Kingdom, not less than 48 hours before the time of the Annual General Meeting.
Completion and return of a proxy card will not preclude a shareholder from
attending and voting in person at the meeting. If a shareholder attends and
votes by ballot at the Annual General Meeting, that vote will cancel any proxy
vote previously given. In addition, a shareholder giving a proxy may revoke it
at any time prior to the foregoing deadline for proxy voting by giving a valid
proxy to Lloyds Bank plc bearing a later date before such deadline.

When proxy cards are returned properly signed, the shares represented will be
voted in accordance with the shareholder's directions. If a proxy card is signed
and returned without specifying choices, the proxy will vote or abstain at his
discretion.

On March 1, 1997, there were 927,567,600 Ordinary Shares outstanding and 1,340
holders of record. Each Ordinary Share is entitled to one vote on all matters
properly brought before the Annual General Meeting. Two or more persons holding
Ordinary Shares (one of whom must be a representative of the TCI Affiliate Group
(as defined herein) and one of whom must be a representative of the U S WEST
Affiliate Group (as defined herein)) must be present in person or by proxy to
constitute a quorum to conduct business at the Annual General Meeting.

<PAGE>

SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS

The following table sets forth certain information with respect to persons known
to the Company to be the beneficial owners, as of March 1, 1997, of more than 5%
of the Company's Ordinary Shares:
<TABLE>
<CAPTION>

NUMBER OF PERCENTAGE
NUMBER OF PERCENTAGE CONVERTIBLE OF CONVERTIBLE
NAME AND ADDRESS OF BENEFICIAL ORDINARY OF ORDINARY PREFERENCE PREFERENCE
OWNER SHARES (1) SHARES SHARES (1) SHARES
- -------------------------------------- ----------- ---------- ------------- ------
<S> <C> <C> <C> <C>
Tele-Communications, Inc. 246,111,750 26.5 132,638,250 26.7
5619 DTC Parkway
Englewood, Colorado 80111 (2)

U S WEST, Inc. 246,111,750 26.5 132,638,250 26.7
7800 East Orchard Road
Englewood, Colorado 80111 (3)

SBC Communications, Inc. 91,997,480 9.9 115,395,104 23.3
2 Read's Way
Suite 222, Corporate Commons
New Castle, Delaware 19720 (4)

Cox Communications, Inc. 91,997,480 9.9 115,395,104 23.3
1400 Lake Hearn Drive
Atlanta, Georgia 30319 (5)
- --------------------
<FN>

(1) For so long as the Ordinary Shares are listed on the London Stock Exchange,
subject to certain exceptions, a holder of Convertible Preference Shares is not
entitled to convert any of its Convertible Preference Shares into Ordinary
Shares to the extent that, immediately following such conversion, the number of
Ordinary Shares in the hands of the public (as specified in the London Stock
Exchange listing rules) would be less than 25%. In addition, the TCI Affiliate
Group, the U S WEST Affiliate Group, the SBC Affiliate Group and the Cox
Affiliate Group (each as defined herein) have agreed not to convert the
Convertible Preference Shares held by them other than in certain limited
circumstances. See "-- Disposal and Acquisition of Ordinary and Convertible
Preference Shares" below. Accordingly, the Ordinary Shares reflected in this
table as beneficially owned by a person do not include any Ordinary Shares that
may be issuable upon conversion of Convertible Preference Shares beneficially
owned by such person.

(2) All of the Ordinary Shares and Convertible Preference Shares that are listed
as beneficially owned by Tele-Communications, Inc. ("TCI") are owned by TW
Holdings, Inc. ("TW Holdings") (which also directly owns the 246,111,750
Ordinary Shares and 132,638,250 Convertible Preference Shares that are listed as
beneficially owned by U S WEST, Inc. ("U S WEST") and therefore has an interest
in a total of 492,223,500 Ordinary Shares and a total of 265,276,500 Convertible
Preference Shares (53.2% of the issued Ordinary Shares assuming full conversion
of the Convertible Preference Shares)). 50% of TW Holdings is owned by United
Artists Programming -- Europe Inc. ("UAEP"), a wholly-owned subsidiary of
Tele-Communications International, Inc. Tele-Communications International, Inc.,
in turn, is a subsidiary of TCI. UAEP, which is also referred to herein as the
"TCI Affiliate," is the registered holder of the shares owned by TW Holdings for
TCI.

(3) All of the Ordinary Shares and Convertible Preference Shares that are listed
as beneficially owned by U S WEST are owned by TW Holdings (which directly owns
the 246,111,750 Ordinary Shares and 132,638,250 Convertible Preference Shares
that are listed as beneficially owned by TCI and therefore has an interest in a
total of 492,223,500 Ordinary Shares and a total of 265,276,500 Convertible
Preference Shares (53.2% of the issued Ordinary Shares assuming full conversion
of the Convertible Preferences Shares)). 45.6% of TW Holdings is owned by U S
WEST UK Cable, Inc. ("U S WEST UK") and 4.4% of TW Holdings is owned by U S WEST
Cable Partnership Holdings, Inc. ("U S WEST Cable"). U S WEST UK and U S WEST
Cable are each wholly-owned subsidiaries of U S WEST International Holdings,
Inc., which is a wholly-owned subsidiary of U S WEST. U S WEST UK (as to
224,717,516 Ordinary Shares and 121,027,284 Convertible Preference Shares) and U
S WEST Cable (as to 21,394,234 Ordinary Shares and 11,610,966 Convertible
Preference Shares) are the registered holders of the shares owned by TW Holdings
for U S WEST. U S WEST UK and U S WEST Cable are collectively referred to herein
as the "U S WEST Affiliates."

(4) All of the Ordinary Shares and the Convertible Preference Shares which are
beneficially owned by SBC Communications, Inc. ("SBC") are owned by and
registered in the name of Southwestern Bell International Holdings (UK-1)
Corporation or Southwestern Bell International Holdings (UK-2) Corporation,
which are indirect wholly-owned subsidiaries of SBC. Southwestern Bell
International Holdings (UK-1) Corporation and Southwestern Bell International
Holdings (UK-2) Corporation each hold 45,998,740 Ordinary Shares and 57,697,552
Convertible Preference Shares. Assuming full conversion of the Convertible
Preference Shares, SBC would beneficially own 14.6% of the issued Ordinary
Shares.

(5) All of the Ordinary Shares and Convertible Preference Shares which are
beneficially owned by Cox Communications, Inc. ("Cox") are owned by and
registered in the name of Cox U.K. Communications L.P., a Delaware limited
partnership comprised of indirect wholly-owned subsidiaries of Cox. Assuming
full conversion of the Convertible Preference Shares, Cox would beneficially own
14.6% of the issued Ordinary Shares.
</FN>
</TABLE>

<PAGE>

VOTING ARRANGEMENTS BETWEEN THE TCI AFFILIATE GROUP AND THE U S WEST AFFILIATE
GROUP

The TCI Affiliate and the U S WEST Affiliates have entered into a Shareholders'
Agreement, dated November 22, 1994, as amended (the "Shareholder Agreement"),
with respect to the ownership, voting and disposal of all of their shares in the
Company, including the Ordinary Shares and the Convertible Preference Shares
owned by TW Holdings. Pursuant to the Shareholder Agreement, the TCI Affiliate
Group and the U S WEST Affiliate Group have agreed that, on any matter requiring
shareholder approval, they will vote their shares together in such manner as may
be agreed by them or, in the absence of such agreement, will vote their shares
together in the manner that would most likely continue the status quo without
materially increasing the Company's financial obligations or materially
deviating from its approved budget and business plan. If either the TCI
Affiliate Group or the U S WEST Affiliate Group, as the case may be, is
precluded from voting on any matter because of a conflict of interest, the
members of the other affiliate group may vote on such matter as they deem
appropriate. As a result of these ownership and voting arrangements, the TCI
Affiliate Group and the U S WEST Affiliate Group together generally will be able
to determine the outcome of any matter requiring shareholder approval (other
than one involving a special resolution), including the election or removal of
Directors, the creation and issue of further shares and the granting of the
necessary authority to the Directors to allot any unissued shares.

DISPOSAL AND ACQUISITION OF ORDINARY AND CONVERTIBLE PREFERENCE SHARES

Pursuant to the Shareholder Agreement, the TCI Affiliate Group and the U S WEST
Affiliate Group has each agreed that, so long as it owns in excess of 25% of the
issued Ordinary Shares, it will not transfer any of its shares of the Company,
including any owned by TW Holdings, without first offering such shares to the
other on the same terms as any proposed transfer. This right of first offer does
not apply to transfers of shares by the TCI Affiliate Group or the U S WEST
Affiliate Group to their respective affiliates. The TCI Affiliate Group and the
U S WEST Affiliate Group has each also agreed that it will not reduce its
interest in the Company to 25% or less of the issued Ordinary Shares without the
consent of the other and, in connection with any such permitted reduction, among
other things the transferee agrees to become bound by the Shareholder Agreement.
Notwithstanding the foregoing, following the fifth anniversary of the
Shareholder Agreement, each of the TCI Affiliate Group and the U S WEST
Affiliate Group will be permitted to so reduce its interest in shares in the
public market after first offering them to the other on the same terms.

The TCI Affiliate Group and the U S WEST Affiliate Group have agreed with each
other that upon a change of control of the TCI Affiliate Group or the U S WEST
Affiliate Group that results in the controlling persons (other than TCI or U S
WEST, as the case may be) of the TCI Affiliate Group or the U S WEST Affiliate
Group, as the case may be, ceasing to have the power directly or indirectly to
direct the voting or disposition of at least 25% of the issued Ordinary Shares,
the party not undergoing the change of control will have an opportunity either
to consent to such change or to require the other to elect to purchase its
Ordinary Shares and Convertible Preference Shares for a specified price or to
sell its shares to the other at the same price (with such choice being made by
the party undergoing the change of control). The TCI Affiliate Group and the U S
WEST Affiliate Group have also agreed with each other that, until the fifth
anniversary of the Shareholder Agreement, without the consent of the other,
neither will acquire any additional equity interests in the Company, other than
pursuant to pre-emption rights or the anti-dilution option referred to below.

Pursuant to the Shareholder Agreement and the Articles of Association of the
Company (the "Articles"), the rights and obligations of the TCI Affiliate Group
and the U S WEST Affiliate Group thereunder continue for so long as they each
hold 25% or more of the issued Ordinary Share capital of the Company. For the
purposes of the Shareholder Agreement and the Articles, unless otherwise
indicated, references to the percentage of Ordinary Shares owned by the TCI
Affiliate Group and the U S WEST Affiliate Group assume conversion of all the
issued Convertible Preference Shares by such groups into Ordinary Shares. In
addition, such percentages also include Ordinary Shares and Convertible
Preference Shares held by certain permitted transferees ("Permitted
Transferees") of TCI (and its affiliates) and U S WEST (and its affiliates) who
become parties to the Shareholder Agreement in accordance with the terms thereof
and with the rights and obligations thereunder and

3
<PAGE>

under the Articles. TCI and its Permitted Transferees are referred to as the
"TCI Affiliate Group" and U S WEST and its Permitted Transferees are referred to
as the "U S WEST Affiliate Group."

Pursuant to a Share Dealing Agreement (the "Share Dealing Agreement"), dated
October 3, 1995, SBC and Southwestern Bell International Holdings (UK-1)
Corporation and Southwestern Bell International Holdings (UK-2) Corporation (the
"SBC Affiliates") and Cox and Cox U.K. Communications UK, L.P. (the "Cox
Affiliate") have each agreed that, subject to certain exceptions, for a period
of five years from the date of completion of the merger (the "Merger") of
Telewest Communications Cable Limited, formerly known as Telewest Communications
plc ("Old Telewest"), and SBC CableComms (UK) ("SBCC"), SBC, the SBC Affiliates
and affiliates thereof (the "SBC Affiliate Group") and Cox, the Cox Affiliate
and affiliates thereof (the "Cox Affiliate Group") will (a) not dispose of any
of their Ordinary Shares unless it offers to involve Kleinwort Benson Securities
Limited or other stockbrokers of the Company from time to time in the sale
process, whether as lead brokers or otherwise; (b) not dispose of an interest in
Ordinary Shares and/or Convertible Preference Shares amounting to in excess of
1% of the Ordinary Share capital of the Company (assuming conversion of any
Convertible Preference Shares being sold) in one sale, to a person who is a U.K.
cable television, cable telephony or satellite television operator or to a
person who is an affiliate of any such person; and (c) offer the Company (either
for itself or its nominated purchaser), TCI and U S WEST a right of first
refusal in respect of any private sale of their Ordinary Shares. The foregoing
transfer restrictions and right of first refusal do not apply to (i) any
transfer of shares by the SBC Affiliate Group or the Cox Affiliate Group to
their respective affiliates or between the SBC Affiliate Group and the Cox
Affiliate Group, (ii) any transfer by the SBC Affiliate Group to enable it to
comply with the Modification of Final Judgment entered on August 24, 1982 by the
United States District Court for the District of Columbia in connection with the
divestiture by AT&T of its local telephony business in the U.S., (iii) any
transfer accepting a third party offer for all the Ordinary Shares (including
giving an irrevocable undertaking to accept such an offer), (iv) any transfer
selling Ordinary Shares to a bona fide third party offer for all the Ordinary
Shares or (v) any transfer pursuant to an offer by either the SBC Affiliate
Group or the Cox Affiliate Group for all the Ordinary Shares.

The SBC Affiliate Group and the Cox Affiliate Group has also each agreed in the
Share Dealing Agreement that, until October 3, 2000, it will not, except in
connection with the exercise of pre-emption rights or in order to maintain its
interests in the Ordinary Shares at 10% of the issued Ordinary Shares, acquire
any additional Ordinary Shares. This restriction does not apply to transfers
between the SBC Affiliate Group and the Cox Affiliate Group.

Pursuant to the terms of the Share Dealing Agreement, when any conversion of
Convertible Preference Shares is permitted, such conversion rights will first be
made available to the TCI Affiliate Group and the U S WEST Affiliate Group to
the extent necessary to keep their collective holding of Ordinary Shares above
50% of the voting rights. Next, such rights will be made available to the SBC
Affiliate Group and the Cox Affiliate Group to the extent necessary to keep each
of their holdings of Ordinary Shares at 10% of the voting rights. No conversion
of Convertible Preference Shares will be made unless there is a need to maintain
respective voting rights at the levels referred to above or if the effect would
be to reduce the collective holding of Ordinary Shares of the TCI Affiliate
Group and the U S WEST Affiliate Group to 50% or below of the voting rights in
the Company. On any sale of Convertible Preference Shares they will
automatically convert into Ordinary Shares to the extent they are sold to the
public.

