Acquisition,Admission,Placing

Calyx Group PLC
17 May 2006


For Immediate Release                                                17 May 2006


                                Calyx Group plc

                           ('Calyx' or 'the Company')


          Acquisition of the Matrix Companies for up to £40.5 million

  Placing of 25,000,000 Placing Shares at 70p per share raising £17.5 million

                      Admission to trading on AIM and IEX

                                      and

                    Notice of Extraordinary General Meeting


Calyx, the largest single-source provider of information and communication
technology ('ICT') network solutions throughout Ireland, today announces that it
has agreed to acquire, subject to Shareholder approval, the entire issued share
capital of Network Partners Holdings and MXC and their subsidiaries ('the Matrix
Companies') from Matrix Communications Group plc ('the Seller').


The total consideration for the Acquisition will be up to £40.5 million (€59.4
million), to be satisfied by an initial cash consideration of £33.5 million
(€49.2 million) and the issue of Calyx Ordinary Shares to the value of £2
million (€2.9 million) on Completion, and payment of a deferred consideration of
up to £5 million (€7.3 million) contingent on the achievement of certain
performance targets.


In addition the Company has today announced that, along with the joint listing
of the Company on the Irish Enterprise Exchange ('IEX'), it is raising £17.5
million (€25.7 million) by way of a Placing of 25,000,000 Placing Shares at 70
pence (€1.027) per Ordinary Share. Of this approximately £11.5 million (€16.9
million) is to provide funds for the payment of the cash element of the
consideration for the Acquisition.


Evolution Securities acted as NOMAD and Broker, and Davy Stockbrokers acted as
IEX Adviser and Broker.


Highlights


   •Calyx will, subject to the approval of Calyx's and the Seller's
    shareholders, acquire Network Partners Holdings and MXC and their
    subsidiaries from Matrix Communications Group plc for a total consideration
    of up to £40.5 million.


   •The Matrix Companies are engaged in the consultancy, design, supply,
    implementation and ongoing support of ICT network solutions, across
    different technologies, to the public and private sectors in the UK.


   •The Matrix Companies' customers include the BBC, BAR (Honda F1),
    Vodafone, Betfair, Party Gaming, and ARM.


   •The Enlarged Group Board believes that the consolidated turnover and
    EBITDA for the Matrix Companies for the year ended 31 October 2005 was £35.1
    million and £4.4 million respectively.


   •Calyx is raising £17.5 million by way of a Placing of 25,000,000 shares
    at 70 pence (€1.027) per Ordinary share.


   • The Group has also decided that it would be appropriate at this time to
    seek admission to the Irish Stock Exchange's IEX market. It is expected that
    liquidity in the Ordinary Shares will be enhanced by the provision of a
    euro-denominated quote and trading facility. Trading on AIM and the IEX is
    expected to commence on Monday 12 June 2006.


   • Following the Acquisition and subject to Shareholder approval, Calyx
    proposes to elect Ian Smith as a new Non-Executive Director of the enlarged
    Calyx Group.

    - Mr Smith (42) is Chief Executive and co-founder of the Seller, prior
    to which he ran the UK and Ireland operations of Foundry Networks, a
    California-based designer and manufacturer of computer network equipment.


   • In total the Company has received irrevocable undertakings to vote in
    favour of the resolutions to approve the Acquisition from 58% of Calyx
    shareholders and from 31% of the Seller's shareholders.

   • An Extraordinary General Meeting will be held in the Crowne Plaza Hotel,
    Dublin Airport, Northwood Park Santry Demesne, Dublin 9, Ireland on Friday 9
    June at 10:00am.


Commenting on the Acquisition and Placing Maurice Healy Chief Executive of Calyx
said;


'This is our largest acquisition to date and firmly establishes Calyx as a force
in the UK ICT market. The combined strength of Calyx and Matrix provides a more
complete service for our customers, from ICT infrastructure through to
information security as well as positioning the Group in the much sought after
networked ICT services market.


The scale of the Group and the broad customer base, across both Ireland and the
UK provides an excellent platform for continued organic growth. The foundation
has now been set to roll out our enhanced service offerings which will greatly
benefit our customers.


I am grateful to our Shareholders and the investment community for their
continued support, and I look forward to trading on both the AIM in London and
the IEX in Dublin.'



Terms defined in the admission document issued today by Calyx shall have the
same meaning in this announcement.


