Capital Reorganisation

K3 Business Technology Group PLC
06 April 2004


K3 Business Technology Group announces that on 5 April 2004, it issued a
circular to Shareholders to convene an extraordinary general meeting to consider
resolutions to consolidate the existing ordinary shares of 5p each ('Existing
Ordinary Shares') and to reduce the Company's share capital.  This announcement
contains details of the proposals that will be put to Shareholders at the
extraordinary general meeting to be held on 26 April 2004.

Share Consolidation

The Directors are proposing to consolidate the Existing Ordinary Shares of the
Company on the basis of 1 new ordinary share of 25p each ('New Ordinary Share')
for every 5 Existing Ordinary Shares.  The Share Consolidation will be effected
by reference to Shareholders and their holdings of Existing Ordinary Shares on
the register as at the close of business on 28 April 2004 and is conditional on
permission being granted for the New Ordinary Shares to be traded on AIM.

The Directors believe that the Share Consolidation should enhance the status of
the Company's shares.  In addition, the Directors believe the spread between the
bid and offer price of the Company's shares may be reduced to the benefit of
Shareholders.

Other than the change in nominal value, the New Ordinary Shares will have the
same rights as the Existing Ordinary Shares including voting, dividend and other
rights.

The Board has determined that any individual entitlements in respect of
fractional shares arising from the Share Consolidation shall be sold and the
proceeds retained by the Company if they do not exceed the sum of £3 per
Shareholder.

Subject to the resolution contained in the Notice of EGM being passed, it is
expected that dealings in and settlement in CREST of the Existing Ordinary
Shares will continue until the close of business on 28 April 2004 when, in the
case of Existing Ordinary Shares held in certificated form, the register will be
closed for transfers.  The registration of uncertificated holdings in respect of
Existing Ordinary Shares will be disabled on admission of the New Ordinary
Shares to AIM ('Admission').  It is expected that admission of the New Ordinary
Shares to AIM will become effective and that dealings in the New Ordinary Shares
on AIM will commence on 29 April 2004.

It is intended that new share certificates will be sent to Shareholders, who
hold their shares in certificated form, on completion of the Share
Consolidation.  These new share certificates will set out the number of New
Ordinary Shares owned by a Shareholder on completion of the Share Consolidation
and will replace a Shareholders' existing share certificate which will no longer
be of value from Admission and should be destroyed upon receipt of the
certificate in respect of the New Ordinary Shares.  Definitive certificates for
the New Ordinary Shares to be issued in certificated form are expected to be
dispatched by post on 6 May 2004.  Temporary documents of title will not be
issued.  Pending despatch of definitive share certificates, transfers of New
Ordinary Shares held in certificated form will be certified against the register
held by Capita Registrars.  Shareholders who hold their Existing Ordinary Shares
in uncertificated form are expected to have their CREST accounts credited with
the New Ordinary Shares on 29 April 2004.

Share Capital Reduction

The Company is currently prohibited under the Companies Act from paying
dividends due to the accumulated deficit on its profit and loss account reserve
which means the Company does not have distributable reserves.  The Board
believes that it is now appropriate for the Board to take the measures necessary
to allow the Company to pay dividends to Shareholders when it is prudent to do
so.

The Board is therefore proposing that the Company should undertake a capital
reduction exercise to reduce the share capital of the Company by cancelling the
other reserve of the Company and cancelling an amount standing to the credit of
the Company's share premium account.  The exact amount of the share premium
account to be cancelled will be decided by the Board at the relevant time having
regard to the deficit on the Company's profit and loss account reserve.  This
capital reduction exercise would create a reserve against which the deficit on
the Company's profit and loss account (which was £8,383,396 as at 31 December
2003) can be written off.

A special resolution of the Shareholders will need to be passed giving approval
to the reduction or cancellation of the Company's share premium account and the
cancellation of the other reserve.

If the special resolution to reduce the Company's share capital is passed by
Shareholders the Company will then seek the confirmation of the High Court to
the share capital reduction.  The High Court will only sanction resolutions for
the reduction of a company's share capital if it is satisfied that this will not
prejudice the interests of the creditors.  This is likely to require the Company
entering into an undertaking with the Court to safeguard the interests of the
creditors.


                      This information is provided by RNS
            The company news service from the London Stock Exchange