4
<PAGE>

PRE-EMPTIVE RIGHTS

Pursuant to the Companies Act, if the Company issues new equity shares for cash,
it is required to offer those shares to its existing shareholders on a
pre-emptive pro rata basis. This requirement has been waived with respect to the
anti-dilution option referred to below until November 29, 1999 and, in addition,
in respect of issues for cash of up to 5% of the nominal value of the issued
Ordinary Shares (in aggregate 46,378,380 Ordinary Shares) until the forthcoming
Annual General Meeting and in accordance with U.K. institutional guidelines (a
proposal to renew this waiver for cash issues is set out in Resolution #14
herein). Although this requirement may further be waived by a vote of the
holders of at least 75% of the Ordinary Shares represented at a duly convened
shareholders meeting, the TCI Affiliate, the U S WEST Affiliates, the SBC
Affiliates and the Cox Affiliate has each advised the Company that it does not
currently intend to vote to waive this requirement with respect to any future
issues of shares other than for the amounts set out above and otherwise in
accordance with U.K. institutional guidelines. The Company has agreed to use its
best efforts (consistent with the interests of shareholders generally) to ensure
that any issue of shares is made in such a manner so as to provide existing
shareholders with an opportunity to acquire additional shares and thereby avoid
a dilution of the interests in the Company of the TCI Affiliate, the U S WEST
Affiliates, the SBC Affiliates and the Cox Affiliate.

In addition, for so long as the TCI Affiliate Group and the U S WEST Affiliate
Group collectively own at least 50.1% of the issued Ordinary Shares (including
those issuable on conversion of the Convertible Preferences Shares) they will
each have an option (an "Anti-dilution Option"), exercisable upon the issue of
Ordinary Shares by the Company other than for cash, or, if for cash, other than
pursuant to a pre-emptive offering, to enable them to maintain their collective
ownership of Ordinary Shares at 50.1% of the issued Ordinary Shares. The
Anti-dilution Option grants the TCI Affiliate Group and the U S WEST Affiliate
Group the right to purchase (at the time of the dilutive event) additional newly
issued Ordinary Shares for cash at a purchase price per share based on the
average of the prices quoted on the London Stock Exchange for the ten days
ending on the day preceding the day on which the Anti-dilution Option is
exercised, and is exercisable only in the event that the collective ownership of
Ordinary Shares held by the TCI Affiliate Group and the U S WEST Affiliate Group
might otherwise have been reduced to 50% or below of the issued Ordinary Shares
as a result of the Company's proposed issue of such shares other than for cash
or if for cash, other than pursuant to a pre-emptive offering. In order for the
TCI Affiliate Group and the U S WEST Affiliate Group to exercise the
Anti-dilution Option, they must first have converted all Convertible Preference
Shares held by them into Ordinary Shares to the extent such Convertible
Preference Shares are then convertible. The TCI Affiliate Group and the U S WEST
Affiliate Group have agreed with each other that they will exercise any rights
to subscribe for new Ordinary Shares (including pursuant to pre-emptive rights
and the Anti-dilution Option) to the extent necessary to ensure that each
Affiliate Group owns at least 25% of the issued Ordinary Shares.

REGISTRATION RIGHTS

The Company has agreed that the TCI Affiliate, the U S WEST Affiliates, the SBC
Affiliates and the Cox Affiliate will have the right, subject to certain limited
exceptions, to require the Company to include all or any portion of their
Ordinary Shares (including those arising from a conversion of Convertible
Preference Shares on any sale to the "public") in any registered offering by the
Company of Ordinary Shares under the U.S. Securities Act of 1933, as amended
(the "Securities Act"), or in a public offering under U.K. law. In addition, the
TCI Affiliate, the U S WEST Affiliates, the SBC Affiliates and the Cox Affiliate
will have the right to cause the Company on up to eight separate occasions (two
exercisable by each of the TCI Affiliate, the U S WEST Affiliates, the SBC
Affiliates and the Cox Affiliate) to offer all or any part of their Ordinary
Shares for sale in a registered offering under the Securities Act or in a public
offering under U.K. law.

5
<PAGE>

LIMITATIONS ON SCOPE OF BUSINESS AND ASSETS SALES

In connection with the initial public offering of Old Telewest in November 1994
(the "Initial Public Offering") and the Merger, the Company and affiliates of
TCI, U S WEST, SBC and Cox entered into various agreements which provide, among
other things, for certain restrictions on the scope of business of the parties
thereto (and certain affiliates thereof) and also require the consent of the TCI
Affiliate Group, the U S WEST Affiliate Group, the SBC Affiliate Group and the
Cox Affiliate Group for certain dispositions of assets of the Company in limited
circumstances. In addition, one of the Company's principal bank credit
facilities provides that it is an event of default if the beneficial ownership
of TCI and U S WEST decreases below certain specified levels under certain
circumstances.

PROPOSALS FOR SHAREHOLDER ACTION

ADOPTION OF 1996 DIRECTORS' REPORT AND ACCOUNTS
(RESOLUTION #1 ON THE PROXY CARD)

In accordance with the Companies Act, at the Annual General Meeting, the Board
of Directors will present for shareholder adoption the Directors' Report and
Accounts of the Company for the year ended December 31, 1996, a copy of which is
included in the Company's Annual Report for 1996 that accompanies this Proxy
Statement. THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR ADOPTION OF THE
1996 DIRECTORS' REPORT AND ACCOUNTS.

APPOINTMENT OF DIRECTORS
(RESOLUTION #2 THROUGH #12 ON THE PROXY CARD)

The Articles provide that the Board of Directors shall consist of no less than
two directors and no more than twelve directors. The Articles provide that so
long as the TCI Affiliate Group owns 25% or more of the outstanding Ordinary
Shares and the U S WEST Affiliate Group owns 25% or more of the outstanding
Ordinary Shares, the Board shall consist of two representatives designated by
the TCI Affiliate Group and two representatives designated by the U S WEST
Affiliate Group. For these purposes, each of the TCI Affiliate Group and the U S
WEST Affiliate Group shall be deemed to own 50% of the Ordinary Shares owned by
TW Holdings. The Articles also provide that for so long as the SBC Affiliate
Group owns a Qualifying Interest of the issued Ordinary Shares, the SBC
Affiliate Group will be entitled to appoint (and remove) one person as a
Director, and that for so long as the Cox Affiliate Group owns a Qualifying
Interest of the issued Ordinary Shares, the Cox Affiliate Group will be entitled
to appoint (and remove) one person as a Director. A Qualifying Interest shall be
8.33% or more of the Ordinary Shares or, following any Dilutive Issue (as
defined below), 5% or more of the Ordinary Shares; provided, however, that
immediately prior to such Dilutive Issue, the SBC Affiliate Group or the Cox
Affiliate Group, as the case may be, held 8.33% or more of the Ordinary Shares.
For purposes of the foregoing, "Dilutive Issue" means any issue of Ordinary
Shares or other securities (including securities convertible into or
exchangeable for Ordinary Shares or other securities) of the Company in respect
of which the SBC Affiliate Group or the Cox Affiliate Group, as the case may be,
is not entitled by the terms of such issue to participate on a pro-rata basis.

As a condition to the continued listing of the Ordinary Shares on the London
Stock Exchange, the Company must demonstrate its "independence" from any
"controlling shareholder" (defined as a shareholder owning more than 30% of the
outstanding voting shares of the Company). TCI and its affiliates and U S WEST
and its affiliates are "controlling shareholders." To comply with the
independence requirement, the Company must demonstrate that all "significant"
decisions can be made by a majority of directors who are independent from TCI
and its affiliates and U S WEST and its affiliates as controlling shareholders.
Consequently, a majority of the Company's Board of Directors needs to be
independent of TCI and its affiliates and U S WEST and its affiliates. Each of
the TCI Affiliate Group and the U S WEST Affiliate Group has agreed that so long
as they collectively own more than 50%, or individually own more than 30%, in
each case, of the outstanding Ordinary Shares, they will use their best efforts
to ensure that a majority of the directors are independent of TCI and U S WEST
and their respective affiliates within the meaning of the London Stock Exchange
Rules.

6
<PAGE>

Consistent with the foregoing requirements, the Board of Directors has nominated
each of the persons listed below (all of whom currently are directors of the
Company) for appointment as a director. If one or more of the nominees should
become unavailable or unable to serve at the time of the Annual General Meeting,
the shares to be voted for such nominee or nominees which are represented by
proxies will be voted for any substitute nominee or nominees designated by the
Board or, if none, a vacancy will be maintained until filled by the Board. The
Board knows of no reason why any of the nominees will be unavailable or unable
to serve at the time of the Annual General Meeting.

Directors appointed at the Annual General Meeting will hold office until the
next Annual General Meeting or until their successors have been elected and
qualified. The following is a brief listing of the principal occupations for at
least the past five years, certain other significant affiliations and the age as
of March 1, 1997 for each of the nominees.

THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE APPOINTMENT OF EACH OF
THE DIRECTORS NOMINATED BY THE BOARD.

Nominees for Appointment as Directors
(To Serve until the Annual General Meeting in 1998)

FRED A. VIERRA

Mr. Vierra has served as the non-executive Chairman of the Board of the Company
since April 1994 and served on the Executive Committee of the joint venture that
was a predecessor business of the Company (the "Joint Venture") from its
formation in December 1991 until the Joint Venture was acquired by the Company
in November 1994 in connection with the Initial Public Offering. He is an
Executive Vice President of TCI and is responsible for international cable
operations and international programming. Mr. Vierra has served in this position
with TCI (and its predecessor company) since December 1991. Mr. Vierra is also
the Vice Chairman and the Chief Executive Officer of Tele-Communications
International, Inc. and has served in these positions since May 1995 and October
1994, respectively. From October 1994 to May 1995, Mr. Vierra served as Chairman
of the Board of Tele-Communications International, Inc. Previously, Mr. Vierra
was President, Chief Operating Officer and a director of United Artists
Entertainment Company (and a predecessor company) from May 1989 to December
1991, where he managed all day-to-day operations and strategies. Mr. Vierra also
serves as Chairman of TeleWest Europe Group (a joint venture between TCI and U S
WEST which operates cable television networks in Norway, Sweden and Hungary) and
as a non-executive director of Flextech plc (a provider of television
programming). Age 65.

ANTHONY W.P. STENHAM

Mr. Stenham has served as a non-executive director and Deputy Chairman of the
Board of the Company since November 1994 and has served as a consultant to the
Executive Committee of the Joint Venture from May 1994 until the Joint Venture
was acquired by the Company in November 1994 in connection with the Initial
Public Offering. He is Chairman of Arjo Wiggins Appleton plc (a manufacturer and
distributor of paper products) and has served in such position since 1990.
Previously, Mr. Stenham was a Managing Director of Bankers Trust Company from
1986 to 1990. Mr. Stenham serves as a non-executive director of various
companies including The Rank Organisation plc (an entertainment company),
Standard Chartered PLC (a commercial bank) and Unigate PLC (a manufacturer and
distributor of dairy products). Age 65.

7
<PAGE>

A. GARY AMES

Mr. Ames has served as a non-executive director of the Company since November
1995. He is the President and Chief Executive Officer of U S WEST International
Inc., based in London, responsible for the U S WEST Media Group's international
operations. Mr. Ames has served in this position since July 1995. Previously,
from January 1990 to June 1995 Mr. Ames was President and Chief Executive
Officer of U S WEST Communications (a provider of residential and business
telephone services in the U.S.). Mr. Ames also serves as a director of
Albertsons Inc. and Tektronics Inc. and as a non-executive director of Flextech.
Age 52.

JOHN H. ATTERBURY III

Mr. Atterbury was appointed to serve as a non-executive director of the Company
upon completion of the Merger October 1995. He has been the President and Chief
Executive Officer -- SBC International Operations since July 1995, prior to
which he was President of SBC's Telemex operations from January 1991 to June
1995. Mr. Atterbury was the President and Chief Executive Officer of
Southwestern Bell Telecom from October 1988 to December 1990. Mr. Atterbury is
also a director of Telefonos de Mexico (a Mexican telephone company), VTR S.A.
(a Chilean communications company), Transcall (a French cellular telephone
company) and Andocs Inc. (a software development company). Age 48.

LORD BORRIE QC

Lord Borrie QC has served as a non-executive director of the Company since
November 1994 and has served as a consultant to the Executive Committee of the
Joint Venture from May 1994 until the Joint Venture was acquired by the Company
in November 1994 in connection with the Initial Public Offering. He was
President of the Institute of Trading Standards Administration from 1992 to
1996 and the Director General of the Office of Fair Trading from 1976 to
1992. Lord Borrie also serves as a non-executive director of The Mirror Group
plc (a media company which has an interest in Live TV (as discussed above)), the
Woolwich plc (a financial institution) and Three Valleys Water plc. Age 65.

CHARLES J. BURDICK

Mr. Burdick has served as Acting Chief Financial Officer of the Company since
September 1996 and was appointed Finance Director in February 1997. He was Vice
President Finance and Assistant Treasurer at U S WEST from 1990 to October 1996.
Prior to joining U S WEST, Mr. Burdick worked in Treasury and Corporate
Development positions at, inter alia, Time Warner and Carnation International.
Age 45.

STEPHEN J. DAVIDSON

Mr. Davidson has served as a director of the Company since April 1994. He was
appointed Chief Executive Officer of the Company in February 1997 and had been
Acting Chief Executive Officer since August 1996 and the Finance Director of the
Company since January 1993. Previously, he worked for four years at Bankers
Trust Company in London where he was a Managing Director with responsibility for
clients in the media business throughout Europe. Age 41.