For further details please contact:
Calyx Group plc                              Tel: [phone]
Maurice Healy, Chief Executive
Buchanan Communications                      Tel: [phone]
Tim Thompson / James Strong
Evolution Securities                         Tel: [phone]
Tom Price / Simon Leathers
Davy Stockbrokers                            Tel: [phone]
Ronan Godfrey



EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Latest date and time for receipt of completed Proxy Forms   10:00am on 7 June
                                                            2006
Extraordinary General Meeting                               10:00am on 9 June
                                                            2006
Completion of Acquisition                                   12 June 2006
Dealings in the Enlarged Issued Ordinary Share Capital      8:00 a.m. on 12 June
commence on AIM and IEX                                     2006
CREST accounts in respect of New Ordinary Shares credited   8:00 a.m. on 12 June
by                                                          2006
Despatch of definitive share certificates in respect of New by 19 June 2006
Ordinary Shares


ACQUISITION AND PLACING STATISTICS

Number of New Ordinary Shares being issued pursuant to
the Placing                                                         25,000,000
Placing Price                                                      70 pence
                                                                   (€1.027)
Gross proceeds of the Placing                                      £17.5 million
Estimated net proceeds of the Placing receivable by the Company    £15.5 million
Number of New Ordinary Shares being issued pursuant to
the Acquisition                                                      2,547,771
Number of Ordinary Shares in issue following the
Acquisition and the Placing                                         67,186,108
Market capitalisation at the Placing Price following completion of approx. £47
the Acquisition and the Placing                                    million
New Ordinary Shares expressed as a percentage of the Existing      69.5 per
Ordinary Shares                                                    cent.


Amounts in this document expressed in pounds sterling or equivalent amounts
stated in Euro have, unless otherwise stated, been calculated using a rate of
£1: €1.4674.


                      Acquisition of the Matrix Companies

         Placing of 25,000,000 Placing Shares at 70p (€1.027) per share

                      Admission to trading on AIM and IEX

                    Notice of Extraordinary General Meeting


INTRODUCTION

CTL, a wholly owned subsidiary of the Calyx Group plc, has agreed to acquire,
subject, inter alia, to Shareholder approval, the entire issued share capital of
Network Partners Holdings and MXC and their subsidiaries, together comprising
the Matrix Companies, from the Seller. The total consideration for the
Acquisition will be up to £40.5 million, to be satisfied by the issue of
Consideration Shares to the value of £2 million and payment of £33.5 million in
cash on Completion, and payment of deferred consideration of up to £5 million
contingent on the achievement of certain performance targets. In addition, the
Company announced today that it is raising £15.5 million (net of expenses) by
way of a Placing of 25,000,000 Placing Shares at 70 pence (€1.027) per Ordinary
Share. Of this net amount, approximately £11.5 million is to provide funds for
the payment of the cash element of the consideration for the Acquisition and £4
million is to provide ongoing working capital for the Enlarged Group.


The Acquisition is classified as a 'reverse takeover' under the AIM Rules by
virtue of the size of the transaction. As such it is subject to the approval of
Shareholders, which is to be sought at the EGM.


Under the terms of the Placing Agreement, Evolution Securities and Davy have
conditionally agreed to procure subscribers for the Placing Shares at the
Placing Price and to the extent that such subscribers are not obtained for any
of the Placing Shares, Evolution Securities and Davy will themselves subscribe
for such Placing Shares at the Placing Price.


The Proposals are conditional, inter alia, upon the approval of the Resolutions
by the Shareholders at the EGM and the approval of the Seller Resolution by the
Seller Shareholders. In aggregate, the Company has received irrevocable
undertakings to vote in favour of the Resolutions to be proposed at the EGM in
respect of 23,109,963 Ordinary Shares, representing approximately 58 per cent.
of the Existing Ordinary Shares. The Seller has also received irrevocable
undertakings to vote in favour of the Seller Resolution in respect of 11,776,942
ordinary shares in the capital of the Seller, representing approximately 31 per
cent. of the issued ordinary share capital of the Seller.


In addition, the Group has decided to seek admission of the Enlarged Issued
Ordinary Share Capital to trading on the IEX market and has appointed Davy as
IEX adviser and broker.


BACKGROUND TO AND REASONS FOR THE ACQUISITION

The Company's Ordinary Shares were admitted to AIM on 17 March 2005 for the
purposes of raising the Group's profile; better positioning itself as a sector
innovator; expanding its product and technologies portfolio; attracting new
clients and strengthening the Group's balance sheet. The Existing Directors also
anticipated that the admission to AIM would better position the Group to make
complementary acquisitions.


Since the Company was admitted to AIM, the Existing Directors have considered
and successfully executed a number of acquisition opportunities across a number
of business sectors in Ireland and the UK and believe that the Acquisition will
allow the Board the opportunity to increase shareholder value at the current
time.


