Final Results

30 June 2011

Merchant House Group Plc

("MHG" or the "Group")

FINAL RESULTS

The Group is pleased to report its final results for the year ended 31 December 2010.

HIGHLIGHTS

·; Profit of £1.69m before tax, which includes a profit of £1.38m attributable to the acquisition of certain assets of The Clarkson Hill Group Plc (in Administration) in December 2010 (2009: loss of £0.9m)

·; 430% increase in turnover through organic growth and acquisition

·; 58,000 clients who are invested through our IFAs or in our structured products (2009: 10,000)

·; Over £950 million of client assets under management and advice (2009: £100m)

·; £350 million of gross assets in Merchant Capital

·; Team of some 180 employees and advisors operating from seven offices

·; Two successful acquisitions during the year

·; Reviewing further acquisition opportunities

Enquiries:

CHAIRMAN'S STATEMENT

I am pleased to report on a year of considerable progress at MHG.

When I became Chief Executive less than three years ago, the Group was heavily loss making and had been since its formation in 2000, while several strategies to build a corporate finance business had been unsuccessful.

We began by slimming down the team and making deep cuts in costs. MHG then embarked on a strategy to attract teams from larger financial institutions with the Group providing the regulatory and operational infrastructure on which teams could build their businesses. This strategy has so far proved successful and has allowed the Group to grow at a rapid rate by being effective at selecting and attracting the right teams. The Group now comprises the following principal businesses:

1. A foreign exchange proprietary trading infrastructure solution for a team of proprietary traders formerly working for major investment banks was set up in partnership with Merchant Trading LLP in 2009. Progress so far has been good, as announced on 30 June 2010 and 30 September 2010, with recurring monthly net fees earned by the Group exceeding $100,000 when daily trading exceeds a nominal of $10.0bn. This partnership agreement is currently under renegotiation.

2. The acquisition of two structured product books, as announced on 4 December 2009 and 28 April 2010, and the recruitment of a new structured products team to Merchant Capital Limited (the FSA regulated subsidiary of MHG) means the Group now administers £350 million of structured products and £13 million of cash for 17,000 clients. Income is derived both through monthly administration fees and commission on investments made. The division works with Barclays Capital, Nomura and Morgan Stanley, amongst others, to create both standard and tailored products for clients. Ten new products were issued during the period under review. In a poll of the top ten performing growth plans maturing in 2010 published by "Money Marketing" (31/5/2011), six were Merchant Capital products. Furthermore, in the same survey, Merchant Capital ranked first and fifth in the ten top performing "kick-out" plans maturing in 2010. Since the year end, six new sales people have joined the business.

3. The establishment of a Dublin based UCITS III umbrella fund began in 2009 and was successfully launched on 18 January 2010. This was described in an RNS dated 9 December 2009. Three funds were launched in the period under review; Merchant European Equities Fund, Merchant Global Resources UCITS Fund and Merchant Galaxy China Absolute Return UCITS Fund, which, in aggregate, manage $90.0 million on which the Group charges management and performance fees. Since the year-end, the Russian Phoenix UCITS Fund has been approved by the Central Bank of Ireland, a second fund is being prepared for submission and three more are in advanced discussion. If each fund is approved and launched with the expected seed capital, there will be eight funds managing in excess of $200 million between them.

Furthermore, the experience of developing and managing investment funds gained from the launch of the UCITS umbrella fund has led to further discussions with major institutions since the year-end in relation to the management of €500 million in non-UCITS funds and the launch of a Merchant turnaround fund based in Jersey. Whilst these can only be viewed as potential opportunities, they are indicative of the benefits of the experience gained in developing the UCITS umbrella.

4. Following the acquisition of certain assets from an IFA business which was in administration, MHG established Merchant House Financial Services Limited (MHFS) towards the end of 2010 and the team appointed to run the business subsequently attracted 118 advisers in early 2011. By the end of 2010, MHFS had secured in excess of 30,000 of the former IFA's clients and approximately £400 million of client assets under advice. In the first few weeks of 2011, this rose to 41,000 clients and over £500 million of client funds.