LORD GRIFFITHS OF FFORESTFACH

Lord Griffiths has served as a non-executive director of the Company since
November 1994 and has served as a consultant to the Executive Committee of the
Joint Venture since May 1994 until the Joint Venture was acquired by the Company
in November 1994 in connection with the Initial Public Offering. He is an
International Advisor at Goldman Sachs International and has served in this
position since 1991. Previously, Lord Griffiths served as Head of the Prime
Minister's Policy Unit from 1985 to 1990. From 1984 to 1986, he was a Director
of The Bank of England. Lord Griffiths currently serves as a non-executive
director of Herman Miller Inc. (a manufacturer and distributor of furniture),
Times Newspaper Holdings Ltd, Servicemaster Limited (a provider of consumer

8
<PAGE>

maintenance services and management maintenance services to homeowners and
commercial facilities) and English, Welsh and Scottish Railways (a freight rail
company). Age 54.

CHARLES M. LILLIS

Mr. Lillis has served as a non-executive director of the Company since April
1994 and has served on the Executive Committee of the Joint Venture from April
1993 until the Joint Venture was acquired by the Company in November 1994 in
connection with the Initial Public Offering. Mr. Lillis is the President and
Chief Executive Officer of U S WEST Media Group and has served in this position
since November 1995. He also is Executive Vice President and Chief Planning
Officer of U S WEST, having served in this position since 1987. Mr. Lillis also
is a member of the Board of Representatives of Time Warner Entertainment
Company, L.P. Age 55.

JAMES O. ROBBINS

Mr. Robbins was appointed to serve as a non-executive director of the Company
upon completion of the Merger in October 1995. He is the President and Chief
Executive Officer of Cox, having served as the President of the Cable Division
of Cox Enterprises Inc. from 1985 until 1995 and the Chief Executive Officer
from January 1995. He is a past chairman of the U.S. National Cable Television
Association and currently serves on its executive committee. He is also a
director of Teleport Communications Group and NCR Corporation and Chairman of
the 1995 Policy Owners Examining Committee of Northwest Mutual Life Insurance
Company. Age 54.

ADAM N. SINGER

Mr. Singer has served as a non-executive director of the Company since November
1995. He is the President and Chief Operating Officer of Tele-Communications
International, Inc., responsible for the management and development of its
international cable, telephony and programming operations, having served in this
position since October 1994. Previously, Mr. Singer was Vice
President-International of TCI (and its predecessor company) from June 1992 to
October 1994 and President and Chief Executive Officer of United Artists
Entertainment (Programming) Limited from September 1988 to June 1992. Mr. Singer
is a director of Tele-Communications International, Inc. and Scottish Television
plc and a non-executive director of Flextech.
Age 45.
---------------

In accordance with the terms of the Articles and the Shareholder Agreement, Mr.
Vierra and Mr. Singer have been designated to serve as directors by the TCI
Affiliate Group and Mr. Ames and Mr. Lillis have been designated to serve as
directors by the U S WEST Affiliate Group. In the Shareholder Agreement, each of
the TCI Affiliate Group and the U S WEST Affiliate Group has agreed that on any
matter requiring Board approval, it will cause the directors designated by it to
vote together as agreed by them (subject to each director's fiduciary duties to
the Company and to minority shareholders of the Company) or, in the absence of
such agreement, to vote together in the manner that would be most likely to
continue the status quo without materially increasing the Company's financial
obligations or materially deviating from its approved budget and business plan.
If either the TCI Affiliate Group or the U S WEST Affiliate Group (as the case
may be) is precluded from voting on any matter because of a conflict of
interest, the designees of the other Affiliate Group may vote on such matter as
they deem appropriate.

In accordance with the terms of the Articles, Mr. Atterbury and Mr. Robbins have
been designated to serve as directors by the SBC Affiliate Group and the Cox
Affiliate Group, respectively.
---------------

Board Meetings

Regular meetings of the Board of Directors of the Company are scheduled to be
held at least four times during the year and special meetings will be scheduled
when required. The Board held five meetings in 1996. No incumbent Director
attended fewer than 75% of the total number of meetings of the Board and all
Committees of the Board on which such Director served. Directors meet their

9
<PAGE>

responsibilities not only by attending Board and Committee meetings, but also
through communication with members of management on matters affecting the
Company.

Board Committees

The Board has established an Audit Committee and a Remuneration Committee to
assist it in meeting its responsibilities.

The Audit Committee is responsible for reviewing and monitoring the Company's
accounting policies and financial reporting. Regular meetings of the Audit
Committee are scheduled at least four times during the year and special meetings
are scheduled when required (6 meetings were held in 1996). Pursuant to the
Articles and the Shareholder Agreement, the Audit Committee is comprised of the
Company's three independent non-executive directors and, based on current share
ownership levels, one designee from each of the TCI Affiliate Group, the U S
WEST Affiliate Group and the SBC Affiliate Group/the Cox Affiliate Group. The
TCI Affiliate Group has agreed that, for so long as the SBC Affiliate Group/the
Cox Affiliate Group retain the right to appoint one representative to the Audit
Committee, the TCI Affiliate Group will not exercise its right to have one
designee on the Audit Committee. The Company has agreed that for the period
during which the TCI Affiliate Group has a right to appoint a representative to
the Audit Committee but does not so exercise it, the TCI Affiliate Group will be
able to appoint an observer to attend meetings of the Audit Committee. Mr.
Stenham, Lord Borrie and Lord Griffiths currently serve as the independent
non-executive director representatives, Mr. Ames and Mr. Atterbury currently
serve as the representatives of the U S WEST Affiliate Group and the SBC
Affiliate Group/the Cox Affiliate Group, respectively, and Mr. Vierra currently
is the observer appointed by the TCI Affiliate Group. Mr. Stenham is the
Chairman of the Audit Committee.

The Remuneration Committee is responsible for reviewing and approving the
remuneration and other terms of employment of the executive directors and senior
executives, as well as for determining or recommending the level of
participation for all the Company's employees in the Company's share and other
incentive plans. Regular meetings of the Remuneration Committee are scheduled
twice during the year and special meetings are scheduled when required (6
meetings were held in 1996). Pursuant to the Articles and the Shareholder
Agreement, the Remuneration Committee is comprised of one of the Company's
independent non-executive directors and, based on current share ownership
levels, one designee from each of the TCI Affiliate Group and the U S WEST
Affiliate Group. In addition, based on current share ownership levels, the SBC
Affiliate Group and the Cox Affiliate Group each has the right to appoint one
observer to the Remuneration Committee. Mr. Stenham currently serves as the
non-executive director representative and Mr. Singer and Mr. Ames currently
serve as the representatives of the TCI Affiliate Group and U S WEST Affiliate
Group, respectively. Mr. Atterbury and Mr. Robbins currently serve as the
observers for the SBC Affiliate Group and the Cox Affiliate Group, respectively.
Mr. Ames is the Chairman of the Remuneration Committee.

Compensation of Non-Executive Directors

The independent non-executive directors (other than the Deputy Chairman of the
Board) receive an annual payment of (pound)20,000. The Deputy Chairman of the
Board receives an annual payment of (pound)35,000. Each independent
non-executive director also receives (pound)1,000 for each Board and committee
meeting attended and reimbursement for reasonable expenses incurred in the
performance of his duties as a director.

No compensation is paid to any of the other non-executive directors or to any of
the executive directors for their service as directors.

ALLOCATION OF SECURITIES
(RESOLUTION #13 ON THE PROXY CARD)

Under the Companies Act, directors may not allot (i.e., issue) shares unless
they are authorized to do so by an ordinary resolution of the shareholders of
the company or under the articles of association of such company. At the Annual
General Meeting, the Board of Directors will present the resolution set

10
<PAGE>

out below, which provides the Directors with the authority to allot up to
309,189,200 Ordinary Shares (representing approximately one third of the
Company's current issued ordinary share capital), which number of shares is in
accordance with U.K. institutional guidelines. This authority will lapse 15
months after the Annual General Meeting or at the conclusion of the 1998 Annual
General Meeting, whichever occurs first.

Text of resolution:

THAT in substitution for all previous authorities which are hereby revoked,
the Directors be generally and unconditionally authorized pursuant to
Section 80 of the Companies Act 1985 (the "Act") to exercise all or any
powers of the Company to allot relevant securities (within the meaning of
Section 80(2) of the Act) up to an aggregate nominal amount of
(pound)30,918,920 such authority to expire (unless previously renewed,
varied or revoked by the Company in a general meeting) on the earlier of
August 8, 1998 or the conclusion of the Annual General Meeting of the
Company to be held in 1998, but the Company may make an offer or agreement
which would or might require relevant securities to be allotted after the
expiry of this authority and the Directors may allot relevant securities in
pursuance of that offer or agreement.

Notwithstanding the foregoing resolution authorizing the Directors to issue
additional securities under certain circumstances without shareholder approval,
the rules of The Nasdaq National Market may require the Company to seek further
shareholder approval for certain such issuances in the future.

THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL OF THE RESOLUTION
BECAUSE IT BELIEVES THAT IT IS IN THE COMPANY'S BEST INTEREST FOR THE DIRECTORS
TO HAVE THE FLEXIBILITY OF ALLOTTING SHARES AS PROVIDED THEREUNDER, ALTHOUGH
THEY HAVE NO PRESENT INTENTION OF DOING SO.

DISAPPLICATION OF PRE-EMPTION RIGHTS
(RESOLUTION #14 ON THE PROXY CARD)

At the Annual General Meeting, the Board of Directors will present the
resolution set out below, which provides the Directors with the authority to
allot shares for cash without first offering such shares pro rata to existing
shareholders, as otherwise required by the Companies Act. The limited authority
conferred by such resolution would empower the Directors to make such cash
issues other than pro rata to shareholders provided such issues did not exceed
in aggregate 46,378,380 shares (representing 5% of the Company's current issued
ordinary share capital), which number of shares is in accordance with U.K.
institutional guidelines. This authority will lapse 15 months after this Annual
General Meeting or at the conclusion of the 1998 Annual General Meeting,
whichever occurs first. The effectiveness of this Resolution is conditional on
the approval by the shareholders of Resolution #13.

Text of resolution:

THAT in substitution for all previous authorities which are hereby revoked,
and subject to the passing of Resolution 13, the Directors be empowered
pursuant to Section 95 of the Companies Act 1985 (the "Act") to allot
equity securities (within the meaning of Section 94(2) of the Act) for cash
pursuant to the authority conferred by Resolution 13 as if Section 89(1) of
the Act did not apply to any such allotment. This power:

(i) expires on the earlier of August 8, 1998 and the conclusion of the
Annual General Meeting of the Company to be held in 1998, but the Company
may make an offer or agreement which would or might require equity
securities to be allotted after the expiry of this authority and the
Directors may allot equity securities in pursuance of that offer or
agreement; and

(ii) is limited to:

A. allotments of equity securities where such securities have been
offered (whether by way of a rights issue, open offer or otherwise) to
holders of ordinary shares of 10p each in the capital of the Company
("Ordinary Shares") and, if in accordance with their rights, the Directors

11
<PAGE>

so determine, to holders of other equity securities of any class, in
proportion (as nearly as may be) to their existing holdings of Ordinary
Shares or (as the case may be) other equity securities of the class on the
basis of their rights to receive such offer or, failing which, on the basis
that their holdings have been converted into or that they have subscribed
for Ordinary Shares on the basis then applicable, subject to the Directors
having a right to make such exclusions or other arrangements in connection
with the offer as they deem necessary or expedient:

(a) to deal with equity securities representing fractional entitlements;
and

(b) to deal with legal or practical problems under the laws of, or the
requirements of any recognized regulatory body or any stock exchange in any
territory; and

B. allotments of equity securities for cash otherwise than pursuant
to paragraph A up to an aggregate nominal amount of (pound)4,637,838.

APPOINTMENT OF AUDITORS AND AUTHORIZATION FOR DIRECTORS TO FIX REMUNERATION
(RESOLUTION #15 ON THE PROXY CARD)

The Board of Directors, upon the recommendation of the Audit Committee, has
recommended that KPMG Audit plc, a limited liability company wholly-owned by
KPMG, be appointed as auditors, to serve from the conclusion of the forthcoming
Annual General Meeting until the next annual general meeting. The Board intends
to fix the remuneration of the auditors for such period after their appointment.
At the Annual General Meeting, the Board of Directors will present for
shareholder approval a resolution appointing KPMG Audit plc as auditors and
authorizing the Board to fix the remuneration for the auditors. THE BOARD
RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR SUCH APPOINTMENT AND AUTHORIZATION TO
FIX REMUNERATION.

Representatives of KPMG and KPMG Audit plc are expected to be present at the
Annual General Meeting. Such representatives will have the opportunity to make a
statement if they desire to do so and will be available to respond to questions
from shareholders.

ADOPTION OF TWO NEW SHARE SCHEMES
(RESOLUTION #16 ON THE PROXY CARD)

In connection with the Initial Public Offering, the Company adopted a restricted
share scheme to replace a then existing cash bonus scheme. The initial awards
made under that share scheme generally vest in January 1998. To provide
additional incentives beyond 1998 the Company proposes to adopt two new schemes:
(a) a long term incentive scheme to provide for additional share grants and (b)
an equity participation plan to enable employees to purchase ordinary shares
using their annual cash performance related bonus, with the Company matching the
employee purchases with an award of shares. These plans are described in more
detail in the Appendix to the Notice of Annual General Meeting accompanying this
document. Under the rules of the London Stock Exchange, the plans require
shareholder approval as provided in Resolution #16. AT THE ANNUAL GENERAL
MEETING, THE BOARD WILL PRESENT FOR SHAREHOLDER APPROVAL A RESOLUTION PROPOSING
THE ADOPTION OF TWO NEW SHARE SCHEMES AND THE BOARD RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR THESE SCHEMES.

12
<PAGE>

INCREASE IN BORROWING LIMIT
(RESOLUTION #17 ON THE PROXY CARD)

The Articles of Association of the Company include a limit on the amount the
Company may borrow. Current limitation provides that the borrowings of the
Company shall not exceed the greater of (pound)2,000,000,000 and four times the
adjusted capital and reserves (as defined in the Articles of Association). Given
the considerable expansion of the Company's operations, the Company believes it
would be prudent to increase the borrowing powers under the Articles of
Association to the greater of (pound)4,000,000,000 and five times the adjusted
capital and reserves. Under the Articles of Association, this change requires
shareholder approval. AT THE ANNUAL GENERAL MEETING, THE BOARD WILL PRESENT FOR
SHAREHOLDER APPROVAL A RESOLUTION TO INCREASE THE BORROWING POWERS AND
RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE RESOLUTION.

SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information known to the Company with
respect to Ordinary Shares beneficially owned, as of March 1, 1997, by each
director, director nominee and named executive officer and all directors and
executive officers as a group:

<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
ORDINARY OUTSTANDING
SHARES ORDINARY
NAME OWNED SHARES
---- ----- ------

<S> <C> <C>
Fred A. Vierra -- --
Anthony W. P. Stenham -- --
Charles Burdick 20,000(1) (2)
Stephen J. Davidson -- --
A. Gary Ames -- --
John H. Atterbury III -- --
Charles M. Lillis -- --
James O. Robbins -- --
Lord Borrie, QC -- --
Lord Griffiths of Fforestfach -- --
Simeon Galpert -- --
Bruce D. Langham 2,750 (2)
Lynn C. Rexroth 3,500(1) (2)
Roger P. Wilson -- --
All Directors and Executive Officers (as a group) 26,250(1) (2)
<FN>
- -------------
1. In the form of American Depository Receipts.

2. Represents less than 0.01% of the Company's outstanding Ordinary Shares.
</FN>
</TABLE>

13
<PAGE>

EXECUTIVE COMPENSATION
Summary Compensation Table (1)
<TABLE>
<CAPTION>

Annual Compensation Long Term Compensation
------------------------------------------------------ ----------------------------
Other Annual Restricted All Other
Name and position Year Salary Bonus Compensation Stock Awards (2) Options Compensation
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Stephen J Davidson 1996 (pound)235,756 (pound)25,500 (pound)11,903 (3) - 107,579 (pound)12,599 (4)
Chief Executive Officer 1995 (pound)143,100 (pound)98,312 (pound)11,443 (3) (pound)819,691 (5) 178,380 (pound)10,017
1994 (pound)135,000 (pound)79,520 (pound)10,974 (3) - - (pound)9,188

Alan Michels (6) 1996 (pound)100,542 - (pound)67,358 (7) - 164,564 (pound)544,137 (8)
Former Chief Executive 1995 (pound)160,348 (pound)120,765 (pound)266,574 (7) (pound)750,008 (9) 183,437 (pound)4,828
Officer 1994 (pound)139,579 (pound)87,834 (pound)304,813 (7) - - (pound)38,403

Lynn C Rexroth (10) 1996 (pound)175,000 (pound)17,093 (pound)179,624 (11) (pound)63,584 104,280 (pound)4,808 (12)
Chief Operations Officer 1995 (pound)84,969 (pound)59,649 (pound)166,274 (11) (pound)119,957 (13) 107,882 (pound)4,827
1994 (pound)82,922 (pound)25,575 (pound)139,037 (11) - - (pound)5,377

Simeon Galpert (14) 1996 (pound)111,138 (pound)28,726 (pound)9,108 (15) - 56,383 (pound)7,780 (16)
Senior Vice President 1995 (pound)103,432 (pound)33,153 (pound)9,269 (15) (pound)176,825 (17) 116,618 (pound)7,000
of Finance 1994 (pound)57,192 (pound)7,272 (pound)5,504 (15) - - (pound)4,083

Roger P Wilson (18) 1996 (pound)98,000 (pound)9,155 (pound)8,479 (19) - 139,007 (pound)11,760 (21)
Senior Vice President 1995 (pound)83,970 (pound)108,132 (pound)7,350 (19) (pound)98,710(20) - (pound)10,076
of Residential Services

Bruce Langham 1996 (pound)98,000 (pound)12,204 (pound)11,614 (22) - 52,128 (pound)9,310 (23)
Senior Vice President 1995 (pound)91,333 (pound)26,030 (pound)11,445 (22) (pound)237,755 (24) 104,956 (pound)7,405
of Digital Services 1994 (pound)77,833 (pound)9,827 (pound)7,599 (22) - - (pound)5,214
<FN>
1. Certain amounts reflected in this table and elsewhere in this section were
paid in US dollars, but are represented in this table in pounds sterling
based on an average exchange rate of $1.56 to (pound)1.00, which represents
the average spot closing rate for the year ended December 31, 1996.

2. The value of the Restricted Stock reflected in this table represents the
product of the number of Ordinary Shares underlying the award multiplied by
the closing price per Ordinary Share of the Ordinary Shares on the London
Stock Exchange on the date of the grant (January 24, 1996 (132.5p) in the
case of Restricted Share awards granted to Mr. Rexroth on that date,
November 8, 1995 (175.0p) in the case of Restricted Share awards granted to
Mr. Wilson on that date and January 13, 1995 (172.5p) in the case of all
other Restricted Share awards).

3. Mr. Davidson's "Other Annual Compensation" includes (pound)11,060,
(pound)10,322 and (pound)10,157 for an automobile and related expenses for
the years 1996, 1995 and 1994, respectively.

4. Mr. Davidson's "All Other Compensation" consists of payments made by the
Company to his private pension plan.

5. On January 13, 1995 Mr. Davidson was granted an award of 475,183 shares of
Restricted Stock. As of December 31, 1996, the aggregate value of such
shares was (pound)589,227 based on a price per Ordinary Share of 124p (the
closing price per Ordinary Share of the Ordinary Shares on the London Stock
Exchange on December 31, 1996). Such shares vest and will be distributed to
Mr. Davidson (without payment of consideration) on January 13, 1998,
subject to earlier vesting and distribution under certain circumstances.
Until such shares are vested, Mr. Davidson will not be entitled to vote or
receive dividends in respect of such shares.

6. Mr. Michels served as a Director and Chief Executive Officer from January
1, 1994 to July 31, 1996. As described below under "- Employment
Agreements," certain amounts reflected in this table for Mr. Michels were
paid by an affiliate of U S WEST, which was reimbursed by the Company for
all such payments.

7. Mr. Michels' "Other annual compensation" includes provisions of
(pound)17,236, (pound)144,771 and (pound)223,060 in respect of his UK
income taxes for 1996, 1995 and 1994, respectively, housing allowances of
(pound)50,638, (pound)62,962 and (pound)49,386 for 1996,

14
<PAGE>

1995 and 1994, respectively, and automobile and related expenses of
(pound)6,743, (pound)11,310 and (pound)8,362 for 1996, 1995 and 1994,
respectively.

8. Mr. Michels' "All other compensation" includes a (pound)539,329 termination
payment paid or payable in connection with Mr. Michels' resignation and a
(pound)4,808 matching contribution to his 401(k) plan.

9. On January 13, 1995 Mr. Michels was granted an award of 434,787 shares of
Restricted Stock. As of December 31, 1996, the aggregate value of such
shares was (pound)539,136 based on a price per Ordinary Share of 124p (the
closing price per Ordinary Share of the Ordinary Shares on the London Stock
Exchange on December 31, 1996). Such shares vested pursuant to the Rules of
the Restricted Stock Scheme and arrangements with the Company in connection
with his resignation.

10. Mr. Rexroth is a secondee to the Company from US WEST and consequently, as
described below under "-Employment Agreements", certain amounts reflected
in this table for Mr. Rexroth were paid by an affiliate of US WEST, which
was reimbursed by the Company for all such payments.

11. Mr. Rexroth's "Other Annual Compensation" includes provisions of
(pound)74,253, (pound)102,968 and (pound)91,629 in respect of his UK income
taxes for the years 1996, 1995 and 1994, respectively, and (pound)30,462,
(pound)32,496 and (pound)32,496 in respect of housing allowances for 1996,
1995 and 1994, respectively.

12. Mr. Rexroth's "All Other Compensation" represents matching contributions to
his 401(k) plan.

13. On January 24, 1996 and January 13, 1995 Mr. Rexroth was granted an award
of 47,988 and 69,540 shares, respectively, of Restricted Stock. As of
December 31, 1996, the aggregate value of such shares was (pound)145,735
based on a price per Ordinary Share of 124p (the closing price per Ordinary
Share of the Ordinary Shares on the London Stock Exchange on December 31,
1996). Such shares vest and will be distributed to Mr. Rexroth (without
payment of consideration) on January 24, 1999 (in the case of the 47,988
shares) and January 13, 1998 (in the case of the 69,540 shares),
respectively, subject to earlier vesting and distribution under certain
circumstances. Until such shares are vested, Mr. Rexroth will not be
entitled to vote or receive dividends in respect of such shares.

14. Mr. Galpert commenced employment with the Company on June 6, 1994 and
resigned effective as of March 31, 1997.

15. Mr. Galpert's "Other Annual Compensation" includes (pound)8,394,
(pound)8,334 and (pound)4,864 for an automobile and related expenses for
the years 1996, 1995 and 1994, respectively.

16. Mr. Galpert's "All Other Compensation" consists of payments made by the
Company to his private pension plan.

17. On January 13, 1995 Mr. Galpert was granted an award of 102,507 shares of
Restricted Stock. As of December 31, 1996, the aggregate value of such
shares was(pound)127,109 based on a price per Ordinary Share of 124p (the
closing price per Ordinary Share of the Ordinary Shares on the London Stock
Exchange on December 31, 1996). Such shares will vest on March 31, 1997 on
a pro rata basis up to March 31, 1997, pursuant to the Rules of the
Restricted Stock Scheme and arrangements with the Company in connection
with his resignation, subject to earlier vesting and distribution under
certain circumstances. Until such shares are vested, Mr. Galpert will not
be entitled to vote or receive dividends in respect of such shares.

18. Mr. Wilson commenced employment with the Company upon completion of the
Merger on October 3, 1995. Amounts reflected for Mr. Wilson prior to
completion of the Merger were paid by former SBCC.

19. Mr. Wilson's "Other Annual Compensation" includes(pound)7,779
and(pound)6,731 for automobile and related expenses for the years 1996 and
1995, respectively.

20. On November 8, 1995 Mr. Wilson was granted an award of 56,406 shares of
Restricted Stock. As of December 31, 1996, the aggregate value of such
shares was (pound)69,943 based on a price per Ordinary Share of 124p (the
closing price per Ordinary Share of the Ordinary Shares on the London Stock
Exchange on December 31, 1996). Such shares vest and will be distributed to
Mr. Wilson (without payment of consideration) on November 8, 1998, subject
to earlier vesting and distribution under certain circumstances. Until such
shares are vested, Mr. Wilson will not be entitled to vote or receive
dividends in respect of such shares.

21. Mr. Wilson's "All Other Compensation" consists of payments made by the
Company to his private pension plan.

22. Mr. Langham's "Other Annual Compensation" includes (pound)10,697,
(pound)10,637 and (pound)6,606 for automobile and related expenses for the
years 1996, 1995 and 1994, respectively.

23. Mr. Langham's "All Other Compensation" consists of payments made by the
Company to his private pension plan.

24. On January 13, 1995 Mr. Langham was granted an award of 137,529 shares of
Restricted Stock. As of December 31, 1996, the aggregate value of such
shares was (pound)170,536 based on a price per Ordinary Share of 124p (the
closing price per Ordinary Share of the Ordinary Shares on the London Stock
Exchange on December 31, 1996). Such shares vest and will be distributed to
Mr. Langham (without payment of consideration) on January 13, 1998, subject
to earlier vesting and distribution under certain circumstances. Until such
shares are vested, Mr. Langham will not be entitled to vote or receive
dividends in respect of such shares.
</FN>
</TABLE>

15
<PAGE>

Option Grant Table
<TABLE>
<CAPTION>

INDIVIDUAL GRANTS
------------------------------------------------------------

PERCENT OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED PRICE APPRECIATION
UNDERLYING TO EMPLOYEES EXERCISE FOR OPTION TERM
NAME OPTIONS GRANTED IN 1996 PRICE(1) EXPIRATION DATE 5% 10%
- --------------------- --------------- ------------ -------- ---------------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Stephen J Davidson 21,277(2) 0.52% 141.0p March 11, 2006 17,827 46,158
86,302(3) 2.09% 141.0p March 11, 2006 72,310 187,221

Alan Michels 21,277(2) 0.52% 141.0p March 11, 2006(4) 17,827 46,158
95,745(3) 2.32% 141.0p March 11, 2006(4) 80,222 207,706
47,542(3) 1.15% 138.0p March 11, 2006(4) 41,260 104,562

Lynn C Rexroth 21,277(2) 0.52% 141.0p March 11, 2006 17,827 46,158
47,542(3) 1.15% 138.0p March 11, 2006 41,260 104,562
35,461(3) 0.86% 141.0p March 11, 2006 29,712 76,928

Simeon Galpert 21,277(2) 0.52% 141.0p March 11, 2006(5) 17,827(5) 46,158(5)
35,106(3) 0.85% 141.0p March 11, 2006(5) 29,414(5) 76,158(5)

Roger P. Wilson 21,277(2) 0.52% 141.0p March 11, 2006 17,827 46,158
117,730(3) 2.86% 141.0p March 11, 2006 98,643 255,399

Bruce Langham 21,277(2) 0.52% 141.0p March 11, 2006 17,827 46,158
30,851(3) 0.75% 141.0p March 11, 2006 25,849 66,927

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

1. The exercise prices reflect the middle market quotation on the London Stock
Exchange for the Ordinary Shares on the day of grant in the case of
incentive stock options under Section 422 of the U.S. Internal Revenue
Code, as amended, and on the day before the grant in the case of other
options.

2. Represents grants under the Telewest (1995) (No.1) Executive Share Option
Scheme.

3. Represents grants under the Telewest (1995) (No.2) Executive Share Option
Scheme.

4. Pursuant to arrangements with the Company in connection with his
resignation, Mr. Michels' options remain in effect in accordance with the
Rules of the Schemes following his resignation, which was effective as of
July 31, 1996.

5. Pursuant to the Rules of the Schemes, Mr. Galpert's options will lapse on
March 31, 1997 (the effective date of his resignation).
</FN>
</TABLE>

16
<PAGE>

Option Exercises and Year-End Value Table(1)
<TABLE>
<CAPTION>

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES ACQUIRED VALUE OPTIONS AT YEAR-END AT YEAR-END
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(2)
---- ----------- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
Stephen J. Davidson 0 0 0/297,459 0/0
Alan Michels 0 0 0/348,001 0/0
Lynn C. Rexroth 0 0 0/212,162 0/0
Simeon Galpert 0 0 0/173,001 0/0
Roger P. Wilson 0 0 0/139,007 0/0
Bruce D. Langham 0 0 0/157,084 0/0
<FN>
1. References to grants of options are options granted by the Company under
its Executive Share Option Schemes and Sharesave Scheme.
2. Based on the closing price per Ordinary Share on December 31, 1996 of 124p.
</FN>
</TABLE>

EMPLOYMENT AGREEMENTS

Mr. Davidson and the Company have agreed that Mr. Davidson will serve as Chief
Executive Officer of the Company for an indefinite term, commencing as of
February 12, 1997. The Company and Mr. Davidson each has the right to terminate
the employment agreement at any time upon one years' notice. The agreement
provides that Mr. Davidson will receive a base salary of (pound)335,000 per
annum and also provides that he will be eligible for a bonus of 25% of his base
salary each year upon the Company's achievement of target performance and
certain personal objectives, increasing to a maximum of 50% of his base salary
if the Company exceeds target performance by specified amounts.