The Existing Directors view the acquisition of the Matrix Companies as an
effective means of expanding its ICT business in the UK, which was recently
established through the acquisition of ITS Technology Services Limited (now
Calyx (UK) Limited). The Group has achieved a significant market position in
this sector in Ireland and the continued expansion into the UK market as a
result of the Acquisition, will provide an opportunity to sell to a wider market
and to achieve synergies from greater economies of scale.


The Board commenced discussions with the Seller in September 2005. Following
these initial discussions and, considering the potential for growth and market
opportunities in the ICT sector that the Existing Directors believe exist in the
UK, the Existing Directors believe that the Enlarged Group will be well placed
to develop its business and to exploit the opportunities ahead.


The Existing Directors believe that the location and scale of the Matrix
Companies' business presents a strong platform from which to expand further
within the UK.


THE MATRIX COMPANIES

Business

The Matrix Companies are engaged in the consultancy, design, supply,
implementation and ongoing support of ICT network solutions, across different
technologies, to the public and private sectors in the UK. The Matrix Companies
operate from headquarters in East Grinstead and regional offices which are
located in Rainford and Hook. The Matrix Companies operate a 24 hour, 365 day
support centre from the East Grinstead facility.


Products and Services

The business of the Matrix Companies is based on designing, developing and
implementing bespoke ICT network designs to service its customers' voice and
data requirements.


The range of products and services offered by the Matrix Companies includes:

   •LAN Integration;
   •WAN Integration;
   •ICT Security;
   •Voice over IP;
   •Specialist telephony services; and
   •Specialist ICT technical support and maintenance services.


Whilst the MXC business is not reliant on any single hardware manufacturer, the
Network Partners Business has strong supply relationships with a number of
carriers, including British Telecom. These relationships are all contracted
under industry standard terms and conditions and BT is currently providing the
majority of these services. This gives the Matrix Companies the flexibility to
offer bespoke solutions to satisfy their customers' needs.


Following the Acquisition, the Seller will retain its Fujin Technology business,
but will no longer have the right to use the 'Matrix', 'MXC' and 'Network
Partners' names, which will transfer to the Enlarged Group pursuant to the
Acquisition Agreement.


Competition and Market

The ICT marketplace in the UK is fragmented and characterised by many small or
regional suppliers. The Enlarged Group Board believes that the Enlarged Group
will become more competitive as a result of the synergies and financial and
operational advantages of acquiring the technologies, services infrastructure
and the customer base of the Matrix Companies.


The customers of the Matrix Companies include the BBC, BAR (Honda F1), Vodafone,
LINX, Betfair, Galileo, Party Gaming, Red Bee Media, Test Valley and ARM.


PRINCIPAL TERMS OF THE ACQUISITION

Pursuant to the terms of the Acquisition Agreement the Company has agreed to
acquire the entire issued share capital of MXC and Network Partners Holdings
through its wholly owned subsidiary CTL. The consideration payable pursuant to
the Acquisition Agreement comprises initial consideration of £33.5 million in
cash and Consideration Shares having an aggregate value of £2 million, and
deferred consideration of up to £3 million payable if the Matrix Companies
achieve profits before tax of £2.5 million in the seven month period to 31
December 2006 and up to a further £2 million if the Matrix Companies achieve
profits before tax of £3.1 million for the five month period to 31 May 2007. A
sliding scale applies to the deferred consideration if the targets for profits
before tax are not met. The value to be attributed to the Consideration Shares
will be the mid-market closing price for Ordinary Shares on AIM for the five
days prior to the earlier of (a) the date of the announcement of the transaction
and (b) 17 May 2006. The Acquisition Agreement contains business and trading
warranties from the Seller and a separate tax indemnity given by the Seller in
relation to the tax liabilities of MXC and Network Partners Holdings arising
prior to the date of the Acquisition Agreement.


In the Acquisition Agreement the Seller has agreed to a twelve month lock-in in
respect of the Consideration Shares with a subsequent arrangement not to dispose
of the Consideration Shares except on an orderly market basis.


KEY STRENGTHS OF THE ENLARGED GROUP

The Existing Directors and the Proposed Director consider that the following are
the Enlarged Group's key strengths:


   • A Proven Management Team

The Enlarged Group's Board and the expanded senior management team have
considerable experience in the ICT sector in Ireland and the UK, with each
having spent many years in the industry. The Executive Directors have also
demonstrated their expertise by identifying suitable complementary acquisition
targets and integrating them into the Group. Both QCL and Convergent are now
fully integrated and operating from Calyx premises.


   • Breadth and Depth of the Client Base

The Enlarged Group has a broad client base, in terms of size, industry sector
and geography across Ireland, Northern Ireland and the UK. It is the Enlarged
Group Board's opinion that there is considerable scope for strong organic growth
through the marketing of centralised remote network management services
throughout the Enlarged Group's existing client base. No single client accounts
for more than 10 per cent. of the Enlarged Group's revenues and none of its
businesses are reliant on any one client.


