Update

Merchant House Group plc

("MHG" or "the Group")

(LSE: MHG.L)

Update on Private Client Financial Services Division

MHG, the AIM-quoted financial services group, is pleased to update shareholders on recent progress in the private client financial services division ("Division") within Merchant Capital Limited ("MCL"), a wholly owned subsidiary of the Group, following the acquisition of the business of two structured product providers over the last eighteen months that were previously in administration.

The Division promotes and distributes structured products which are developed by MCL with the backing of a major international financial institution or bank in each case. A structured product offers a fixed return against an index or other asset.

The Division's structured product management team has been strengthened with the recruitment of several key individuals, including Tony King as Director of Operations. Tony was previously at St James Place Wealth Management as Head of New Business and Development for one of the top performing partnerships. The business has expanded rapidly through acquisition as announced in December 2009 and April 2010 and there has been considerable reorganisation and recruitment both internally and externally to establish the right team.

The Division has had a strong start to 2011 and is now generating profits. Sales of structured products in Q1 reached their highest level since the commencement of operations in December 2009, with January's sales alone exceeding the total generated in Q4 of 2010.

In March 2011, MCL offered four new structured products, in line with its strategic growth initiative. The board is also pleased to announce that MCL has almost doubled the number of counterparties it works with to ensure diversification and choice for MCL's customers.

The board is pleased to announce that the Merchant Capital Emerging Markets Kick Out plan, launched in July 2010 kicked out after six months and paid investors a return of 9%, equivalent to an annualised return on their investment of 18%.

As part of the strategy of growing the Division, MHG is announcing the successful launch of a dedicated distribution arm, Merchant Capital Investment Services ("MCIS"). MCIS is working in conjunction with the structured product sales team to increase awareness of MCL and coverage of IFAs across the country to whom structured products are sold. The team has considerable experience within the IFA market and will assist in the development of new products. Clive Moore of International Design and Development has recently joined MCIS as a consultant to assist in the further development of the division. MCIS currently has a team of seven brokers with the intention over the short to medium term to expand significantly.

John Gracey, Director of Structured Products Merchant Capital said,

"Having prepared the groundwork carefully, I believe we now have the strongest sales team ever at Merchant Capital. Sales levels so far this year demonstrate that the right team is in place. We are supporting the growth of our distribution network by developing a diversified range of products, all of which we believe are extremely competitive and cater for fundamental investor demand. We are currently ahead of our ambitious targets for sales this year both in terms of revenue generated and market penetration".

Christopher Day, CEO of MHG commented,

"I am always pleased to welcome new, experienced members to our team at MHG. We are encouraged with the progress made in the structured products business over the last year. We have the right team selling products which are sought after and those products are backed by the strongest counterparties. The team has achieved this very quickly, moving the division into profitability. We look forward to expanding on this success through 2011, significantly increasing the number of distribution partners, to ensure we remain one of the largest independent structured product provider in the UK."

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About Merchant House Group Plc

Merchant House Group is a new form of corporate banking and financial services group that uses its intellectual capital, agility and mercantile ability to challenge competitors' conventional approach and deliver a high level of service to its clients. This new approach is allied to strong risk management and corporate governance controls on a sound capital footing to enable the group to realise its full potential.

Merchant House Group plc is a London Stock Exchange AIM-listed holding company.

For further information about Merchant House Group and its corporate finance, investment and private client services divisions, please visit the company website at www.merchanthousegroup.com