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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)

x      Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2009

o         Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                               to

Commission File Number: 000-19889

South Hertfordshire United Kingdom Fund, Ltd.

(Exact name of registrant as specified in its charter)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o No x

The number of limited partnership units of the registrant outstanding as of November 6, 2009 was 56,935.

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In this quarterly report, unless the context otherwise requires, the terms “we”, “us”, “our” and similar terms refer to South Hertfordshire United Kingdom Fund, Ltd. and its subsidiaries, and “Virgin Media” refers to the consolidated business of Virgin Media Inc. and its subsidiaries, as further described herein.

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“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:

Various statements contained in this document constitute “forward-looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995.  Words like “believe”, “anticipate”, “should”, “intend”, “plan”, “will”, “expect”, “estimate”, “project”, “positioned”, “strategy” and similar expressions identify these forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements or industry results to be materially different from those contemplated, projected, forecasted, estimated or budgeted, whether expressed or implied, by these forward-looking statements.  These factors, among others, include:

·                       our reliance on the continued support of Virgin Media Inc., the ultimate parent company of our general partner;

·                       the lack of an established trading market for our partnership interests;

·                       conflicts of interest between us and Virgin Media and its affiliates;

·                       our reliance on a limited franchise area;

·                       the risks to Virgin Media’s business set forth below, which are risks that we share as a result of our reliance on, and integration with, Virgin Media;

·                       Virgin Media’s ability to compete with a range of other communications and content providers;

·                       Virgin Media’s ability to manage customer churn;

·                       Virgin Media’s ability to maintain and upgrade its networks in a cost-effective and timely manner;

·                       Virgin Media’s ability to implement its restructuring plan successfully and realize the anticipated benefits;

·                       the general deterioration in economic conditions;

·                       Virgin Media’s continued right to use the Virgin name and logo;

·                       possible losses in Virgin Media’s revenues due to systems failures;

·                       Virgin Media’s ability to provide attractive programming at a reasonable cost;

·                       Virgin Media’s ability to control unauthorized access to its network;

·                       the effect of technological changes on Virgin Media’s businesses;

·                       Virgin Media’s reliance on single-source suppliers for some equipment, software and services and third party distributors of its mobile services;

·                       currency and interest rate fluctuations;

·                       Virgin Media’s ability to fund debt service obligations through operating cash flow and refinance its debt obligations;

·                       Virgin Media’s ability to obtain additional financing in the future;

·                       Virgin Media’s ability to comply with restrictive covenants in its indebtedness agreements; and

·                       the extent to which Virgin Media’s future cash flow will be sufficient to cover its fixed charges.

These and other factors are discussed in more detail under “Risk Factors” and elsewhere herein and in our annual report on Form 10-K for the year ended December 31, 2008, as filed with the Securities and Exchange Commission, or SEC, on March 16, 2009.  We assume no obligation to update our forward-looking statements to reflect actual results, changes in assumptions or changes in factors affecting these statements.

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Exchange Rates

The following table sets forth, for the periods indicated, the high, low, period average and period end noon buying rate in the City of New York for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York expressed as U.S. dollars per £1.00.  The noon buying rate of the pound sterling on September 30, 2009 was $1.6004 per £1.00.

(1)                     The average rate is the average of the noon buying rates on the last day of each month during the relevant period.

The above rates may differ from the actual rates used in the preparation of the condensed consolidated financial statements and other financial information appearing in this quarterly report.  Our inclusion of these exchange rates is not meant to suggest that the pound sterling amounts actually represent these U.S. dollar amounts or that these amounts could have been converted into U.S. dollars at any particular rate, if at all.

Unless we otherwise indicate, all U.K. pound sterling amounts as of September 30, 2009 are translated to U.S. dollars at an exchange rate of $1.6004 to £1.00, all amounts disclosed for the nine months ended September 30, 2009 are based on an average exchange rate of $1.5423 to £1.00, and all amounts disclosed for the nine months ended September 30, 2008 are based on an average exchange rate of $1.9469 to £1.00.  All amounts disclosed as of December 31, 2008 are based on an exchange rate of $1.4619 to £1.00.  U.S. dollar amounts for the three months ended September 30, 2009 and 2008 are determined by subtracting the U.S. dollar converted financial result for the six months ended June 30, 2009 and 2008 from the U.S. dollar converted financial result for the nine months ended September 30, 2009 and 2008, respectively. All rates are based on the noon buying rate in the City of New York for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York.  The variation among the exchange rates for 2009 and 2008 has affected the U.S. dollar comparisons significantly.

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PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.

(A Limited Partnership)

CONDENSED CONSOLIDATED BALANCE SHEETS

See accompanying notes.

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SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.

(A Limited Partnership)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

See accompanying notes.

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SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.

(A Limited Partnership)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

See accompanying notes.

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SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.

(A Limited Partnership)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1 — Basis of Presentation

Formation and Business

South Hertfordshire United Kingdom Fund, Ltd., or the Partnership, a Colorado limited partnership, was formed on December 23, 1991, in connection with a public offering of its limited partnership interests.  The Partnership was formed to acquire, construct, develop, own and operate cable television/telephone systems in the U.K. NTL Fawnspring Limited, a U.K. corporation and a subsidiary of Virgin Media Inc., or Virgin Media, is the general partner, or the General Partner, of the Partnership.

