Trading Update

Merchant House Group Plc ("Merchant House", the "Group" or the "Company")

1 June 2010

Trading update

Merchant House is pleased to update shareholders on recent progress within the Group.

The Structured Products division of Merchant Capital Limited, the Company's wholly-owned FSA authorised subsidiary, last week began marketing the Merchant Capital Principal Lock-in plan. This plan provides investors with a return on capital on maturity in five years from its strike date based on a multiple of 1.35 times the increase in the FTSE 100 index. The plan also provides for full capital protection in the event that the FTSE 100 index is, on any plan anniversary date, at least ten per cent above its level when the plan was first issued. Morgan Stanley provides both the underlying investment and the capital protection element for this plan.

A second product is also being launched at this time. This plan, an emerging markets kick-out plan, is a three year plan which is based on Brazilian and Chinese markets and offers a return of up to 18 per cent. per annum as well as having the benefit of early redemption if the investment achieves its stated aims. This plan is underwritten by Barclays Capital (part of Barclays Bank PLC).

In addition, the Structured Products team has been working on raising money for a Global Emerging Markets fund which is managed by Nomura Bank and invests in diverse industries in a number of emerging markets. To date, £545,000 has been raised. The fund is open ended.

John Gracey, Managing Director of the Structured Products division stated, "As reported previously, the division's sales have been satisfactory given current economic uncertainty and the lack of confidence in all major financial markets. We are looking to continue to build the business by searching the market for products and banks to partner with. We believe that taking on responsibility for the plan management and administration of Keydata Investment Services Limited's structured product book will help the division to gain momentum"

FX Trading continues to perform well with net fees to Merchant Capital ranging typically from thirty thousand pounds per month to sixty thousand pounds per month which reflects the volatility inherent in these markets.

Merchant Capital's Asset Management division is launching two new funds shortly but both are subject to approval by the Financial Regulator in Ireland. Shareholders will be updated when the result of this process is known. This follows the launch of the Merchant European Equities Fund which was announced on 9 December 2009 and is now paying fees to Merchant Capital. The Group will receive a management fee and a percentage of the capital gains from these new funds but as the funds will both be start-ups, the level of fees will reflect their size.

As previously announced, the Company issued convertible loan notes, both secured and unsecured, in 2005 (the "Loan Notes") following Shareholder approval. The balance of Loan Notes outstanding at this time is £468,000. The Loan Notes are repayable on or before 25 August 2010. Discussions are currently taking place with holders of the Loan Notes to secure a conversion of these notes into new ordinary shares. A further announcement in this regard will be made as required.

Martin Eberhardt, Chairman of Merchant House commented, "The Board is encouraged by progress so far this year. We will continue to update shareholders on a regular basis of significant developments within the Merchant House group of businesses. We will announce the final results of the Group for the financial year ended 31 December 2009 later this month."

Ends.

Enquiries:

Merchant House Group Plc

James Holmes

Tel: 020 7332 2200

Shore Capital and Corporate Limited

Pascal Keane

Tel: 020 7408 4090