Pursuant to a secondment agreement between the Company and an affiliate of U S
WEST, Mr. Michels and the Company entered into an employment agreement which
provided that Mr. Michels would serve as Chief Executive Officer of the Company
for an initial term of three years commencing as of November 29, 1994. In
accordance with the agreement (as most recently amended) Mr. Michels received
gross payments in 1996 equivalent to (pound)167,900 per annum, which consisted
of a base salary of (pound)100,542 and foreign service premiums and other
expatriate compensation in an aggregate of (pound)67,358 (subject to certain
adjustments). Mr. Michels was also eligible for, but did not receive, a
short-term bonus of 40% of his base salary each year upon the Company's
achievements of target performance, increasing to a maximum of 80% of his base
salary if the Company exceeded target performance by specified amounts.
Effective July 31, 1996, Mr. Michels resigned from his positions as Chief
Executive Officer and a member of the Board of Directors. In connection with
such resignation, the Company and Mr. Michels agreed to a termination payment of
(pound)539,329 in lieu of any additional salary, bonus or other benefits under
Mr. Michel's employment agreement. Mr. Michels retains the award under the
Restricted Share Scheme with respect to 434,787 Ordinary Shares and the awards
under the Executive Share Option Schemes with respect to 348,001 Ordinary
Shares, in each case exercisable pursuant to the original terms thereof.

Mr. Rexroth commenced employment with the Company on December 24, 1992. Pursuant
to the terms of a new assignment agreement with U S WEST Overseas on December 1,
1995, Mr. Rexroth was assigned to serve as Senior Vice President of Group
Operations for a fixed term of eighteen months, commencing as of January 1,
1996. U S WEST Overseas and Mr. Rexroth each has the right to terminate the
agreement upon 60 days' notice. The agreement (as revised) provides that Mr.
Rexroth will receive a base salary of (pound)175,000 per annum plus foreign
service premiums and other expatriate compensation (subject to certain
adjustments) and also provides that he will be eligible for a bonus of 30% of
his base salary each year upon the Company's achievement of target performance
and certain personal objectives. On termination, Mr. Rexroth is entitled to be
reimbursed for relocation costs to the U.S. The Company has agreed to reimburse
U S WEST Overseas for all amounts paid to Mr. Rexroth during the term of the
assignment. Mr. Rexroth continues to receive benefits under certain U S WEST
plans.

17
<PAGE>

Mr. Galpert and the Company entered into an employment agreement which provides
that Mr. Galpert will serve as Senior Vice President of Finance of the Company
for an indefinite term, commencing as of June 6, 1994. The Company and Mr.
Galpert each has the right to terminate the employment agreement at any time
upon one year's notice. The agreement (as most recently amended) provides that
Mr. Galpert will receive a base salary of (pound)115,000 per annum and also
provides that he will be eligible for a bonus of 25% of his base salary each
year upon the Company's achievement of target performance, increasing to a
maximum of 50% of his base salary if the Company exceeds target performance by
specified amounts. Mr. Galpert resigned from his position as Senior Vice
President of Finance effective as of March 31, 1997. Mr. Galpert retains the
award under the Restricted Share Scheme with respect to 76,880 Ordinary Shares
(75% of his current outstanding grant) and the awards under the Executive Share
Option Schemes lapsed.

Mr. Wilson commenced employment with the Company on October 3, 1995, being
previously employed by SBCC since October 1992. Mr. Wilson and the Company
entered into an employment agreement which provides that Mr. Wilson will serve
as Senior Vice President of Operations of the Company for an indefinite term,
commencing as of September 16, 1996. The Company and Mr. Wilson each has the
right to terminate the employment agreement at any time upon one year's notice.
The agreement provides that Mr. Wilson will receive a base salary of
(pound)85,460 per annum and also provides that he will be eligible for a bonus
of 25% of his base salary each year upon the Company's achievement of target
performance, increasing to a maximum of 50% of his base salary if the Company
exceeds target performance by specified amounts. Following reviews in January
1996, January 1997 and March 1997 Mr. Wilson's salary was increased to
(pound)98,000 per annum, (pound)106,820 per annum and (pound)120,000 per annum,
respectively.

Mr. Langham commenced employment with the Company on October 28, 1991. Mr.
Langham and the Company entered into an employment agreement which provides that
Mr. Langham will serve as Senior Vice President of Digital Services of the
Company for an indefinite term, commencing as of September 16, 1996. The
Company and Mr. Langham each has the right to terminate the employment agreement
at any time upon one year's notice. The agreement provides that Mr. Langham will
receive a base salary of (pound)98,000 per annum and also provides that he will
be eligible for a bonus of 25% of his base salary each year upon the Company's
achievement of target performance, increasing to a maximum of 50% of his base
salary if the Company exceeds target performance by specified amounts. Following
a review in January 1997, Mr. Langham's salary was increased to (pound)102,900
per annum. In addition, the Company has also agreed to make certain payments and
provide certain benefits to Mr. Langham in the event he resigns or is terminated
under certain circumstances prior to September 6, 1997.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

SECONDMENT OF PERSONNEL

Affiliates of TCI, U S WEST, SBC and Cox have seconded senior personnel to the
Company to provide certain business and technical expertise and support.
Currently, five of the Company's employees are on secondment from affiliates of
TCI, U S WEST, SBC and Cox. The Company has agreed in secondment agreements to
reimburse the affiliates of TCI, U S WEST, SBC and Cox, as the case may be, for
the full costs each incurs in respect of any personnel seconded to the Company.
The aggregate amount expensed by the Company to TCI, U S WEST, SBC and Cox (or
affiliates thereof) in respect of personnel (and certain technical consultants)
in 1996 was approximately (pound)375,000, (pound)1,810,000, (pound)93,000 and
(pound)281,000, respectively.

TECHNOLOGY SHARING ARRANGEMENTS

TCI and U S WEST have agreed to make available to the Company proprietary
technology and know-how which they are permitted to license and which is related
to cable television and cable telephony at a fair market price which is
generally no less favorable than those provided to any unaffiliated customers.
The Company has agreed to make available to TCI and U S WEST any of the
Company's proprietary technology and know-how which it is permitted to license
and which is related to cable television and cable telephony at a fair market
price which is generally not less favorable than those provided to any
unaffiliated customers.

18
<PAGE>

PROGRAMMING

An affiliate of TCI and an affiliate of U S WEST own approximately 50.9% and
7.4%, respectively, of Flextech plc ("Flextech"). In addition, Mr. Vierra and
Mr. Singer are directors of Flextech. Flextech owns interests (in some cases,
controlling interests) in certain programming channels and provides management
services to certain of such channels and other channels. Some of the channels in
which Flextech owns an interest or provides management services to are offered
directly by the Company to its subscribers and some are included in the BSkyB
Multi-Channel Package, which is also offered by the Company to its subscribers.
In addition, affiliates of U S WEST, TCI and SBC are partners in CPP-1, a joint
venture with three other U.S. cable operators which has a 10% interest in Live
TV. Lord Borrie is also a director of The Mirror Group plc, which has an
interest in Live TV. Live TV is carried by the Company's network. Furthermore,
Cox has an interest in The Discovery Channel, The Learning Channel, UK Gold and
UK Living and an affiliate of TCI has an interest in Time Warner Inc., which
owns CNN International, The Cartoon Network and TNT, all of which are carried by
the Company's network. The Company believes that programming obtained from all
the affiliated programming suppliers is obtained on terms no less favorable than
those available to unrelated third parties.

CERTAIN TAX CONSEQUENCES OF OWNERSHIP OF ADSS

A description of certain tax consequences relating to the ownership of ADSs is
set out in Annex B hereto.

REMUNERATION COMMITTEE REPORT

A report of the Remuneration Committee of the Company's Board of Directors
covering various matters specified by applicable U.S. law and the U.K. Code of
Best Practice in the recent Report of the Study Group on Directors' Remuneration
chaired by Sir Richard Greenbury is set out in the Annual Report of the Company
for 1996 under the caption "Report of the Remuneration Committee."

19
<PAGE>

PERFORMANCE GRAPHS

The following graph compares, for the period from November 23, 1994 through the
fiscal year ended December 31, 1996, the cumulative total shareholder return on
Ordinary Shares which are traded on the London Stock Exchange to that of (a) the
Financial Times -- Stock Exchange All Share Index, (b) a peer group which
consists of British Telecommunications plc, Cable & Wireless plc, Vodafone,
Securicor Services, NYNEX CableComms Group plc and General Cable plc. The
cumulative shareholder return on Ordinary Shares reflects the Old Telewest
Ordinary Shares (which were traded on the London Stock Exchange prior to the
Merger) for the period from November 22, 1994 (the first time such shares were
registered under the U.S. Securities Exchange Act of 1934, as amended) through
September 29, 1995 (the last day of trading for such shares) and reflects the
Company's Ordinary Shares for the period from October 2, 1995 (the first day of
trading for such shares) through December 31, 1996.

[GRAPH TO BE INSERTED]

20
<PAGE>

The following graph compares, for the period from November 22, 1994 through the
fiscal year ended December 31, 1996, the cumulative total shareholder return on
the ADSs which are traded on The Nasdaq National Market to that of (a) the S&P
500 Index, (b) a peer group which consists of Bell Cablemedia Plc, Comcast UK
Cable Partnership, International CableTel Inc., NYNEX CableComms Group plc and
General Cable plc. The cumulative shareholder return on the ADSs reflects ADSs
evidencing Old Telewest Ordinary Shares (which were traded on the London Stock
Exchange prior to the Merger) for the period from November 22, 1994 (the first
time such shares were registered under the U.S. Securities Exchange Act of 1934,
as amended) through September 29, 1995 (the last day of trading for such shares)
and reflects the Company's Ordinary Shares for the period October 2, 1995 (the
first day of trading for such shares) through December 31, 1996.

[GRAPH TO BE INSERTED]

In calculating cumulative total shareholder return in the two preceding graphs,
returns are calculated on a quarterly basis (assuming an initial investment of
$100 on November 22, 1994), reinvestment of dividends is assumed, and the
returns of each member of the indices and the peer groups are weighed for market
capitalization.

21
<PAGE>

COMPLIANCE WITH SECTION 16(A) OF THE U.S. SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the U.S. Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and any persons who own more than ten
percent of the Company's Ordinary Shares to file reports of initial ownership of
the Company's Ordinary Shares and subsequent changes in that ownership with the
Securities and Exchange Commission (initial reports are filed on Form 3 and
reports as to subsequent changes or certain other matters are filed on Forms 4
or 5). Officers, directors and greater than ten-percent beneficial owners are
also required to furnish the Company with copies of all Section 16(a) forms they
file.

Based solely upon a review of the copies of the forms furnished to the Company,
the Company believes that during 1996 all Section 16(a) filing requirements were
complied with except that (a) Mr. Vierra filed one Report on Form 5 late
covering three transactions which had not previously been reported in a timely
manner and (b) Messrs. Stephen Davidson, Alan Michels, Lynn Rexroth, Simeon
Galpert, Bruce Langham, Roger Wilson, Geoffrey Cheetham and Howard Watson and
Ms. Victoria Hull each [filed] one Report on Form 5 late covering an aggregate
of 17 transactions for the grant of options on March 11, 1997 pursuant to the
Telewest (1995) (No.1) Executive Share Option Scheme and the Telewest (1995)
(No.2) Executive Share Option Scheme.

APPLICABILITY OF SECTION 162(M) OF THE U.S. INTERNAL REVENUE CODE OF 1986

Because the Company is not currently and does not expect in the future to be
subject to U.S. federal income tax, Section 162(m) of the U.S. Internal Revenue
Code of 1986, as amended (the "Code"), which generally denies a deduction for
U.S. federal income tax purposes to publicly-held companies for compensation
paid to certain executives in excess of $1 million per executive per taxable
year, currently does not apply to the Company.

VOTING REQUIREMENTS

Every holder of Ordinary Shares who is present in person or by proxy at the
Annual General Meeting shall have one vote on each matter to be presented, and
on a poll every shareholder who is present in person or by proxy shall have one
vote for every Ordinary Share held (subject in each case to disenfranchisement
in the limited circumstances provided in the Articles). Voting at the Annual
General Meeting will be by a show of hands unless a poll is demanded. A poll may
be demanded by (a) the chairman of the meeting, (b) not less than five
shareholders present in person or by proxy and entitled to vote, (c) any
shareholder or shareholders present in person or by proxy and representing in
the aggregate not less than one-tenth of the total voting rights of all
shareholders entitled to attend and vote at such meeting or (d) any shareholder
or shareholders present in person or by proxy and holding shares conferring a
right to vote at the meeting on which there have been paid-up sums in aggregate
equal to not less than one-tenth of the total sum paid on all shares conferring
such right. Since under English law voting rights are only conferred on
registered holders of shares, a person holding through a nominee may not
directly demand a poll.

Where a poll is not demanded, the interests of beneficial owners of Ordinary
Shares who hold through a nominee or record owners who have appointed a proxy
may not be reflected in votes cast on a show of hands if such nominee or proxy
does not attend the meeting or receives conflicting voting instructions from
different beneficial or records owners for whom it holds as nominee or acts as
proxy. In any event, in a show of hands, such nominee or proxy will have only
one vote, notwithstanding the number of beneficial or record owners for whom he
or she acts.

Resolutions #1 through #13 and #15 and #16 are Ordinary Resolutions and require
the affirmative vote of a majority of the shareholders present in person or by
proxy, in the case of a vote by show of hands, or present in person or by proxy
and holding shares conferring in the aggregate a majority of the votes actually
cast on the Ordinary Resolution, in the case of a vote by poll. Resolutions #14
and

22
<PAGE>

#17 are Special Resolutions and require the affirmative vote of not less than
75% of the shareholders present in person or by proxy, in the case of a vote by
show of hands, or present in person or by proxy and holding shares conferring in
the aggregate at least 75% of the votes actually cast on the Special Resolution,
in the case of a vote by poll. In accordance with London Stock Exchange Rules,
shareholders do not have an opportunity to cast "abstentions." Broker non-votes
will not count as votes cast "FOR" or "AGAINST" any matter.