We hold 66.7% of the shares of NTL (South Hertfordshire) Limited, or NTL South Herts, which is principally engaged in the development, construction, management and operation of broadband communications networks for telephone, cable television and internet services in the U.K.  As a result of our ownership of 66.7% of the shares of NTL South Herts, for accounting purposes, we have consolidated the results of NTL South Herts with our results.  Virgin Media indirectly holds the remaining 33.3% of the shares of NTL South Herts.  We are reliant on the support of Virgin Media, the ultimate parent company of the General Partner, to continue our operations as a going concern.

Basis of Presentation

We have prepared the accompanying unaudited condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, for interim financial information and with the rules and regulations of the SEC.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  In the opinion of our management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included.  Results of operations for the three and nine months ended September 30, 2009 are not necessarily indicative of results to be expected for the full year ending December 31, 2009.  For further information, refer to the consolidated financial statements and footnotes thereto included in our annual report on Form 10-K for the year ended December 31, 2008, as filed with the SEC on March 16, 2009.

Note 2 — Comprehensive Profit

Comprehensive profit includes net profit as well as other comprehensive profit.  Our other comprehensive profit consists of changes in cumulative foreign currency translation adjustments.  Comprehensive profit comprises:

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SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.

(A Limited Partnership)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 3 — Investment in Subsidiary

NTL South Herts is a U.K. corporation which is principally engaged in the development, construction, management and operation of broadband communication networks for telephone, cable television and internet services in the South Hertfordshire franchise area, located adjacent to the northwest perimeter of Greater London, England (the “South Herts System”).   NTL South Herts is owned 66.7% by the Partnership and 33.3% by Virgin Media.  Virgin Media also owns the General Partner.  The General Partner provides consulting services to the Partnership and may delegate some or all of the consulting services to Virgin Media or to other affiliates.

Note 4 — Transactions with the General Partner and Affiliated Entities

Consulting and Management Fees

An affiliate of the General Partner is entitled to be paid a consulting fee by NTL South Herts.  During the construction phases of the South Herts System, this consulting fee was 2% of construction costs.  Since completion of construction of each portion of the system, the consulting fee for the completed portion has been 5% of the gross revenue, excluding revenue from the sale of cable television/telephone systems.  The consulting fee is calculated and payable monthly.  Consulting fees paid or payable by NTL South Herts for the three months ended September 30, 2009 and 2008 were $359,904 and $425,217, respectively.  Consulting fees paid or payable by NTL South Herts for the nine months ended September 30, 2009 and 2008 were $1,051,406 and $1,328,252, respectively. These amounts were expensed in the condensed consolidated statement of operations.

Distribution Ratios and Reimbursement

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

The General Partner and its affiliates are entitled to reimbursement from NTL South Herts for direct and indirect expenses allocable to the operation of the South Herts System, and from the Partnership for direct and indirect expenses allocable to the operation of the Partnership which include, but are not limited to, salaries of any full or part-time employees, rent, supplies, telephone, travel, and restructuring and other charges.  The General Partner believes that the methodology used in allocating these expenses is fair and reasonable.  During the three months ended September 30, 2009 and 2008, reimbursement made by NTL South Herts and the Partnership to the General Partner or its affiliates for any allocable direct and indirect expenses totaled $2,460,936 and $2,890,500, respectively.  During the nine months ended September 30, 2009 and 2008, reimbursement made by NTL South Herts and the Partnership to the General Partner or its affiliates for any allocable direct and indirect expenses totaled $7,409,828 and $8,918,243, respectively.

The General Partner and its affiliates may make advances to, and defer collection of fees and allocated expenses owed by, the Partnership, although they are not required to do so.  The Partnership is charged interest on such advances and deferred amounts at a rate equal to the General Partner’s or certain affiliates’ effective average cost of debt financing from unaffiliated entities, which does not differ from their weighted average cost of debt financing.  For the three months ended September 30, 2009 and 2008, affiliates of the General Partner charged the Partnership aggregated interest, bank fees and finance charges of $697,222 and $1,117,873, respectively, relating to non-permanent loans, and an affiliate of the General Partner charged the Partnership interest on advances of $34,499 and $43,211 respectively. For the nine months ended September 30, 2009 and 2008, affiliates of the General Partner charged the Partnership aggregated interest, bank fees and finance charges of $2,142,433 and $3,392,287, respectively, relating to non-permanent loans, and an affiliate of the General Partner charged the Partnership interest on advances of $100,778 and $135,902, respectively. The General Partner and its affiliates are entitled to recover interest on the full amount of non-permanent loans they provide to the Partnership or NTL South Herts and the portion of bank fees and deferred financing costs relating to Virgin Media’s senior credit facility allocable to the Partnership or NTL South Herts.

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SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.

(A Limited Partnership)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 5 — Recent Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board, or FASB, issued guidance relating to the FASB Accounting Standards Codification, or ASC, at ASC 105. Effective for interim or annual financial periods ending after September 15, 2009, the ASC will become the single official source of authoritative U.S. GAAP (other than guidance issued by the SEC), superseding existing FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force (EITF), and related literature. After September 15, 2009, only one level of authoritative U.S. GAAP will exist. All other literature will be considered non-authoritative. The ASC does not change U.S. GAAP; instead, it introduces a new structure that is organized in an easily accessible, user-friendly online research system. We have adopted the disclosure requirements of this guidance.

