Interim Report

BT Group PLC
07 November 2002



BT Group Half Year Results and Interim Report

Chairman's Statement

"This is an excellent set of results. The operating performance and cash
generation of the business has been particularly strong in a difficult market.

I am pleased to report that we will be paying an interim dividend of 2.25 pence
per share.

The recently announced agreement to dispose of our stake in Cegetel will see net
debt reduce by a further £2.5 billion on completion.

These results demonstrate our ability to reduce debt, reward our shareholders
and invest for the future."

                                     Sir Christopher Bland, 6 November 2002

_________________________________________________________________________________________

Review

Group turnover from continuing activities increased by 2 per cent. This was a
good performance in difficult market conditions. Although the three year revenue
target of 6 to 8 per cent compound annual growth is unlikely to be achieved in
the present market conditions, we expect total revenue growth for the second
half to be in line with current market expectations. Future revenue growth will
benefit from our focus on developing new wave initiatives.

Group profit before taxation* increased by 57 per cent to £818 million
reflecting improved gross margins in BT Retail, cost reductions across the lines
of business, reduced operating losses in the overseas activities of BT Ignite
and a reduction in the level of interest payable.

Earnings per share* were 6.2 pence, an increase of 68 per cent.

An interim dividend of 2.25 pence per share will be paid on 10 February 2003 to
shareholders on the register on 31 December 2002. We expect this year's final
dividend to be slightly more than the historical level of one and a half times
the interim dividend. Our progressive dividend policy remains unchanged.

Cash inflow from operating activities amounted to £2,736 million, representing a
strong conversion of profits into cash. Capital expenditure at £1,108 million
was 19 per cent lower than last year reflecting the continued management focus
and control over capital expenditure. Full year expenditure is expected to be
around £2.8 billion. Net debt was reduced by a further £589 million to £13.1
billion at 30 September 2002.

Exceptional profits of £66 million reflect the gain on disposal of BSkyB shares.

On 16 October 2002 we agreed to sell our stake in Cegetel, subject to regulatory
approval, for approximately £2.5 billion which will generate a profit of
approximately £1.4 billion.

*from continuing activities before goodwill amortisation and exceptional items

____________________________________________________________________

Group profit and loss account for the six months ended 30 September

(unaudited)
                                                                           2002                2001
                                                                           (a)                 (b)
                                                                           £m                  £m
Turnover, including share of ventures                                      10,092              13,315
Group turnover                                                             9,248               10,758
Group operating profit                                                     1,288               844
Share of operating profit (loss) of ventures                               115                 (824)
Profit on sale of investments and group undertakings                       66                  4,495
Profit on sale of property fixed assets                                    6                   12
Amounts written off investments                                            (7)                 (535)
Net interest payable                                                       (595)               (836)
Profit before taxation                                                     873                 3,156
Taxation                                                                   (272)               (272)
Profit after taxation                                                      601                 2,884
Minority interests                                                         (11)                (14)
Profit attributable to shareholders                                        590                 2,870
Interim dividend                                                           (194)               -
Earnings per share
- basic                                                                    6.9p                35.8p
- diluted                                                                  6.8p                35.5p
Earnings per share before goodwill amortisation and exceptional items
- basic                                                                    6.2p                3.7p
- diluted                                                                  6.2p                3.7p
Interim dividend per share                                                 2.25p               -


    (a) Results are wholly from continuing activities.

    (b) Includes the results of discontinued activities - mmO2, Japan Telecom,
    J-Phone Communications, Airtel and Yell.

________________________________________________________________________



Group cash flow statement for the six months ended 30 September

(unaudited)
                                                                               2002                2001
                                                                               £m                  £m
Inflow from operating activities, including ventures                           2,736               2,688
Outflow for returns on investments                                             (606)               (679)

and servicing of finance
Taxation paid                                                                  (146)               (238)
Outflow for capital expenditure and financial investments                      (1,226)             (2,032)
Inflow for acquisitions and disposals                                          1                   5,419
Equity dividends paid                                                          (173)               -
Inflow before use of liquid resources and financing                            586                 5,158
Management of liquid resources                                                 1,117               (3,959)
Outflow from financing                                                         (1,469)             (1,101)
Increase in cash                                                               234                 98

________________________________________________________________________

Group balance sheet
                                                            30 September                              31 March
                                                            2002                 2001 (a)             2002
                                                                           (unaudited)
                                                            £m                   £m                   £m
Fixed assets                                                17,171               42,102               17,551
Current assets                                              9,354                13,816               10,122
Current liabilities                                         (8,764)              (14,441)             (9,390)
Net current assets (liabilities)                            590                  (625)                732
Total assets less current liabilities                       17,761               41,477               18,283
Creditors: amounts falling due after one year               15,394               17,704               16,245
Provisions for liabilities and charges                      2,304                2,763                2,324
Minority interests                                          67                   78                   72
Capital and reserves                                        (4)                  20,932               (358)
                                                            17,761               41,477               18,283

(a)     Before the demerger of mmO2.

__________________________________________________________________



Notes

 1. This statement has been prepared in accordance with the accounting policies
    in the statutory accounts for the year ended 31 March 2002.

2     The figures for the year ended 31 March 2002 are extracts from those
accounts. A copy of the statutory accounts for that year, on which the auditors
have issued an unqualified report, has been delivered to the Registrar of
Companies.

If you have any queries as a shareholder please call Freefone 0808 100 4141.
Further information about BT and these financial results may be found on the
internet at

www.btplc.com/investorcentre

BT Group plc

81 Newgate Street, London EC1A 7AJ

________________________________________________________________________



Independent Review Report to

BT Group plc

Introduction

We have been instructed by the company to review the financial information which
comprises the group profit and loss account, group cash flow statement, group
balance sheet and the related notes. We have read the other information
contained in the interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.

Directors' responsibilities

The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors are
responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.

Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly we do not express
an audit opinion on the financial information.

Review conclusion

On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 2002.





PricewaterhouseCoopers, Chartered Accountants

London. 6 November 2002


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