SOLICITATION OF PROXIES

The cost of soliciting proxies in the accompanying form will be borne by the
Company. The Company has not retained any independent soliciting agent. Proxies
may be solicited in person or by telephone or telegram by the directors,
executive officers and employees of the Company, who will not receive additional
compensation for such activities.

Brokers, nominees and other similar record holders will be requested to forward
proxy solicitation material to beneficial owners and, upon request, will be
reimbursed by the Company for their out-of-pocket expenses.

SUBMISSION OF SHAREHOLDER PROPOSALS

Shareholder proposals intended for inclusion in next year's Proxy Statement
should be sent to the Company Secretary at Genesis Business Park, Albert Drive,
Woking, Surrey GU21 5RW, United Kingdom, and must be received by November 27,
1997.

FINANCIAL STATEMENTS AVAILABLE

Consolidated financial statements for the Company are included in the Annual
Report of the Company for 1996 furnished to shareholders with this Proxy
Statement. Additional copies of these statements and the Annual Report on Form
10-K for the year ended December 31, 1996 may be obtained without charge from
the Company Secretary at Genesis Business Park, Albert Drive, Woking, Surrey
GU21 5RW, United Kingdom.

The annual report on Form 10-K is also on file with the Securities and Exchange
Commission, Washington, D.C. 20549, and The Nasdaq Stock Market Inc., 1735 K
Street, NW, Washington, DC 20006-1500.

Dated: March 26, 1997

23
<PAGE>

ANNEX A

CERTAIN TAX CONSEQUENCES OF OWNERSHIP OF ADSs

GENERAL

The following generally summarizes the principal U.K. and U.S. federal income
tax consequences of the purchase, ownership and disposition of Ordinary Shares
or ADSs (evidenced by ADRs) that are residents or citizens of the U.S. and hold
the Ordinary Shares or ADSs as capital assets ("U.S. Holders"). BECAUSE THIS IS
A GENERAL SUMMARY, PROSPECTIVE PURCHASERS OF ORDINARY SHARES OR ADSS WHO ARE
U.S. HOLDERS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE
U.S. FEDERAL, STATE AND LOCAL TAX CONSEQUENCES, AS WELL AS TO THE U.K. TAX
CONSEQUENCES, OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF ORDINARY SHARES OR
ADSS APPLICABLE IN THEIR PARTICULAR TAX SITUATIONS.

The statements of U.S. federal income tax and U.K. tax law set out below are
based (a) on the laws in force, and as interpreted by the relevant taxation
authorities, as of the date of this Proxy Statement, and are subject to any
changes (which may apply retroactively) in U.S. or U.K. law, or in the
interpretation thereof by the relevant taxation authorities, or in the
conventions between the U.S. and the U.K. relating to income and capital gains
(the "Income Tax Convention") and estate and gift taxes (the "Estate and Gift
Tax Convention"), occurring after such date and (b) in part, on representations
of the Depositary and on the assumption that each obligation in the Deposit
Agreement and any related agreement will be performed in accordance with its
terms.

This summary does not address the laws of any state or locality or any foreign
government (other than the U.K.). Further, this summary does not address the tax
consequences to particular classes of taxpayers that are subject to special
rules including, without limitation, dealers in securities or currencies,
insurance companies, tax exempt organizations, financial institutions, persons
that hold their Ordinary or ADSs as part of a straddle, hedging or "conversion
transaction", persons whose functional currency is other than the U.S. dollar,
tax-exempt investors or persons owning directly, indirectly or constructively,
10% or more of the Company's stock. This summary does not address the U.K. or
U.S. tax treatment of persons who hold Ordinary Shares or ADSs through a
partnership or other pass-through entity. Except to the limited extent discussed
below, it does not consider the U.K. tax or U.S. tax consequences to a person
other than a U.S. Holder (a "Non-U.S. Holder").

For purposes of the Conventions and the Code, U.S. Holders will be treated as
the owners of the Ordinary Shares represented by ADSs evidenced by ADRs.
Accordingly, and except as noted below, the U.K. tax and U.S. federal income tax
consequences discussed below apply equally to beneficial owners of both Ordinary
Shares and ADSs that are U.S. Holders.

TAXATION OF DIVIDENDS

For the purposes of this summary, the term "Eligible U.S. Holder" means a
beneficial owner of an ADS or an Ordinary Share (a) that derives and
beneficially owns the cash dividend paid thereon, (b) that is an individual, a
corporation, a trust or estate resident in the U.S. (and, in the case of a
corporation, not also resident in the U.K. for U.K. tax purposes) for the
purposes of the Income Tax Convention and (c) whose holding is not effectively
connected with a "permanent establishment" through which the Eligible U.S.
Holder carries on business in the U.K. with a "fixed base" in the U.K. from
which the Eligible U.S. Holder performs independent personal services. Such term
excludes, however, (a) a beneficial owner who owns at least 10% of the Ordinary
Shares in respect of which the dividend is paid, (b) under certain
circumstances, a corporation 25% or more of the capital of which is owned
directly or indirectly by one or more persons who are not individual residents
or nationals of the U.S. and (c) a U.S. corporation that controls, directly or
indirectly (either alone or with one or more associated corporations), 10% or
more of the voting stock of the Company.

24
<PAGE>

The Company is required, when paying a dividend in respect of the Ordinary
Shares, to account to the U.K. Inland Revenue for a payment known as advance
corporation tax ("ACT"). The rate of ACT at present is equal to 25% of any
dividend paid to shareholders, which is equivalent to 20% of the sum of the
dividend and the related ACT.

An Eligible U.S. Holder is entitled under the Income Tax Convention and current
U.K. law to claim from the U.K. Inland Revenue a refund of an amount equal to
the ACT paid by the Company in respect of the dividend (the "Tax Credit
Amount"), but subject to a 15% U.K. withholding tax on the combined sum of the
dividend paid and the related Tax Credit Amount. For example, assuming
continuance of ACT at the rate of 25% of a dividend paid, a dividend of
(pound)8.00 paid to such an Eligible U.S. Holder would generally entitle the
Eligible U.S. Holder to claim (pound)0.50 (a Tax Credit Amount of (pound)2.00
less a withholding of L1.50) from the U.K. Inland Revenue, giving a total cash
received, after U.K. taxes but before U.S. taxes, of (pound)8.50.

If the Eligible U.S. Holder is a U.S. trust or estate, the Tax Credit Amount
will be available only to the extent that the income derived by such trust or
estate is subject to U.S. tax as the income of a resident either in its hands or
in the hands of its beneficiaries, as the case may be.

For U.S. federal income tax purposes, the gross amount of a dividend plus the
Tax Credit Amount, including the 15% U.K. withholding tax thereon, (a) will be
included in gross income by a U.S. Holder and (b) will be treated as foreign
source dividend income to the extent paid out of current or accumulated earnings
and profits as determined for U.S. federal income tax purposes. Subject to
certain limitations, the 15% U.K. withholding tax will be treated as a foreign
income tax eligible for credit against such Eligible U.S. Holder's federal
income tax (or, alternatively, a deduction in computing such U.S. Holder's
taxable income). The consequences of these limitations will depend on the nature
and sources of each Eligible U.S. Holder's income and the deductions
appropriately allocated or apportioned thereto. In general, no dividends
received deduction will be allowed with respect to dividends paid by the
Company. The amount of the dividend will be the U.S. dollar spot value of the
dividend on the date of receipt, regardless of whether the payment is in fact
converted into U.S. dollars on such date. Exchange gain or loss, if any,
recognized by an Eligible U.S. Holder on a sale or other disposition of pounds
received pursuant to the dividend will generally be U.S.
source ordinary income or loss.

Arrangements exist with the U.K. Inland Revenue under which certain Eligible
U.S. Holders of ADSs (i.e., (a) a U.S. corporation, (b) an individual resident
in the U.S. and not resident in the U.K. or (c) a trust or estate all the
beneficiaries of which are resident in the U.S. or Canada) generally will
receive directly from the Company together with the payment of the associated
dividend payment of the Tax Credit Amount to which such Holder is entitled, net
of the applicable U.K. withholding tax, without the need to file a claim for
refund. To claim the benefit of the arrangements, the registered holder must
complete the declaration on the reverse of the dividend check confirming the
Eligible U.S. Holder's entitlement to the Tax Credit Amount and present the
check for payment within three months from the date of issue of the check. These
arrangements can be terminated or altered without notice by the U.K. Inland
Revenue.

In addition, arrangements exist with the U.K. Inland Revenue under which an
Eligible U.S. Holder of Ordinary Shares will receive payment of the U.K. tax
credit at the same time as and together with the payment of the associated
dividend. In order to receive such payment, the Eligible U.S. Holder must have
the Ordinary Shares registered in the name of a nominee approved by the U.K.
Inland Revenue for such purpose, and the nominee must follow certain procedural
requirements. In addition, the qualifying holder must be either: (a) an
individual who: (i) is not resident in the U.K. and does not retain the use of
any accommodation in the U.K., (ii) has not during the previous four years been
in the U.K. for as much as three months a year on average, or for a period or
periods amounting in the aggregate to six months in the relevant U.K. income tax
year; (iii) has not been absent from the U.S. for a complete U.S. tax year in
any of the previous four years; (iv) does not have a permanent establishment in
the U.K. and (v) does not own 10% or more of the class of shares in respect of
which the dividend is paid; or (b) a corporation: (i) which is managed and
controlled in the U.S. and does not have a permanent establishment in the U.K.;
(ii) which does not, either alone

25
<PAGE>

or together with one or more associated corporations, control, directly or
indirectly, 10% or more of the voting power in the Company; (iii) which does not
own 10% or more of the class of shares in respect of which the dividend is paid;
(iv) which is liable to U.S. tax on the dividend and (v) at least 75% of the
capital of which is owned directly or indirectly by persons who are U.S.
residents. These arrangements will be extended to trusts, estates in the course
of administration, pension funds, foundations and similar bodies only with the
prior approval of the U.K. Inland Revenue.

Certain Eligible U.S. Holders who are not entitled to receive payment of the
U.K. Tax Credit Amount from the Company with payment of the associated dividend
but who, nevertheless, are entitled to a refund of the Tax Credit Amount, net of
the U.K. withholding tax, must file a claim for the Tax Credit Amount in the
manner described in U.S. Revenue Procedure 80-18, 1980-1 C.B. 623, as modified
by U.S. Revenue Procedures 81-58, 1981-2 C.B. 678; 84-60, 1984-2 C.B. 504, and
90-61, 1990-2 C.B. 657. Claims for tax refund must be made within six years of
the U.K. year of assessment (generally the 12-month period ending April 5 in
each year) in which the related dividend was paid. The first claim by a claimant
for a tax credit under these procedures is made by sending the appropriate U.K.
form (FD/13) in duplicate to the Director of the Internal Revenue Service Center
with which the holder's last U.S. federal income tax return was filed. Forms may
be available from the U.S. Internal Revenue Service Assistant Commissioner
(International), 950 L'Enfant Plaza South, S.W., Washington, D.C. 20024,
Attention: Taxpayers Service Division. Because a refund claim is not considered
made until the U.K. tax authorities receive the appropriate form from the U.S.
Internal Revenue Service, forms should be sent to the U.S. Internal Revenue
Service well before the end of the applicable limitation period. Any claim by a
claimant after the first claim by such a U.S. Holder for payment under these
procedures should be filed directly with the U.K. Financial Intermediaries and
Claims Office, Fitz Roy House, P.O. Box 46, Nottingham, England, NG2 1BD.

Under Section 812 of ICTA 1988, the U.K. government has the power to deny the
payment of associated U.K. tax credits under the Income Tax Convention to a
corporation that controls, directly or indirectly, either alone or together with
one or more corporations, which are treated as associated for the purposes of
the Income Tax Convention, at least 10% of the voting power of the Company, if
it or an "associated company" (as defined in Section 416 ICTA 1988) has a
"qualifying presence" (as defined in Section 812 ICTA 1988) in a state in the
U.S. which operates a unitary system of corporation taxation. These provisions
will come into force only if the U.K. government so determines by statutory
instrument. No such instrument has yet been made.

Subject to the discussion below regarding backup withholding tax, a Non-U.S.
Holder of Ordinary Shares or ADSs generally will not be subject to U.S. federal
income or withholding tax on dividends received on Ordinary Shares or ADSs,
unless such income is effectively connected with the conduct of a trade or
business in the U.S. and, in general, in the case of a Non-U.S. Holder entitled
to benefits under a tax treaty, attributable to a permanent establishment or
fixed base in the U.S.

TAXATION OF CAPITAL GAINS

A U.S. Holder who is not resident or ordinarily resident in the U.K. for U.K.
tax purposes will not be liable for U.K. tax on capital gains realized or
accrued on the sale or other disposal of Ordinary Shares or ADSs unless the
Ordinary Shares or ADSs are held in connection with a trade, profession or
vocation carried on by such U.S. Holder in the U.K. through a branch or agency
which constitutes a permanent establishment or fixed base and the Ordinary
Shares or ADSs are or have been used, held or acquired for the purposes of such
trade, profession or vocation of such branch or agency. A U.S. Holder will be
liable for U.S. federal income tax on such gains to the same extent as on any
other gains from sales or disposition of stock.

Assuming that gain on the disposition of Ordinary Shares or ADSs would not be
subject to U.K. tax, such gain would be U.S. source income for U.S. foreign tax
credit limitation purposes. Deposits and withdrawals of Ordinary Shares by U.S.
Holders in exchange for ADSs will not result in the realization of gain or loss
for U.K. capital gains tax or U.S. federal income tax purposes.

Subject to the discussion below of backup withholding, a Non-U.S. Holder of
Ordinary Shares or ADSs will not be subject to U.S. federal income or
withholding tax on gain realized on the sale of

26
<PAGE>

Ordinary Shares or ADSs unless (i) such gain is effectively connected with the
conduct by the Non-U.S. Holder of a trade or business in the U.S. and, in
general, in the case of a Non-U.S. Holder entitled to benefits under a tax
treaty, such gain is attributable to a permanent establishment or fixed base in
the U.S. or (ii) in the case of gain realized by an individual Non-U.S. Holder,
the Non-U.S. Holder is present in the U.S. for 183 days or more in the taxable
year of the sale and certain other conditions are met.