In December 2007, the FASB issued new accounting guidance around noncontrolling Interests at ASC 810.  This guidance establishes requirements for ownership interests in subsidiaries held by parties other than ourselves (sometimes called ‘‘minority interests’’) to be clearly identified, presented, and disclosed in the consolidated statement of financial position within equity, but separate from the parent’s equity. All changes in the parent’s ownership interests are required to be accounted for consistently as equity transactions and any noncontrolling equity investments in unconsolidated subsidiaries must be measured initially at fair value. Additionally, the guidance requires that net income or loss and comprehensive income or loss be attributed to the parent entity and the noncontrolling interest. Before the adoption of this guidance, the portion of operations relating to the noncontrolling interest was reflected in the statement of operations as an income or expense item in the calculation of net income or loss.  The guidance is effective, on a prospective basis, for fiscal years beginning after December 15, 2008; however, presentation and disclosure requirements must be retrospectively applied to comparative financial statements. We adopted this guidance effective January 1, 2009 and have classified noncontrolling interest (previously minority interest) as a component of equity for all periods presented.   We also made the required adjustments to reflect the net profit or loss and comprehensive profit or loss as being attributable to the Partnership for all periods presented.  Such adjustments had the following impact on our previously reported condensed consolidated statements of operations for the three and nine months ended September 30, 2008.

The following table presents a reconciliation of the beginning and the ending carrying amounts of total equity attributable to the Partnership and equity attributable to the noncontrolling interests.

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SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD.

(A Limited Partnership)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 5 — Recent Accounting Pronouncements Continued

In May 2009, the FASB issued new accounting guidance for the disclosure of subsequent events at ASC 855, effective for financial statements issued for all periods ending after June 15, 2009. The guidance establishes general standards of accounting for, and requires disclosure of, events that occur after the balance sheet date but before financial statements are issued or are available to be issued. We adopted this guidance during the second quarter of 2009. In accordance with the guidance, we have evaluated subsequent events through the date and time the financial statements were issued on November 12, 2009.

In September 2009, the FASB ratified new accounting guidance for existing multiple-element revenue arrangements at ASC 605.25. The revised multiple-element revenue arrangements guidance will be effective for the first annual reporting period beginning on or after June 15, 2010 and may be applied retrospectively for all periods presented or prospectively to arrangements entered into or materially modified after the adoption date. Early adoption is permitted provided that the revised guidance is retroactively applied to the beginning of the year of adoption. We have not yet adopted the provisions of this guidance and are evaluating the impact on our consolidated financial statements.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We are a Colorado limited partnership that was formed in December 1991 pursuant to the public offering of our limited partnership interests for the purpose of acquiring one or more cable television/telephone systems in the U.K.  Upon acquisition of our system, our primary investment objective was to obtain capital appreciation in the value of our investment in the system over the term that the investment is held by us.

We hold 66.7% of the shares of NTL South Herts, which is principally engaged in the development, construction, management and operation of broadband communications networks for telephone, cable television and internet services in the U.K.  As a result of our ownership of 66.7% of the shares of NTL South Herts, for accounting purposes we have consolidated the results of NTL South Herts with our results.  Virgin Media indirectly holds the remaining 33.3% of the shares of NTL South Herts.  We are reliant on the support of Virgin Media, the ultimate parent company of the General Partner, to continue our operations as a going concern.

We derive our revenue principally from monthly fees and usage charges.  Our packaging of services and pricing are designed to encourage our residential customers to use multiple services like “double-play” telephone and broadband, “double-play” telephone and television or “triple-play” telephone, television and broadband.

Our expenses include certain costs that are charged to us by a subsidiary of Virgin Media for the provision of network services and support, the use of Virgin Media’s national backbone telephone network for carriage of our telephone traffic, as well as the provision of technical infrastructure and network capacity by Virgin Media for our subscription internet access service and digital television services, the provision of corporate services, including finance, legal, human resources and facility services, and for the provision of IT services, including our use of the related IT systems and equipment.  The principal components of Virgin Media’s expenses include payroll and other employee-related costs; television programming costs; interconnect costs paid to other carriers relating to call termination; facility-related costs, such as rent, utilities and rates; marketing and selling costs; repairs and maintenance costs; and allowances for doubtful accounts.

In the second quarter, the General Partner agreed to the transfer of customer and supplier contracts relating to NTL South Herts’ premium TV services, resulting in a transfer of revenue and costs to Future Entertainment Sarl, a wholly owned subsidiary of Virgin Media, which as of June 1, 2009 carried substantially all Virgin Media’s premium TV channels and associated revenue and costs.  This is not expected to be detrimental to the results of operations or financial position of NTL South Herts.

Factors Affecting Our Business

Our residential customers account for the majority of our total revenue.  The number of residential customers, the number and types of services that each customer uses and the prices we charge for these services drive our revenue.  Our profit is driven by the relative margins on the types of services we provide to these customers and by the number of services that we provide to them.  For example, broadband internet is more profitable than our television services and, on average, our “triple-play” customers are more profitable than “double-play” or “single-play” customers. Our packaging of services and our pricing are designed to encourage our customers to use multiple services such as television, telephone and broadband at a lower price than each stand-alone product on a combined basis.  Factors particularly affecting our business include general macroeconomic factors, currency movements, integration and restructuring activities, churn, average revenue per user, competition, capital expenditures and seasonality.