The IFA business was The Clarkson Hill Group Plc (in administration) (CHG) from which certain assets were purchased on 17 December 2010. These assets include the right to pipeline and trail or renewal income. Other than a share owed to the administrators, which is estimated by the auditors to be £600,000, there are no additional liabilities on the income. To date, £2,147,595 of pipeline and trail income has been collected. Based on the records and statements of CHG, it is estimated by the Group that up to £850,000 of pipeline income remains to be collected. The trail or renewal income is estimated at £2 million per year and is expected to continue to be paid throughout each year unless clients move to another firm.

In 2010, MHG businesses were grown in two ways. First, where possible, middle and back office functions were contracted out to keep MHG's costs as low cost as possible while leaving the Company in a position to scale each business without the need to increase personnel significantly. Second, the board identified and implemented cross-sales synergies between the businesses as a low cost way of driving growth.

In the second half of the year under review, the MHG board was strengthened with the appointment of Christopher Day as Chief Executive. Christopher was MD of Dresdner Bank's Far East investment management business, where he managed operations in nine countries and was part of a team that grew assets under management from $600 million to $2,500 million. At the last AGM, Martin Eberhardt stepped down at the end of his term as Chairman and I was elected by the board. Christopher and I are the two executive directors and Martin is the independent non-executive director. As reported above and, including the 118 independent advisers working with Merchant House Financial Services, the team is now 180 strong working from seven offices located in London (2), Cardiff, Northampton, Plymouth, Truro and Wisbech.

The performance in the first half of 2011 is in line with Board expectations. We are continuing to review possible acquisition opportunities in stockbroking and asset management. Shareholders will be updated in due course.

Aside from the possible investments, the directors are working to grow revenues while controlling costs. The MHG board are of the view that the current market capitalisation does not reflect the excellent progress made both organically and by acquisition over the last three years.

Shareholders should note that the accounts contain a qualification. This is solely in respect of the lack of audited accounts or other up to date financial information available on two investments held by the Group. One is in our books at nil value and the other has a valuation in our books based on an external, third party valuation which has been reviewed by the auditors.

I would like to thank my board colleagues, senior management and the whole team for the part they have played in the turnaround of MHG, which has resulted in a solid profit, as well as shareholders who have remained with the Group during the last three years. The times remain uncertain and, in a growing company, cashflow continues to need careful management; there can be no certainty of success but the board look to the future with a measure of renewed confidence.

James Holmes

Executive Chairman

30 June 2011

CONSOLIDATED INCOME STATEMENT

for the year ended 31 December 2010

The Company has taken advantage of Section 408 of the Companies Act 2006 not to publish its income statement.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 December 2010

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

31 December 2010

These financial statements were approved by the Directors on 30 June 2011 and signed on their behalf by:

J Holmes

Director

STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2010

Group

Group

CONSOLIDATED CASH FLOW STATEMENT

for the year ended 31 December 2010

NOTES TO THE FINANCIAL STATEMENTS

1. Basis of preparation

The financial information contained in this document does not constitute statutory financial statements within the meaning of section 434 of the Companies Act 2006. The figures for the year ended 31 December 2010 have been extracted from the audited statutory financial statements.

2. Profit/(loss) per share

The profit/(loss) per share has been calculated on the net basis on the group surplus/(deficit) for the financial year, after taxation, of £1,609,690 (2009: £(915,263)) using the weighted average number of ordinary shares in issue of 424,618,438 (2009: 118,555,080).

Diluted earnings per share have been calculated using the weighted average number of ordinary shares in issue, diluted for the effect of loan conversion rights, convertible preference shares and warrants. There were unexercised loan conversion rights, convertible preference shares and warrants on 1,777,797,247 shares in existence at the year-end (2009: 200,066,667).

3. Distribution of the Annual Report and Notice of AGM

A copy of the Annual Report and Financial Statements, together with a notice of the Annual General Meeting to be held at the Group's offices at Aldermary House, 15 Queen Street, London, EC4N 1TX on 25 July 2011 at 10:00 a.m., will be sent to all shareholders shortly. Further copies will be available from the Group's offices and on the Group's website, www.merchanthousegroup.com.