South Hertfordshire
United Kingdom Fund, Ltd.
ntl House
Bartley Wood
Business Park
Hook
Hampshire
RG27 9UP
United Kingdom
BY FACSIMILE (202) 772-9205 AND EDGAR
Mr Larry Spirgel
Assistant Director, Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
July 18, 2005
RE: SOUTH HERTFORDSHIRE UNITED KINGDOM FUND, LTD
FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004
FILED MARCH 31, 2005
FORM 10-Q FOR THE FISCAL QUARTER ENDED MARCH 31, 2005
FILED MAY 13, 2005
FILE NO 0-19889
Dear Mr Spirgel
Set forth below are the responses of South Hertfordshire United Kingdom
Fund, Ltd ("UK Fund") to the comments received from the Staff of the
Securities and Exchange Commission in a letter dated July 11, 2005. The UK
Fund owns 66.67% of the issued share capital of NTL (South Hertfordshire)
Limited, or NTL South Herts, a United Kingdom corporation.
FORM 10-K FOR FISCAL YEAR ENDED DECEMBER 31, 2004
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION, PAGE 24
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RESULTS OF OPERATIONS, PAGE 28
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STAFF COMMENT:
"We note your disclosure that you record a charge for minority
interest in NTL (South Hertfordshire) Limited when the assets of NTL (South
Hertfordshire) Limited exceed its liabilities. Clarify this statement for
us and tell us your basis in the accounting literature for charging none of
the losses of NTL (South Hertfordshire) Limited to the minority shareholder
until the quarter ended December 31, 2004. In addition, tell us why you
began charging minority interest in the final quarter of 2004. Please
provide us with your calculation of how you determined the amounts of
minority interest to record in the statement of operations and the balance
sheet. Please refer to all applicable accounting literature."
RESPONSE
Prior to the quarter ended December 31, 2004, the losses of NTL South
Herts applicable to the minority interest exceeded the minority interest in
the equity capital of NTL South Herts. In accordance with Accounting
Research Bulletin 51, or ARB 51, paragraph 15, such excess and further
losses applicable to the minority interest have been charged against the
majority interest, as there is no obligation of the minority interest to
make good such losses. In the final quarter of 2004, NTL South Herts
generated earnings such that the majority interest was fully credited to
the extent of minority interest losses previously absorbed.
We provide below a summary calculation of the minority interest for
the year ended December 31, 2004:
Net income of NTL South Herts (pound)1,621,986
Minority interest at 33.33% (pound)540,662
Less: minority interest losses previously
absorbed by majority interest (488,879)
Minority interest (pound)51,783
Minority interest reported (exchange
rate of $1.8326) $94,898
NOTE 1 - ORGANIZATION AND PARTNERS' INTERESTS, PAGE F-8
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STAFF COMMENT:
"Describe for us how you applied the guidance in FIN 46(R) in
determining that it is appropriate to consolidate NTL (South Hertfordshire)
Limited."
RESPONSE:
The UK Fund has determined that NTL South Herts is not a variable
interest entity since the conditions in FIN 46(R), paragraph 5, are not
present.
a) The total equity investment at risk was sufficient to permit NTL South
Herts to finance its activities without additional subordinated
financial support. The total equity investment at risk in NTL South
Herts amounted to $70.8 million at December 31, 2004.
b) The UK Fund's equity investment at risk has the characteristics of a
controlling financial interest, including the ability through voting
rights to make decisions about NTL South Herts' activities, the
obligation to absorb the expected losses and the right to receive
expected residual returns of NTL South Herts through its 66.67%
majority voting interest.
c) The UK Fund's voting rights are proportional to the obligations to
absorb the expected losses and the rights to receive the expected
residual returns of NTL South Herts, and NTL South Herts' activities
are not conducted on behalf of an investor that has disproportionately
few voting rights.
The UK Fund has consolidated the results of operations and the
financial position of NTL South Herts because of its controlling financial
interest in accordance with ARB 51, paragraph 3. The UK Fund owns a
majority voting interest representing 66.67% of the voting interest in NTL
South Herts.
* * *
The UK Fund acknowledges that (i) it has full responsibility for the
adequacy and accuracy of the disclosure in the above-referenced filings;
(ii) Staff comments or changes to disclosure in response to Staff comments
do not foreclose the Commission from taking any action with respect to the
filings; and (iii) the UK Fund may not assert Staff comments as a defense
in any proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
If the Staff has any additional comments or questions, please call the
undersigned at +44 125 675-2157 or email at robert.mackenzie@ntl.com. Thank
you.
Sincerely,
/s/ Robert M Mackenzie
Robert M Mackenzie
Director
For and on behalf of ntl Directors Limited
Corporate director of ntl Fawnspring Limited
For and on behalf of South Hertfordshire UK Fund Ltd