General Macroeconomic Factors.  General macroeconomic factors in the U.K. have an impact on our business.  For example, during an economic slowdown, potential and existing customers may be less willing, or able, to purchase our products or upgrade their services.  We may also experience increased churn and higher bad debt expense.

Currency Movements.  Because substantially all of our revenue and operating costs are earned and paid in U.K. pounds sterling, but we report our financial results in U.S. dollars, our financial results are impacted by currency fluctuations which are unrelated to our underlying results of operations.

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Integration and Restructuring Activities.  In the fourth quarter of 2008, Virgin Media commenced the implementation of a restructuring plan aimed at driving further improvements in Virgin Media’s and our operational performance and eliminating inefficiencies in order to create a fully-integrated, customer-focused organization.  While Virgin Media anticipates significant cost savings from the plan and that the annual savings from and after 2010 will exceed the annual costs, it expects that 2009 costs will be at a similar level to 2009 savings.  These costs will include purchases of fixed assets, lease and contract exit costs, employee termination costs, and other restructuring and restructuring-related expenses, some of which will be classified as restructuring costs.  In total, Virgin Media expects to incur operating expenditures of between £120 million to £140 million and capital expenditures of between £50 million to £60 million in connection with this plan over a three-year period.  Virgin Media’s and our financial performance may be negatively affected if Virgin Media is unable to implement its restructuring plan successfully and realize the anticipated benefits.

Churn.  Churn is a measure of the number of customers who stop subscribing to any of our services.  An increase in our churn can lead to increased costs and reduced revenue.  We continue to focus on improving our customer service and enhancing and expanding our service offerings to existing customers in order to manage our churn rate.  Our ability to reduce our churn rate beyond a base level is limited by factors such as competition, the economy and customers moving outside our network service area, in particular during the summer season.  Managing our churn rate is a significant component of our business plan.  Our churn rate may increase if our customer service is seen as unsatisfactory, if we are unable to deliver our services without interruption, if we fail to match offerings by our competitors, if we increase our prices, if there is an improvement in the U.K. housing market or if there is a prolonged economic downturn.

ARPU.  Average revenue per user, or ARPU, is a measure Virgin Media uses to evaluate how effectively it is realizing potential revenue from its residential cable customers on its network.  Virgin Media believes that its “triple-play” cable offering of television, broadband and fixed line telephone services is attractive to its existing customer base and generally allows Virgin Media to increase its ARPU by facilitating the sale of multiple services to each customer.

Competition.  Our ability to acquire and retain customers and increase revenue depends on our competitive strength.  There is significant and increasing competition in the market for our consumer services, including broadband and telephone services offered by British Telecom, or BT; resellers or local loop unbundlers, such as British Sky Broadcasting Group plc, or BSkyB, and Carphone Warehouse (Talk Talk); alternative internet access services like DSL; satellite television services offered by BSkyB and by BBC and ITV through Freesat; free-to-air digital terrestrial television offered through Freeview; and internet protocol television offered by BT.  Our business services also face a range of competitors, including services offered by BT and Cable & Wireless plc.  In addition, certain competitors, such as BT and BSkyB, are dominant in markets in which we compete and may use their dominance in those markets to offer bundled services that compete with our product offerings.  As a result of increased competition, we have had to, and may be required to continue to, adjust our pricing and offer discounts to new and existing customers in order to attract and retain customers.

Capital Expenditures.  Our business requires substantial capital expenditures on a continuing basis for various purposes, including expanding, maintaining and upgrading our network, investing in new customer acquisitions, and offering new services.  If Virgin Media and we do not continue to invest in our network and in new technologies, our ability to retain and acquire customers may be hindered.  Therefore, Virgin Media’s and our liquidity and the availability of cash to fund capital projects are important drivers of our revenue.  When Virgin Media’s and our liquidity is restricted, so is our ability to meet our capital expenditure requirements.

Seasonality.  Some revenue streams are subject to seasonal factors.  For example, telephone usage revenue by residential customers and businesses tends to be slightly lower during summer holiday months.  Our churn rate includes persons who disconnect their service because of moves, resulting in a seasonal increase in our churn rate during the summer months when higher levels of U.K. house moves occur and students leave their accommodation between academic years.

Critical Accounting Policies

The preparation of our consolidated financial statements requires us to make estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and contingent liabilities. We base our judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making estimates about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

For a discussion of the accounting judgments and estimates that we have identified as critical in the preparation of our consolidated financial statements, please refer to our annual report on Form 10-K for the year ended December 31, 2008, as filed with the SEC on March 16, 2009.

