Interim Results - Highlights

BT Group PLC
13 November 2003

BT Group Half Year Results and Interim Report

Chairman's Statement

This continues to be a challenging year for our traditional business but our new
wave businesses are delivering strong growth. Whilst investing for the future we
have been able to increase earnings per share before goodwill amortisation and
exceptional items for the half year by 37 per cent and generate free cash flow
of £1.2 billion, up nearly 60 per cent.

I am pleased to report that we will be paying an interim dividend of 3.2 pence
per share, 42 per cent higher than last year. We intend that this year's full
year dividend will represent around 50 per cent of earnings, a year ahead of
target. We are also targeting a further increase to around 60 per cent of
earnings for 2005/6. In addition we will begin a share buyback programme whilst
we reduce our debt towards a targeted level of around £7 billion in 2006/7.

Our results demonstrate our continuing ability to reduce debt, grow rewards for
our shareholders and build for the future.

                                    Sir Christopher Bland, 12 November 2003

_________________________________________________________________________________________

Review

The regulatory environment and lower pricing means this has been a challenging
half year in which group turnover decreased by 1 per cent. Regulatory reductions
on fixed to mobile termination rates account for more than half of the decline
in group turnover. The continued focus on new wave initiatives generated an
increase in new wave turnover of 24 per cent driven by particularly strong
growth in broadband and our solutions business. This strong growth was offset by
a 5 per cent decline in turnover from traditional business.

Group profit before taxation, goodwill and exceptional items increased by 26 per
cent reflecting an improvement in operational efficiency, lower leavers costs,
reduced operating losses in the overseas activities and a reduction in interest
payable, partially offset by investment in new wave initiatives.

Earnings per share before goodwill and exceptional items were 8.5 pence, an
increase of 37 per cent.

Net debt has fallen to £8.8 billion, 33 per cent below last year. Free cash flow
generated in the first half amounted to £1.2 billion, an improvement of 59 per
cent on last year.

The Board recommends an interim dividend of 3.2 pence per share. This will be
paid on 9 February 2004 to shareholders on the register on 30 December 2003.

The Board continues to target a single "A" rating and believes that a gradual
reduction in net debt to around £7 billion in 2006/7 is appropriate. The strong
cash flow will also enable us to begin a share buyback programme funded from
cash generated over and above that required to meet our debt target, after
paying dividends and taking into account any acquisitions or disposals. The
group will continue to invest for the future and with an efficient balance sheet
enhance shareholder value.

We remain committed to our strategy and are confident in our ability to continue
to deliver our key strategic goals in a challenging environment for our
traditional business. Our investment in our new wave businesses and cost
transformational plans provide a strong base for the future.

____________________________________________________________________

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

(unaudited)
                                                                                2003               2002
                                                                                £m                 £m

Group turnover                                                                  9,154              9,248

Group operating profit                                                          1,472              1,288

Share of operating (loss) profit of ventures                                      (7)                115

(Loss) profit on sale of investments and group undertakings                       (1)                66

Profit on sale of property fixed assets                                            1                  6

Amounts written off investments                                                    -                 (7)

Net interest payable                                                            (459)              (595)

Profit before taxation                                                          1,006               873

Taxation                                                                        (285)              (272)

Profit after taxation                                                            721                601

Minority interests                                                                 7                (11)

Profit attributable to shareholders                                              728                590

Interim dividend                                                                (278)              (194)

Earnings per share

- basic                                                                         8.4p               6.9p

- diluted                                                                       8.4p               6.8p

Earnings per share before goodwill amortisation and exceptional items

- basic                                                                         8.5p               6.2p

- diluted                                                                       8.5p               6.2p

Interim dividend per share                                                      3.2p               2.25p

Results are wholly from continuing activities.

________________________________________________________________________





Group cash flow statement for the six months ended 30 September

(unaudited)
                                                                               2003                2002
                                                                               £m                  £m

Inflow from operating activities, including ventures                           2,784               2,736

Outflow for returns on investments                                              (459)               (606)
and servicing of finance

Taxation paid                                                                     (9)               (146)

Outflow for capital expenditure and financial investments                      (1,113)             (1,226)

Free cash flow before acquisitions, disposals and dividends                     1,203                 758

(Outflow) inflow for acquisitions and disposals                                   (4)                   1

Equity dividends paid                                                            (368)               (173)

Inflow before use of liquid resources and financing                               831                 586

Management of liquid resources                                                    501               1,117

Outflow from financing                                                         (1,151)             (1,469)

Increase in cash                                                                  181                 234

Decrease in net debt from cash flows                                              831                 628

__________________________________________________________________________

Group balance sheet
                                                               30 September                            31 March
                                                               2003                2002                2003
                                                                             (unaudited)
                                                               £m                  £m                  £m

Fixed assets                                                   16,145              17,171              16,661

Current assets                                                 11,099               9,354              11,556

Current liabilities                                            (9,150)             (8,764)             (9,680)

Net current assets                                             1,949                  590               1,876

Total assets less current liabilities                          18,094              17,761              18,537

Creditors: amounts falling due after more than                 12,584              15,394              13,456
one year

Provisions for liabilities and charges                         2,351               2,304               2,376

Minority interests                                                50                  67                  63

Capital and reserves                                           3,109                 (4)               2,642

                                                               18,094              17,761              18,537

___________________________________________________________________________

Notes

 1. This statement has been prepared in accordance with the accounting policies
    in the statutory accounts for the year ended 31 March 2003.

2     The figures for the year ended 31 March 2003 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. This report has been prepared for and only for the company for the
purpose of the Listing Rules of the Financial Services Authority and for no
other purpose. We do not, in producing this report, accept or assume
responsibility for any other purpose or to any other person to whom this report
is shown or into whose hands it may come save where expressly agreed by our
prior consent in writing.

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 2003.


PricewaterhouseCoopers LLP, Chartered Accountants

London. 12 November 2003


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