U.S. INFORMATION REPORTING AND BACKUP WITHHOLDING

U.S. Holders are generally subject to information reporting requirements with
respect to dividends paid in the U.S. on Ordinary Shares or ADSs. Under existing
regulations, such dividends are not subject to back up withholding. However,
under proposed regulations such dividends paid in the United States would be
subject to back up withholding. Non-U.S. Holders will not be subject to
information reporting or back up withholding with respect to dividends on
Ordinary Shares or ADSs, unless payment is made through a paying agent (or
office) in the U.S. Non-U.S. Holders generally will be subject to information
reporting (and, under proposed regulations, could be subject to back up
withholding at a rate of 31%) with respect to the payment within the U.S. of
dividends on Ordinary Shares or ADSs, unless the holder provides a taxpayer
identification number, certifies to its foreign status, or otherwise establishes
an exemption.

U.S. Holders generally will be subject to information and back up withholding at
31% on proceeds paid from the disposition of Ordinary Shares or ADSs unless the
U.S. Holder provides an IRS Form W-9 or otherwise establishes an exemption.
Non-U.S. Holders generally will be subject to information reporting and back up
withholding at a rate of 31% on the payment to or through the U.S. office of a
broker, whether domestic or foreign, of proceeds from the disposition of
Ordinary Shares or ADSs, unless the holder provides a taxpayer identification
number, certifies to its foreign status or otherwise establishes an exemption.
Non-U.S. Holders will not be subject to information reporting or back up
withholding with respect to the payment by a foreign office of a broker of
proceeds from the disposition of Ordinary Shares or ADSs, provided, however,
that, if the broker is a U.S. person or "U.S. related person," information
reporting (but not back up withholding) will apply, unless the broker has
documentary evidence in its records of the Non-U.S. Holder's foreign status, the
Non-U.S. Holder certifies to its foreign status under penalties of perjury or
otherwise establishes an exemption. For this purpose, a "U.S. related person" is
a broker or other intermediary that is a controlled foreign corporation for U.S.
federal income tax purposes or that is a person 50% or more of the gross income
from all sources of which, over a specified three year period, is effectively
connected with the conduct of a U.S. trade or business.

The amount of any back up withholding will be allowed as a credit against such
holder's U.S. federal income tax liability and may entitle such holder to a
refund, provided that the required information is furnished to the U.S. Internal
Revenue Service.

PASSIVE FOREIGN INVESTMENT COMPANY CONSIDERATIONS

The Company generally will be a passive foreign investment company ("PFIC") for
U.S. federal income tax purposes for any taxable year (i.e., the period from
January 1 to December 31) in which either (a) 75% or more of its gross income is
passive income or (b) on average for the taxable year, 50% or more of its assets
(averaged over the year and generally determined based on fair market value)
produce or are held for the production of passive income. The Internal Revenue
Service has indicated that cash balances, even if held as working capital, are
considered to be passive assets that produce passive income. As of the date of
this Proxy Statement, the Company does not believe it is a PFIC for U.S. federal
income tax purposes, and, based on current projections, the Company does not
anticipate that it will become a PFIC. No assurance can be given, however, that
the Company will not become a PFIC in the future.

The Company will monitor its status and, promptly following the end of any
taxable year, will notify shareholders if it believes that it is properly
classified as a PFIC for that taxable year, in which case it will comply with
the reporting requirements necessary for U.S. Holders to elect to treat the
Company as a "qualified electing fund" (a "QEF election"). This summary does not
address the

27
<PAGE>

consequences were the Company determined to be a PFIC. U.S. Holders
should consult their own tax advisers concerning the U.S. tax consequences of
holding Ordinary Shares or ADSs if the Company were considered to be a PFIC,
including the consequences of making a QEF election.

U.K. ESTATE AND INHERITANCE TAX

An Ordinary Share or ADS beneficially owned by an individual U.S. Holder who is
domiciled in the U.S. for the purposes of the Estate and Gift Tax Convention and
is not domiciled in the U.K. for such purposes is not subject to U.K.
inheritance tax on the individual's death or U.K. gift tax on a gift made by the
individual during his lifetime except where the Ordinary Share or ADS is part of
the business property of a U.K. "permanent establishment" of the individual or
pertains to a U.K. "fixed base" of an individual used for the performance of
independent personal services. The Estate and Gift Tax Convention generally
provides for tax paid in the U.K. to be credited against any tax payable in the
U.S. and for tax paid in the U.S. to be credited against any tax payable in the
U.K., based on priority rules set forth in that Convention, in a case where an
Ordinary Share or ADS is subject both to U.K. inheritance tax and to U.S.
federal gift or estate tax. There are special individual rules applying to
trusts. Ordinary Shares or ADSs held in a trust created by a U.S. Holder who is
not domiciled in the U.K. normally will fall outside the scope of U.K.
inheritance tax.

STAMP DUTY AND STAMP DUTY RESERVE TAX

Stamp duty reserve tax at the then-applicable rate arises upon the deposit with
the Depositary of the Ordinary Shares. The current rate of stamp duty reserve
tax is L1.50 per L100 (or part thereof). The stamp duty reserve tax on the
initial deposit of the Ordinary Shares represented by the ADSs was paid by the
Company. On the transfer of further Ordinary Shares to the Depositary, stamp
duty reserve tax will be payable by the Depositary and under the Deposit
Agreement, holders of ADRs must pay an amount equal to such tax to the
Depositary.

Provided that the instrument of transfer is not executed in the U.K. and remains
at all subsequent times outside the U.K., no U.K. stamp duty will be payable on
the acquisition or transfer of ADSs evidenced by ADRs, nor will an agreement to
transfer ADSs evidenced by ADRs give rise to a liability to stamp duty reserve
tax.

A transfer of Ordinary Shares by the Depositary or its nominee to the beneficial
owner of the relevant ADS or its nominee when the beneficial owner is not
transferring beneficial ownership will give rise to U.K. stamp duty at the rate
of 50p per transfer.

Purchasing Ordinary Shares, as opposed to ADSs, will normally give rise to a
charge to U.K. stamp duty or stamp duty reserve tax at the rate of 50p per L100
(or part) of the price payable for the Ordinary Shares. Stamp duty and stamp
duty reserve tax generally are the liabilities of the purchaser. Where such
Ordinary Shares are later transferred to the Depositary's nominee, further stamp
duty or stamp duty reserve tax will normally be payable at the rate of L1.50 per
L100 (or part thereof) of the value of the Ordinary Shares at the time of
transfer. However, where Ordinary Shares being acquired are transferred directly
to the Depositary's nominee, the only charge will generally be the higher charge
of L1.50 per L100 (or part) of the price payable for the Ordinary Shares so
acquired.

The U.K. government has announced its intention to abolish both stamp duty and
stamp duty reserve tax in respect of the transfer of securities from a date
which has not yet been announced.

28
<PAGE>

ATTACHED IS A COPY OF THE "REPORT OF THE REMUNERATION COMMITTEE" WHICH WILL BE
SET OUT IN FULL IN THE COMPANY'S 1996 ANNUAL REPORT TO SHAREHOLDERS ON PAGE 40
AND INCORPORATED BY REFERENCE IN THE COMPANY'S 1997 PROXY STATEMENT. A COPY OF
THE COMPANY'S 1996 ANNUAL REPORT WILL BE SENT TO EACH SHAREHOLDER TOGETHER WITH
THE 1997 PROXY STATEMENT. THIS ARRANGEMENT WAS CLEARED WITH MR. ROGER SCHWALL OF
THE STAFF DURING THE PREPARATION OF THE COMPANY'S 1996 PROXY STATEMENT.

<PAGE>

REPORT OF THE REMUNERATION COMMITTEE

1. COMPLIANCE

The Report of the Study Group on Directors' Remuneration chaired by
Sir Richard Greenbury was published on 17 July 1995. A principal component of
its recommendations was a Code of Best Practice (the "Code"). The following
report by the Remuneration Committee complies with this Code and with Section A
of the Best Practice Provisions on remuneration committees as annexed to the
Listing Rules of the London Stock Exchange. Full consideration has also been
given to Section B of the Best Practice Provisions regarding remuneration
policy, service contracts and compensation, as annexed to the Listing Rules of
the London Stock Exchange. The Report is also in line with requirements under US
securities laws applicable to remuneration committee reports. Further
information on senior executive remuneration as required by U.S. law can be
found in the proxy statement accompanying this document.

2. COMPOSITION

The members of the Committee are given on page 37 in the Report of
the Directors. The Committee submits reports regularly to the full board of
Directors concerning in activities and decisions. It has written terms of
reference which include the assessment and approval of the remuneration of the
executive Directors and senior executives. The Board determines the remuneration
of the non-executive Directors.

3. REMUNERATION POLICY FOR THE EXECUTIVE DIRECTORS AND SENIOR
EXECUTIVES

(a) General policy

The Group aims to attract, motivate and retain high calibre
executives by rewarding them with competitive salary and benefit packages which
are linked to both individual and business performance. These packages are based
on the Group's philosophy of emphasising pay-for-performance. The Group
recognises the pressures for short-term as well as long-term performance and
seeks to provide an appropriate balance. The Group uses a market-based
four-tiered salary structure for its executive employees. Each executive is
assigned to one of these four tiers based on his or her level of responsibility
and position in relation to others inside and outside of the Group.

<PAGE>

The Committee believes that the Group's current remuneration policy
(including the proposed new share plans described below) appropriately aligns
the Group's executive compensation with the performance of the Group and
shareholder interests and offers competitive compensation for its executives.
The Committee does not believe in compensating for poor performance and does not
reward unsatisfactory performance. In the case of early termination of
employment, it is the Committee's policy to seek to mitigate any liability.

(b) Remuneration components

There are four components to the executive remuneration package:
base salary and benefits, annual cash bonus, long-term incentive arrangements
and pension.

(i) Base salary and benefits

Salaries are established by the Committee by reference to those
prevailing in the employment market generally for executives of comparable
status, responsibility and skills. To assist in determining the comparability of
positions and competitive market pricing, the Group uses executive compensation
salary surveys prepared by recognised independent compensation consulting firms
in the UK. The Group uses surveys that specifically cover the UK cable
communications industry, as well as surveys of comparable companies of similar
size in similar industries. In general, and because of the competitive nature of
the market, the Group seeks to set overall executive compensation levels to rank
between the mid-market and upper quartile of the survey data.

Salary reviews are generally determined by the Committee on an
annual basis. Adjustments in base salary, if any, occur after a formal appraisal
process, taking account of individual performance, changes in job
responsibilities, changes in the marketplace and general economic conditions in
the UK.

Benefits for senior executives typically include a car (or a cash
payment in lieu thereof) and payment of its operating expenses and fuel, and
life, disability and health insurance. The benefits are not pensionable.

(ii) Annual cash bonuses

The Group's Short-Term Incentive Plan (the "STIP") provides each
executive with an opportunity to earn an annual cash award (which is not
pensionable) based upon the achievement of short-term Group targets (ie, one
financial year) and individual contributions

<PAGE>

to Group results. These targets are set by the Remuneration Committee at the
commencement of each financial year. Under the STIP, the executive has an award
opportunity expressed as a percentage of base salary. For executive Directors,
the award is up to 25% of salary for achieving target, rising to a maximum of
50% of salary if the Group exceeds its STIP target. The 1996 STIP awards to the
executive Directors and senior executives represented approximately 49.5% of the
targeted bonus amount. The amount of the STIP is based upon the extent to which
the Group achieves certain specified objectives and, in the case of the
executive Directors, the extent to which the executive Directors meet certain
specified personal objectives. In 1996, the STIP objective related to the
achievement of targets set in respect of growth, quality of operations (measured
by customer satisfaction surveys), operating cash flow, net cash flow and
personal objectives. The objective is to have payout tied to Group performance,
thereby providing higher than targeted payouts for better than expected
performance and lower than targeted payouts for performance below the targeted
levels. For executive Directors and senior executives, bonus payments are based
on the performance of the Group as a whole. Those employed within franchises
receive bonuses based on the performance within the employing franchise.

(iii) Long-term incentive arrangements

The Group operates the following long-term share and option
incentive plans: The Telewest Restricted Share Scheme (designed to operate in
conjunction with an Employee Share Ownership Plan ("ESOP")); an Inland Revenue
approved executive share option scheme, the Telewest 1995 (No.1) Executive Share
Option Scheme; an unapproved executive share option scheme, the Telewest 1995
(No.2) Executive Share Option Scheme; a share save scheme and a profit sharing
scheme designed for Inland Revenue approval.

The Telewest Restricted Share Scheme was designed to replace a cash
bonus scheme in operation prior to the initial public offering in November 1994
and for this reason, exercise of the award is not subject to the satisfaction of
a performance condition. Under this scheme, awards were made over Telewest
shares to senior executives based on a percentage of salary and for no
consideration. At the time of the initial public offering Mr Davidson was
granted an award over 475,183 Telewest shares. Awards generally vest over a
three year period with, in the case of Mr Davidson, a final vesting date of
January 1998. Awards under the scheme are made by the ESOP Trustees following
recommendations made by the Remuneration Committee and are designed to retain
and motivate senior executives.

The executive share option schemes also form part of the Group's
long-term incentive arrangements. Options over Telewest shares are granted in
phases, generally on a

<PAGE>

one times salary basis up to a maximum of four times salary and exercise is
subject to a performance condition, namely out-performance of the FT-SE 100
Index over any three-year period preceding exercise.

The option arrangements relating to Mr Davidson are set out on page
38 of the Report of the Directors.

The Inland Revenue approved share save scheme is designed to
incentivise employees which enables the Company to grant options to employees to
purchase Telewest shares at a 20% discount to market price. These options can be
exercised only with funds saved by employees over time in a qualified savings
account.

It is proposed to replace the Telewest Restricted Share Scheme with
a new Long-Term Incentive Plan ("LTIP") for future share awards to executive
Directors and senior executives. It is intended that following its introduction
participants in the new plan will not be granted further options under the
executive share option schemes (subject to exceptions at the discretion of the
Remuneration Committee). In future, options under these schemes will generally
be awarded to employees not participating in the LTIP. It is also intended that,
if the LTIP is introduced, no further awards will be made under the Telewest
Restricted Share Scheme.