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Consolidated Results of Operations

Three Months Ended September 30, 2009 and 2008

We present below summarized consolidated financial information in U.S. dollars and U.K. pounds sterling for the three months ended September 30, 2009 and 2008:

Revenue

For the three months ended September 30, 2009, revenue decreased by 15.4% to $7.2 million from $8.5 million for the three months ended September 30, 2008, and revenue expressed in pounds sterling decreased by 2.9% to £4.4 million for the three months ended September 30, 2009 from £4.5 million for the three months ended September 30, 2008.  The decrease was primarily driven by a full quarter’s impact on revenue of the transfer of customer and supplier contracts relating to the NTL South Herts’ premium TV services to Future Entertainment Sarl, a wholly owned subsidiary of Virgin Media, partially offset by the impact of selective price increases and continued growth in triple-play customers.

Expenses

Operating costs

Operating costs include cost of goods sold and depreciation of fixed assets related to the network. For the three months ended September 30, 2009, operating costs decreased by 31.0% to $2.5 million from $3.6 million for the three months ended September 30, 2008, and operating costs expressed in pounds sterling decreased by 21.9% to £1.5 million for the three months ended September 30, 2009 from £1.9 million for the three months ended September 30, 2008.  The reduction in operating costs was primarily driven by a full quarter’s impact on cost of goods sold of the transfer of customer and supplier contracts relating to NTL South Herts’ premium TV services to Future Entertainment Sarl, a wholly owned subsidiary of Virgin Media. For the three months ended September 30, 2009 and 2008, depreciation expense included in operating costs was $1,124,374, or £684,441, and $1,567,503, or £830,188, respectively.

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Allocated overhead

For the three months ended September 30, 2009, allocated overhead decreased by 14.9% to $2.5 million from $2.9 million for the three months ended September 30, 2008. For the three months ended September 30, 2009, allocated overhead expressed in pounds sterling decreased by 2.6% to £1,489,449 from £1,528,564 for the three months ended September 30, 2008. The business of NTL South Herts is managed as an integral part of Virgin Media. The combined costs of managing the larger group are allocated to each entity within the Virgin Media group, including NTL South Herts, on a consistent and proportional basis according to the level of trading in that entity. Allocated overhead expressed in pounds sterling decreased due to a reduction in selling, general and administrative expenses incurred by Virgin Media Inc.

Management fees

For the three months ended September 30, 2009, management fees decreased by 15.4% to $359,904 from $425,217 for the three months ended September 30, 2008, and management fees expressed in pounds sterling decreased by 2.9% to £218,519 for the three months ended September 30, 2009 from £224,983 for the three months ended September 30, 2008.  Management fees are charged as a percentage of revenue and changes in management fees are therefore a direct reflection of changes in revenue.

Selling, general and administrative expenses

For the three months ended September 30, 2009, selling, general and administrative expenses increased to $32,833, or £19,912, from $20,227, or £10,711, for the three months ended September 30, 2008.  The increase was primarily due to higher audit fees.

Interest expense

For the three months ended September 30, 2009, interest expense decreased by 37.0% to $0.7 million from $1.2 million for the three months ended September 30, 2008, and interest expense expressed in pounds sterling decreased by 28.0% to £0.4 million for the three months ended September 30, 2009 from £0.6 million for the three months ended September 30, 2008.  This decrease was primarily due to a lower accounts payable to affiliates and related parties balance, arising from increased profitability, together with lower interest rates.

We paid no cash interest for the three months ended September 30, 2009 and 2008.

Exchange gains

For the three months ended September 30, 2009, foreign currency exchange gains were $56,613, or £41,674, as compared with gains of $257,531, or £132,221, for the three months ended September 30, 2008.  The change in foreign currency exchange gains was primarily attributable to fluctuations in the value of the U.S. dollar on certain of our liabilities and transactions.  The value of the U.S. dollar strengthened by approximately 3% against the pound sterling from June 30, 2009 to September 30, 2009.  Our results of operations will continue to be affected by foreign exchange rate fluctuations.

Noncontrolling interest

During the three months ended September 30, 2009, the profit attributable to the noncontrolling interest was $407,249, or £255,396, compared with $167,656, or £87,769, for the three months ended September 30, 2008.

Net profit attributable to South Hertfordshire United Kingdom Fund, Ltd.

For the three months ended September 30, 2009, net profit attributable to South Hertfordshire United Kingdom Fund, Ltd. was $787,247, or £501,598 as compared with $508,437, or £265,446, for the three months ended September 30, 2008, primarily due to the reasons described above.

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Nine Months Ended September 30, 2009 and 2008

We present below summarized consolidated financial information in U.S. dollars and U.K. pounds sterling for the nine months ended September 30, 2009 and 2008:

Revenue

For the nine months ended September 30, 2009, revenue decreased by 20.8% to $21.0 million from $26.6 million for the nine months ended September 30, 2008, and revenue expressed in pounds sterling remained relatively unchanged at £13.6 million for the nine months ended September 30, 2009 and 2008. Revenue was relatively unchanged as the decline in revenue from the transfer of premium TV services, as discussed above, was offset by the impact of selective price increases and continued growth in triple-play customers.

Expenses

Operating costs

Operating costs include cost of goods sold and depreciation of fixed assets related to the network. For the nine months ended September 30, 2009, operating costs decreased by 30.0% to $8.0 million from $11.5 million for the nine months ended September 30, 2008, and operating costs expressed in pounds sterling decreased by 11.6% to £5.2 million for the nine months ended September 30, 2009 from £5.9 million for the nine months ended September 30, 2008.  The reduction in operating costs was primarily a reflection of lower depreciation, as a result of fixed assets becoming fully depreciated, together with a reduction in cost of goods sold relating to the transfer of premium TV services, as discussed above.  For the nine months ended September 30, 2009 and 2008, depreciation expense included in operating costs was $3,202,353, or £2,076,349, and $5,008,711, or £2,572,660, respectively.

