Fundamentals

Details Company Name: Merchant House Group Plc Ticker: MHG Date Posted: Tuesday, 22nd December 2009 Price: 0.2 (as of Friday, 18th December 2009)

Shareholders at 1 September 2009

Merchant House Group plc provides corporate finance, investment management, investment advice and stockbroking services, carried out largely by its wholly owned subsidiary, Merchant Capital Limited.

Merchant Capital's services include advice provided to companies in connection with flotations on the Alternative Investment Market (AIM) and Plus Markets, reverse takeovers and private equity fundraisings. The Company also provides advice on debt and asset-based financing, and corporate restructuring The Company also recently launched a Foreign Exchange Proprietary Trading operation and has recently received its permission from the FSA to act as investment manager. In respect of the latter, Merchant Capital is in the process of launching Merchant Funds plc, a Dublin-based UCITS III umbrella designed for the alternative fund industry; UCITS III is expected by many commentators to be a major influence in the sector.

Private Client Broking Team

Merchant Capital has raised £891,000 in the first tranche of sales of corporate bond units in Merchant Corporate Recovery plc (MCR). MCR provides finance to selected distressed companies which have significant turnover and a strong debtor book and/or easily realisable assets.

Other key MCR transactions include a £200,000 financing of coaches for a well known bus/tour operator and #1.5 million financing of broadcasting equipment for a company whose main activity is the delivery of TV networks in doctors' surgeries, health centres and schools. At some stage a published Net Asset Value of these assets would assist in adding value to the Company.

MCR says they have a large number of potential opportunities under review and shareholders will be updated in due course.

Merchant Capital has worked with, and advised listed companies on everything from the reversal of a carbon related business to assisting fundraising for resource opportunities in Central Asia.

Proprietary Trading Systems

The Company has announced on 9th December 2009 the facilitation of a foreign fxchange proprietary trading operation commenced with a trading facility provided by a major global clearer and results are ahead of budget with nominal trading values now regularly exceeding US$5 billion per day and capacity projected to grow significantly over the next six months. Merchant Capital, the wholly owned Financial Services Authority ("FSA") authorised subsidiary, is now receiving net fee contributions.

Investment Manager

Merchant Capital has been granted authorisation by the FSA to act as investment managers, with permission to manage funds on a discretionary or advisory basis for professional clients.

Merchant Capital, on behalf of Merchant Funds plc its new UCITS III investment business has filed paperwork with the Dublin authorities to become the financial promoter of a UCITS III umbrella fund. The first fund, with distribution based in Spain has signed up subject only to approval from the Dublin authorities. This status will assist greatly the Company's current discussions with customers over the launch of six UCITS III propositions.

Financial summary

The Group incurred losses totalling £496,308 during the six month period ending June 30th 2009.

However, compared with six month period in 2008 (£563,418), the figures were favourable.

Summary

The re positioning of the Group and recruitment of new experienced team members together with the recovering revenue for Merchant Capital in the first five months of the current year are positive developments. The Directors will continue to seek suitable acquisitions using the Company's listed shares as well as joint venture partnerships and the acquisition/absorption of teams looking for a base from which to operate and retain a larger share of the revenue they generate than may be possible in competing firms.