4. PROPOSED ARRANGEMENTS

It is proposed that two new share plans be introduced. Shareholder
approval will be sought for the introduction of these share plans at the 1997
AGM. A summary of the rules for both plans can be found in the 1997 AGM Notice.
A brief description is set out below.

(a) Equity Participation Plan ("EPP")

Under the STIP, participants may be due a cash bonus. The EPP
provides that, at the Remuneration Committee's discretion, a participant can use
up to 50% of the bonus payable to him (or such lower percentage as the
Remuneration Committee may determine), after deduction of tax, to buy Telewest
shares ("bonus shares"). He must deposit the bonus shares with the Trustee of
the existing Telewest ESOP. In return, the participant is provisionally
allocated for no payment a matching number of Telewest shares (after grossing up
the value of the bonus shares).

<PAGE>

Alternatively, at the Remuneration Committee's discretion, the
participant can agree to forego up to 50% of the bonus payable to him (or such
lower percentage as the Remuneration Committee may determine), before deduction
of tax, and receive instead a conditional right to acquire Telewest shares
("bonus shares"). In return the participant is provisionally allocated a
matching number of Telewest shares for no payment.

In each of the above cases, provided the bonus shares are retained
for three years and the participant remains employed by the Group for three
years, the bonus and matching shares would thereafter be released to the
participant.

(b) Long-Term Incentive Plan

Under the LTIP, which will operate on an annual basis, a participant
will be awarded the provisional right to receive, for no payment, a number of
Telewest shares with a value equating to a percentage of his/her base salary.
The shares will not vest unless certain performance criteria, based on total
shareholder return ("TSR") are met. The percentage of salary will be determined
by the Remuneration Committee and will be up to 100% of base salary for
executive Directors. The award is divided equally, with vesting of 50% depending
on the Company's TSR meeting a performance condition relating to the TSR of
FT-SE 100 companies, and the remaining 50% depending on meeting a performance
condition relating to the TSR of a group of comparator companies (including
cable, broadcasting and telecommunications companies listed on the London Stock
Exchange and cable companies operating in the UK and listed on Nasdaq), in each
case over a three year period. If the Company's TSR is in the top quartile of
the FT-SE 100 over that period, the executive will receive 50% of the number of
shares awarded to him; if the Company's TSR is 50th place in the FT-SE 100, the
executive will receive 12.5% of the number of shares awarded to him; if below
50th place in the FT-SE 100, the executive will receive nothing in respect of
this portion of the award. Similarly, if the Company's TSR is in the top
quartile of the group of comparator companies in that period, the executive will
receive 50% of the number of shares awarded to him; if the Company's TSR is at
the median position the executive will receive 12.5% of the number of shares
awarded to him; if below the median position, the executive will receive nothing
in respect of that portion of the award. In either test, a proportionate number
of shares will be received for intermediate positions. TSR in each case will be
calculated by reference to the cash flow generated by dividends, and capital
appreciation on a share purchased at the beginning and sold at the end of the
period. If the participant remains employed by the Group, at the end of the
third year after the date of grant, 50% of the vested award will be transferred
to the employee and the balance will be transferred at the end of the fourth
year after the date of grant.

5
<PAGE>

Assuming shareholder approval is obtained at the 1997 AGM for the
introduction of these plans, the Remuneration Committee may, at its discretion,
decide to operate them with effect from 1 January 1997.

5. PENSION

The Group contributes to personal pension schemes established by
individual employees. The actual contribution of the Group to such schemes
depends on the contribution made by the employee and may vary according to
length of service. Generally the Group contribution varies from 3% of an
employee's salary to a maximum of 12% for executive Directors. In addition,
there is a money purchase pension scheme to which the Group contributes an
amount equal to the employee's contribution, such contributions varying between
3% and 6%. The Group's contribution is based on the employee's salary and does
not include benefits or bonuses.

6. EXECUTIVE DIRECTORS' AGREEMENTS

Mr Davidson has agreed to reduce the notice period in his employment
agreement from two years' to one year's notice in accordance with the
recommendation of the Code. However, the Remuneration Committee believes that at
this stage of the Group's development it may be necessary to offer executives
contracts in excess of one year to attract candidates of the appropriate
calibre. In July 1996 Mr Davidson's salary was increased to (pound)225,000 from
(pound)151,686 to reflect his additional responsibilities as Acting Chief
Executive Officer, following the departure of Mr Michels from the Company. This
was increased to (pound)335,000 in February 1997, effective from July 1996, to
reflect his confirmation as Chief Executive Officer. For the financial year
ended 1996, Mr Davidson was awarded an annual bonus, pursuant to the STIP, of
(pound)25,500.

Mr Burdick has agreed to an initial two year, fixed term agreement
to continue thereafter until terminated by the Company giving no less than
twelve months' notice to expire on or at any time after the end of the initial
fixed term. The Remuneration Committee believes an initial notice period in
excess of one year is justified in view of his recent move from the US. Mr
Burdick's salary has been agreed at (pound)225,000 and he will be awarded
options under the Telewest Executive Share Option Schemes on the basis of 4
times salary to be granted as soon as practicable and subject to the Rules of
the Telewest Executive Share Option Schemes. It is also intended that Mr Burdick
shall participate in the LTIP.

Mr Michels resigned from his position as Chief Executive Officer and
from the Board of Directors with effect from 31 July 1996. He joined the Company
in January

<PAGE>

1994. At the time of the initial public offering in November 1994, Mr Michels
entered into a three year, fixed term employment agreement with the Company
which reflected Mr Michel's anticipated term of employment with the Company. The
Company and Mr Michels agreed the early termination of this arrangement which
resulted in a payment of (pound)410,268 being paid to Mr Michels by the Company
which reflected, with mitigation, the unexpired value of Mr Michels' contract
(including salary, housing and car allowance and net income taxes). There is a
provision for income taxes which is subject to agreement with the Inland
Revenue.

Mr Michels is also entitled to exercise 348,001 options over
Telewest shares under the Telewest Executive Share Option Schemes and subject to
the rules of the schemes, in respect of those granted in 1995 between 1 August
1996 and 8 May 1999 and in respect of those granted in 1996 between 1 August
1996 and 5 September 1999 at prices ranging from 138p to 173.5p and also to
receive his award of Telewest shares under the Telewest Restricted Share Scheme
of 434,787 Telewest shares which shall be transferred to him under the rules of
the scheme.

Under the current Remuneration Committee policy senior executives
have employment agreements notice periods which range from three months to one
year, depending on their grade.

7. DIRECTOR'S REMUNERATION

The aggregate compensation for the Directors is as follows:

1996 1995
(pound)'000 (pound)'000

Base Salary and Benefits 530 1,193
Annual Bonus - STIP 25 79
Special Bonus -- 140
Pension 18 24
Compensation for loss of office 539 487
------ ------
1,112 1,923

Additional information required under US securities laws with
respect to the compensation of the Directors, the Chief Executive Officer and
certain other executives is set out under the caption "Executive Compensation"
in the Proxy Statement.

<PAGE>

DIRECTORS' COMPENSATION
<TABLE>
<CAPTION>

- ------------------------------------------------------------------------------------------------------------------------------
Compensation Total emoluments
Annual/ for loss of excluding Pension
Salaries/fees Taxable Benefits Special Bonuses Office Contributions Pension Contributions
1996 1995 1996 1995 1996 1995 1996 1995 1996 1995 1996 1995
(L)'000 (L)'000 (L)'000 (L)'000 (L)'000 (L)'000 (L)'000 (L)'000 (L)'000 (L)'000 (L)'000 (L)'000
(L)=British Pound
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EXECUTIVE
S J Davidson 236 143 12 12 25 98 -- -- 273 253 13 10
A Michels 100 160 68 267 -- 121 539 -- 707 548 5 5
D F Bryan -- 145 -- 344 -- -- -- 487 -- 976 -- 9

NON-EXECUTIVE
F A Vierra -- -- -- -- -- -- -- -- -- -- -- --
A G Ames -- -- -- -- -- -- -- -- -- -- -- --
A W P Stenham 50 54 -- -- -- -- -- -- 50 54 -- --
Lord Borrie QC 34 36 -- -- -- -- -- -- 34 36 -- --
Lord Griffiths 30 32 -- -- -- -- -- -- 30 32 -- --
J A Atterbury -- -- -- -- -- -- -- -- -- -- -- --
J O Robbins -- -- -- -- -- -- -- -- -- -- -- --
A N Singer -- -- -- -- -- -- -- -- -- -- -- --
C M Lillis -- -- -- -- -- -- -- -- -- -- -- --

Total Board 450 570 80 623 25 219 539 487 1,094 1,899 18 24
<FN>
Notes:

1 Certain amounts reflected in this table and elsewhere in this section were
paid in US dollars, but are represented in this table in pounds sterling
based on an average exchange rate of $1.56 to (pound)1.00 for the year
ended 31 December 1996.

2 Mr Michels' principal taxable benefits were the provision of(pound)17,236
in respect of his income taxes, housing allowance of(pound)50,638 and use
of car of(pound)6,743.

3 Mr Michels' compensation for loss of office includes a provision for income
taxes which is subject to agreement with the Inland Revenue.

4 The 1996 pension contribution for Mr Michels represents a matching
contribution to his 401(k) plan.

5 The independent non-executive Directors are paid (pound)1,000 for each
Board or Committee meeting they attend in addition to their fees. The
executive Directors' interests in Company share options and restricted
share scheme awards are set out on page 38 of the Report to the Directors
and proposed awards on page 42 of this report. No non-executive Director
has any interests in Telewest shares.
</FN>
</TABLE>

8. REMUNERATION POLICY FOR NON-EXECUTIVE DIRECTORS

The remuneration policy for non-executive Directors consists of fees for
their services in connection with Board and Board Committee meetings and, where
relevant, for additional services such as chairing a committee. They are not
eligible for pension scheme membership

<PAGE>

and do not participate in any of the Group's bonus, share option or other
incentive schemes. Their remuneration is approved by the Board of Directors.

A G AMES (CHAIRMAN)
A W P STENHAM
A N SINGER
The Remuneration Committee

<PAGE>

TELEWEST COMMUNICATIONS PLC

I/We________________________________ of_________________________________________
________________________________________________________________________________
being the holder(s) of Ordinary Shares of 10 pence each in Telewest
Communications plc (the "Company") hereby appoint the Chairman of the meeting or
____________________________ of_________________________________________________
________________________________________________________________________________
as my/our proxy to vote in my/our name(s) and on my/our behalf at the Annual
General Meeting of the Company to be held on Friday, 9 May 1997, at 10.00 am at
The Grocers' Hall, Princes Street, London EC2R 8AD, and at any adjournment
thereof and I/we direct the proxy to vote in respect of the resolutions to be
proposed at the meeting as indicated herein.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.

<TABLE>
<S> <C> <C>
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ORDINARY RESOLUTIONS For Against
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1 To adopt the Directors' Report and Account for the year ended 31 December 1996.
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2 To reappoint Mr F.A. Vierra as a Director.
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3 To reappoint Mr A.W.P. Stenham as a Director.*
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4 To reappoint Mr A.G. Ames as a Director.*
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5 To reappoint Mr J.A. Atterbury III as a Director.
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6 To reappoint Mr C.J. Burdick as a Director.
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7 To reappoint Lord Borrie QC as a Director.
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8 To reappoint Mr S.J. Davidson as a Director.
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9 To reappoint Lord Griffiths of Fforestfach as a Director.
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10 To reappoint Mr C.M. Lillis as a Director.
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11 To reappoint Mr J.O. Robbins as a Director.
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12 To reappoint Mr A.N. Singer as a Director.*
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13 To authorise the Directors to allot ordinary shares.
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SPECIAL RESOLUTION
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14 To disapply statutory pre-emption rights.
Note: The effectiveness of this Resolution is conditional upon the approval of Resolution 13.
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ORDINARY RESOLUTION
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15 To reappoint KPMG Audit plc as auditors and fix their remuneration.
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ORDINARY RESOLUTION
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16 To approve the Telewest Equity Participation Plan and the Telewest Long Term Incentive Plan.
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SPECIAL RESOLUTION
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17 To approve the change to the Articles of Association to increase the borrowing powers of the Company.
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</TABLE>

NAME(S) OF SHAREHOLDER(S) IN BLOCK CAPITALS

DATED SIGNED

NOTES:
1 Please indicate how you wish your vote to be cast by inserting an "X" in
the appropriate box opposite each resolution.
2 A holder of Ordinary Shares entitled to attend and vote at the
meeting is also entitled to appoint one or more proxies to attend and
vote instead of the shareholder. A proxy need not be a shareholder
of the Company. In the event that you wish to appoint a person
other than the Chairman as your proxy, delete the reference to the
Chairman and insert the name and address of the person you wish
to appoint in the space provided.
3 This form of proxy must be executed by the appointor or his/her duly
constituted attorney or, if the appointor is a company, under its seal or
under the hand of its duly authorised officer or attorney or other person
authorised to sign.
4 In the case of joint holders of the Ordinary Shares the vote of the senior
who tenders a vote whether in person or by proxy shall be accepted to the
exclusion of the vote of the other joint holders and for this purpose
seniority shall be determined by the order in which the names of the
holders stand in the register of shareholders.
5 Any alteration made in this Proxy Card should be initialled.
6 To be effective this Proxy Card and any authority under which it is
executed (or a notarially certified copy of each authority) must be
deposited at Lloyds Bank plc, Registrar's Department, The
Causeway, Worthing, West Sussex, England BN99 6DB not less than 48 hours
before the time of the Annual General Meeting. Completion and return of
this Proxy Card will not preclude a shareholder from attending and voting
in person at the meeting.
7 IF THIS PROXY CARD IS RETURNED DULY SIGNED BUT WITHOUT AN INDICATION AS TO
HOW THE PROXY MUST VOTE ON A PARTICULAR RESOLUTION, THE PROXY WILL VOTE OR
ABSTAIN AT HIS DISCRETION.
8 *Indicates the members of the Remuneration Committee.

<PAGE>

BUSINESS REPLY SERVICE
Licence No. BR 3006

Lloyds Bank plc
Registrar's Department
The Causeway
Worthing
West Sussex
England
BN99 6DB