Allocated overhead

For the nine months ended September 30, 2009, allocated overhead decreased by 16.9% to $7.4 million from $8.9 million for the nine months ended September 30, 2008. For the nine months ended September 30, 2009, allocated overhead expressed in pounds sterling increased by 4.9% to £4.8 million from £4.6 million for the nine months ended September 30, 2008. The business of NTL South Herts is managed as an integral part of Virgin Media. The combined costs of managing the larger group are allocated to each entity within the Virgin Media group, including NTL South Herts, on a consistent and proportional basis according to the level of trading in that entity. Allocated overhead expressed in pounds sterling increased in line with Virgin Media’s overall cost base as a result of higher network and other operating costs incurred by Virgin Media and also as a result of higher restructuring and other charges in connection with Virgin Media’s restructuring program initiated in the fourth quarter of 2008.

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Management fees

For the nine months ended September 30, 2009, management fees decreased by 20.8% to $1,051,406 from $1,328,252 for the nine months ended September 30, 2008, and management fees expressed in pounds sterling decreased by 0.1% to £681,713 for the nine months ended September 30, 2009 from £682,239 million for the nine months ended September 30, 2008.  Management fees are charged as a percentage of revenue and changes in management fees are therefore a direct reflection of changes in revenue.

Selling, general and administrative expenses

For the nine months ended September 30, 2009, selling, general and administrative expenses increased to $97,010, or £62,900, from $64,451, or £33,104, for the nine months ended September 30, 2008.  The increase was primarily due to higher audit fees.

Interest expense

For the nine months ended September 30, 2009, interest expense decreased by 36.4% to $2.2 million from $3.5 million for the nine months ended September 30, 2008, and interest expense expressed in pounds sterling decreased by 19.7% to £1.5 million for the nine months ended September 30, 2009 from £1.8 million for the nine months ended September 30, 2008.  This decrease was primarily due to a lower accounts payable to affiliates and related parties balance, arising from increased profitability, together with lower interest rates.

We paid no cash interest for the nine months ended September 30, 2009 and 2008.

Exchange (losses) gains

For the nine months ended September 30, 2009, foreign currency exchange losses were $174,895, or £113,399, as compared with gains of $249,870, or £128,342, for the nine months ended September 30, 2008.  The change in foreign currency exchange losses and gains was primarily attributable to fluctuations in the value of the U.S. dollar on certain of our liabilities and transactions.  The value of the U.S. dollar weakened by approximately 9% against the pound sterling from December 31, 2008 to September 30, 2009.  Our results of operations will continue to be affected by foreign exchange rate fluctuations.

Noncontrolling interest

During the nine months ended September 30, 2009, the profit attributable to the noncontrolling interest was $810,747, or £525,674, compared with $394,813, or £202,791, for the nine months ended September 30, 2008.

Net profit attributable to South Hertfordshire United Kingdom Fund, Ltd.

For the nine months ended September 30, 2009, net profit attributable to South Hertfordshire United Kingdom Fund, Ltd. was $1,199,218, or £777,551, as compared with $1,098,228, or £564,089, for the nine months ended September 30, 2008, primarily due to the reasons described above.

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Selected Operating Data

The following table sets forth certain data concerning our residential cable customers for the last five quarters:

(1)   Churn is calculated by taking the total number of customers disconnecting from our services during the month and dividing them by the average number of customers during the month. Average monthly churn during the quarter is the average of the three monthly churn calculations within the quarter.

Condensed Consolidated Statement of Cash Flows

In the nine months ended September 30, 2009, we generated $0.5 million from our operating activities compared with $0.8 million in the nine months ended September 30, 2008, which was used to purchase fixed assets including equipment for customer installations.  Our cash provided by operating activities decreased primarily due to a reduction in accounts payable to affiliates and related parties.

Liquidity and Capital Resources

We have no financing independent of Virgin Media.  We are reliant upon the support of Virgin Media to continue our operations.  As of September 30, 2009, we had consolidated current liabilities of $42.6 million due to Virgin Media group companies compared with $43.8 million as of December 31, 2008 and $54.5 million as of September 30, 2008.

Historically, our source of cash has been the net proceeds of our offerings of limited partnership interests along with funding from Virgin Media and our principal uses of cash have been capital contributions to NTL South Herts in order to fund our proportionate share of the construction costs of the South Herts System and ongoing operations.

Until such time as NTL South Herts begins to pay dividends on its ordinary shares (which is not expected in the foreseeable future) we will be required to fund our administrative expenses from borrowings or, theoretically, additional issuances of limited partnership interests.  It is unlikely that we will be able to sell debt or equity securities in the public markets, at least in the short term, or to obtain financing from commercial banks.  Accordingly, we are dependent on Virgin Media for funds to cover operating expenses, and will continue to be dependent upon Virgin Media to meet our liquidity requirements for the foreseeable future.  We expect that cash from our operations in 2009 will be utilized fully for the purchase of fixed assets including connecting new customers to our networks.

