MXC Mgc Pharmaceuticals Limited

RNS Number:1550Y
Matrix Communications Group PLC
09 February 2006

Matrix Communications Group Plc



Trading Update



As outlined on 2 February 2006 Matrix Communications Group Plc ('Matrix' or 'the
Group') is implementing its strategy as it matures from being a product-based
distribution and reseller business, to becoming a focused solutions and services
provider in the converged telecoms and IT services sector. This process started
with the acquisition of Network Partners, a telecommunication service provider,
in November 2004, which provided the platform for the Group's entry into the
managed services sector.



As part of this strategic development the Group has completed a review of its
revenue recognition policies and made appropriate changes to reflect more
accurately Matrix's new business model as a supplier of managed data solutions
to its customers. As a result, the Group's accounting policy for the recognition
of revenue and costs for managed service contracts (including where the
maintenance is fully provided by a third party supplier) will be recognised over
the lifetime of the contract. Hitherto such contracts where the maintenance was
fully provided by a third party supplier had been recognised on contract
approval. The change to the accounting policy has no cash impact.



The Directors believe that the new accounting policy is more appropriate as it
better reflects risk and reward over the life of such contracts in the context
of the transition of Matrix to a supplier of managed data solutions to its
customers and ultimately will deliver greater financial stability and better
shareholder value.



Matrix will announce its Preliminary Results for the year ended 31 October 2005
on Tuesday 14 February.



The Board estimates that the deferment of revenue recognition in accordance with
its accounting policies together with certain additional cost accruals will
reduce pre-tax profits, before amortisation of goodwill and exceptional costs
(for restructuring during the financial year and the impairment of goodwill
arising on the disposal of Equip announced on 2 February 2006) in the year ended
31 October 2005 by around #1.0 million relative to the current market consensus
forecasts.



In the current year to October 2006, Matrix estimates that profits will be
reduced by a similar amount as a result of the accounting policy change and
additional operating costs.



Matrix will give a further detailed update on its strategy, its performance in
the year ended 31 October 2005 (including the change in accounting policy) in
its Preliminary Results.



                                                                9 February 2006

Enquiries


Matrix Communications                                           01342 871 888
Ian Smith, Chief Executive Officer
Tony Weaver, Chief Operating Officer

College Hill                                                    020 7457 2020
Adrian Duffield / Corinna Dorward






                      This information is provided by RNS
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