   • Recurring Revenue

The Enlarged Group exhibits a growing contracted recurring revenue stream and
this is especially true of the Matrix Companies.


   • Industry Relationships

The Enlarged Group has long established relationships with well known ICT
service providers and network equipment suppliers. The Enlarged Group, through
discussions with its clients, has identified a demand for centralised remote
network management services, and continues to work with existing and future
potential partners to generate solutions that satisfy this demand.


   • ICT Services Infrastructure

Ongoing support of its clients' ICT network solutions will be provided by the
Enlarged Group's ICT services infrastructure in Ireland and the UK. This
consists of its field service teams, its technical help desks based in Dublin,
Rainsford and Hook, and its 24 hour, 365 day support centres which are located
in Dublin and East Grinstead.


   • Integrated Voice, Data and Consultancy Skill-sets

The technical division currently consists of engineers who specialise in data
technologies, engineers who specialise in voice technologies, helpdesk staff and
workshop staff. Ongoing service quality and technical training is provided for
the support team.


The Enlarged Group Board considers that the combination of these strengths will
differentiate the

Enlarged Group from its competitors and will enable it to maximise its growth
opportunities in the future.


STRATEGY

The Enlarged Group's strategy is to continue to develop a comprehensive
portfolio of ICT solutions and support offerings which can be tailored to fit
individual clients' needs. The Directors and the Proposed Director believe that
the Enlarged Group is well placed to achieve a significant competitive advantage
in the growing ICT managed services market in Ireland and the UK by utilising
the Enlarged Group's range of existing resources, which include:

   • experience in the design and provision of LAN and WAN and enabling voice
    and data services
   • partnerships with leading voice and data industry suppliers
   • experience in enabling networks for integrated solutions
   • ability to support multi-vendor and multi-site hardware and software
    solutions
   • field service engineering infrastructures
   • 24 hour, 365 day client support and contact centres in Dublin and East
    Grinstead


COMPETITION

The Enlarged Group Board believes that the Enlarged Group will be one of the
largest independent single-source service suppliers, to both the private and
public sectors, of their telecommunications and computer needs in the UK and
Ireland. The Enlarged Group has a number of competitors in both the telephony
and computer supply and service markets. However, the Enlarged Group Board
believes that few, if any, are in a position to provide as comprehensive a range
of total ICT services.


The Enlarged Group Board believes that one of the Enlarged Group's competitive
advantages lies in its ability to offer businesses the option of an alternative
and more comprehensive service from that of the original supplier of their
equipment.


The Enlarged Group Board believes that a further strength of the Enlarged Group
is its ability to react to client demand and its committed approach to service
quality and client care. The Enlarged Group Board believes that these factors
have enabled the Group, the Network Partners Business and the MXC Business to
win major contracts in a competitive environment.


RATIONALE FOR ADMISSION TO IEX

The Group has decided that it would be appropriate at this time to seek
admission to the Irish Stock Exchange's IEX market. It is expected that
liquidity in the Ordinary Shares will be enhanced by the provision of a
euro-denominated quote and trading facility. The incremental costs are not
expected to be material as the regulatory regime and continuing obligations of
IEX are similar to those of AIM.


CURRENT TRADING AND PROSPECTS

Current Trading of the Group

The Group continues to trade in line with expectations which underpins the
Existing Directors' confidence for 2006.


The Group has restructured its Sales and Marketing team to concentrate on
services revenue. A media campaign which promoted the Group's NOC services in
Ireland was undertaken in the last quarter of 2005. The Existing Directors
consider that these factors have resulted in an increase in the Group's managed
services sales order book.


The Existing Directors believe that there remains continued demand by ICT users
for outsourced solutions.


Current Trading and Prospects of MXC Integration Limited and Network Partners
Limited

In the first half of the financial year order intake within the Matrix Companies
has been in line with budget and the Proposed Director believes the business is
in a strong trading position with a significant order book.


Prospects of the Enlarged Group

The Enlarged Group Board considers that the Acquisition is an effective means of
expanding its ICT business in the UK. It also believes that the Acquisition
gives the Enlarged Group the opportunity to sell to a wider market and to
potentially achieve synergies from greater economies of scale. The Enlarged
Group Board considers that the Acquisition will also give the Enlarged Group a
stronger position in the converging network services market and provide an
opportunity to sell converged network services, which creates a base of
recurring revenue.


The Enlarged Group Board will continue to focus on the integration of the
acquired businesses and to seek out acquisitions appropriate to the Enlarged
Group's strategy.



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