Virgin Media had £5,972.0 million of debt outstanding as of September 30, 2009, compared to £6,170.1 million as of December 31, 2008 and £6,082.6 million as of September 30, 2008, and £351.6 million of cash and cash equivalents as of September 30, 2009, compared to £181.6 million as of December 31, 2008 and £521.4 million as of September 30, 2008.  The decrease in debt since September 30, 2008 is primarily attributable to the voluntary prepayment of £300 million of senior bank debt in December 2008 partially offset by movements in exchange rates.  The decrease in debt from December 31, 2008 is primarily due to movements in exchange rates.

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On June 3, 2009, Virgin Media issued $750 million aggregate principal amount of 9.50% senior notes due 2016 and €180 million aggregate principal amount of 9.50% senior notes due 2016.  On July 21, 2009, Virgin Media issued an additional $600 million aggregate principal amount of 9.50% senior notes due 2016 under the same terms as the notes issued on June 3, 2009.  Virgin Media used the net proceeds from the June 2009 note issuance and the July 2009 note issuance, together with additional cash reserves, to repay £608.5 million and £403.6 million, respectively, of obligations under its senior credit facility that were originally scheduled to be paid in 2010 and 2012. On November 9, 2009, Virgin Media issued a further $600 million aggregate principal amount of 8.375% senior notes due 2019 and £350 million aggregate principal amount of 8.875% senior notes due 2019.  Virgin Media intends to use the net proceeds from the senior notes due 2019 to redeem a portion of the outstanding senior notes due 2014 of Virgin Media Finance PLC.

Virgin Media’s business is capital intensive and it is highly leveraged. Virgin Media has significant cash requirements for operating costs, capital expenditures and interest expense.  Virgin Media also has significant principal payments under its senior credit facility due from 2011 to 2013, as described below. The levels of Virgin Media’s capital expenditures and operating expenditures are affected by the significant amounts of capital required to connect customers to its network, expand and upgrade its network and offer new services.  Virgin Media expects that its cash on hand, together with cash from operations and amounts undrawn on its revolving credit facility, will be sufficient for its cash requirements through September 30, 2010.  However, Virgin Media’s cash requirements after September 30, 2010 may exceed these sources of cash.

Significant principal payments under Virgin Media’s senior credit facility were due in 2010 and 2011.  However, following the amendment of the terms of Virgin Media’s senior credit facility in November 2008, and subsequent satisfaction of the applicable prepayment conditions in June 2009, a significant portion of these payments was deferred to 2012.  Virgin Media expects to be able to address the remaining scheduled principal payments due in 2010 and 2011 through cash flow from operations.  However, if Virgin Media were unable to service these obligations through cash flow from operations, then it would need to secure additional funding such as raising additional debt or equity, refinancing its existing facility, selling assets or using other means.  Virgin Media may not be able to obtain financing or sell assets, at all or on favorable terms, or may be contractually prevented by the terms of its senior notes or its senior credit facility from incurring additional indebtedness or selling assets. Virgin Media also has significant principal payments due in 2012 under its senior credit facility that it can address only by a comprehensive refinancing of its senior debt and possibly other debt instruments. Virgin Media’s ability to implement such a refinancing successfully is significantly dependent on sustained improvements in the debt capital markets.

Virgin Media’s long term debt was issued by Virgin Media Inc. and certain of its subsidiaries that have no independent operations or significant assets other than investments in their respective subsidiaries. As a result, Virgin Media will depend upon the receipt of sufficient funds from their respective subsidiaries to meet their obligations. In addition, the terms of Virgin Media’s existing and future indebtedness and the laws of the jurisdictions under which its subsidiaries are organized limit the payment of dividends, loan repayments and other distributions from them under many circumstances.

Virgin Media’s debt agreements contain restrictions on its ability to transfer cash between groups of its subsidiaries or to us.  As a result of these restrictions, although its overall liquidity may be sufficient to satisfy its obligations, it may be limited by covenants in some of its debt agreements from transferring cash to other subsidiaries that might require funds.  In addition, cross default provisions in its other indebtedness may be triggered if it defaults on any of these debt agreements.

For further information concerning Virgin Media’s liquidity and capital resources and the terms of its various debt facilities, see the annual report on Form 10-K of Virgin Media Inc. for the year ended December 31, 2008, as filed with the SEC on February 26, 2009, and revised by the current report on Form 8-K filed with the SEC on May 27, 2009, and its quarterly report on Form 10-Q for the three and nine months ended September 30, 2009, as filed with the SEC on October 29, 2009.

Off-Balance Sheet Transactions

As of September 30, 2009 and 2008, we had no off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K under the Securities Exchange Act of 1934, as amended.

Contractual Obligations and Commercial Commitments

There have been no material changes in the nine months ended September 30, 2009 to the information required under this Item from what was disclosed in our annual report on Form 10-K for the year ended December 31, 2008, as filed with the SEC on March 16, 2009.

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Item 3.  Quantitative and Qualitative Disclosures about Market Risk

The functional currency of NTL South Herts is pounds sterling and all revenue and substantially all costs are incurred in pounds sterling.  We report in U.S. dollars and are therefore, exposed to fluctuations in the pound sterling to U.S. dollar exchange rate.

The aggregate potential loss from a hypothetical one-percent decrease in the pound sterling/U.S. dollar exchange rate is approximately $4,000 for the nine months ended September 30, 2009.

We have no debt other than amounts due to affiliates.  As of September 30, 2009 and 2008, we had approximately $42.6 million and $54.5 million, respectively, in amounts due to Virgin Media group companies.  Interest on amounts due to affiliates is at a variable rate based on the average rate incurred by Virgin Media.  Therefore we are exposed to changes in Virgin Media’s borrowing rate.  The aggregate potential loss from a hypothetical one-percentage point increase in the interest rate is approximately $300,000 for the nine months ended September 30, 2009.

Item 4.  Controls and Procedures

(a) Disclosure Controls and Procedures.  Our management, with the participation of the chief executive officer and principal financial officer of Virgin Media*, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, Virgin Media’s chief executive officer and principal financial officer have concluded that, as of the end of such period, these controls and procedures are effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. These disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit is accumulated and communicated to our management, including Virgin Media’s chief executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

(b)  Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

*                                         The Partnership has no principal executive officer or principal financial officer. Robert Mackenzie and Robert Gale are Directors of Virgin Media Directors Limited, which is a Corporate Director of NTL Fawnspring Limited, the General Partner of the Partnership.

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PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

We are involved in various disputes and litigation arising in the ordinary course of our business.  While we do not believe any of these litigation matters alone or in the aggregate will have a material adverse effect on our financial position or results of operation, any adverse outcome in one or more of these matters could be material to our consolidated financial statements for any one period.

Item 1A.  Risk Factors

Except for the following, there have been no material changes in the risk factors discussed under “Risk Factors” and elsewhere in our annual report on Form 10-K for the year ended December 31, 2008, as filed with the SEC on March 16, 2009:

The sectors in which Virgin Media competes are subject to rapid and significant changes in technology, and the effect of technological changes on its businesses cannot be predicted.

The broadband internet, television, fixed line telephone and mobile telephone services sectors are characterized by rapid and significant changes in technology. Advances in current technologies, such as VoIP (over fixed and mobile technologies), mobile instant messaging, wireless fidelity, or WiFi, the extension of local WiFi networks across greater distances, or WiMax, enhancements to existing mobile network technologies that increase capacity and speed such as Long Term Evolution, or LTE, internet protocol television, or future technological breakthroughs, may result in our core offerings becoming less competitive or render Virgin Media’s existing products and services obsolete. Virgin Media may not be able to develop new products and services at the same rate as its competitors or keep up with trends in the technology market as well as its competitors. The cost of implementing emerging and future technologies could be significant, and Virgin Media’s ability to fund that implementation may depend on its ability to obtain additional financing. Similarly, the deployment of new services, such as LTE services, in the spectrum frequencies in which Virgin Media operates could have an impact on the existing services offered by Virgin Media, with consequential impact on its and our business.

Virgin Media continues to face amortization pressures under its senior credit facility, and Virgin Media may not be able to refinance its debt obligations or may be able to refinance only on terms that will increase its cost of borrowing.

As of September 30, 2009, Virgin Media had amortization payments of £0.2 million and £285.7 million due in 2010 and 2011, respectively. Virgin Media expects to be able to address those payments through cash flow from operations and, if required, amounts then undrawn on its revolving credit facility. However, if Virgin Media should need to secure additional funding, it may not be able to obtain financing or sell assets, at all or on favorable terms, or Virgin Media may be contractually prevented by the terms of its senior notes or its senior credit facility from incurring additional indebtedness or selling assets.

As of September 30, 2009, Virgin Media also had amortization payments of £2,540.9 million due in 2012. Virgin Media does not expect to generate sufficient cash flow from operations to satisfy all of the 2012 payments. Virgin Media expects to address this shortfall in advance thereof through a comprehensive refinancing of its senior secured debt, which may take place at any time before the amortization payments are due. Virgin Media’s ability to implement such a refinancing successfully is significantly dependent on sustained improvements in the debt markets. Even if the debt markets improve, the size of the amounts outstanding under Virgin Media’s senior credit facility may be too large to be refinanced with senior bank debt and Virgin Media may need to raise additional capital by doing one or more of the following:

· raising additional debt other than senior bank debt, such as secured or unsecured high yield debt, on terms that may increase its cost of borrowing or result in more onerous terms;

· selling or disposing of some of its assets, possibly on unfavorable terms; or

· issuing equity or equity-related instruments that will dilute the equity ownership interest of existing stockholders.

Virgin Media cannot be sure that any of, or any combination of, the above actions would be available or sufficient to fund its debt obligations or that it will be able to refinance its debt obligations on favorable terms or at all.

Item 2.  Unregistered Sales of Equity Securities and use of Proceeds

None.

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Item 3.  Defaults Upon Senior Securities

None.

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

No matters were submitted to a vote of our security holders in the quarter ended September 30, 2009.

Item 5.  Other Information

None.

Item 6.  Exhibits

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 12, 2009

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

Date: November 12, 2009

*                                         The Partnership has no principal executive officer or principal financial officer. Robert Mackenzie and Robert Gale are Directors of Virgin Media Directors Limited, which is a Corporate Director of NTL Fawnspring Limited, the General Partner of the Partnership.

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