ADSL Asia Distrib.

RNS Number:6271L
Asia Distribution Solutions Limited
11 January 2008



                      Asia Distribution Solutions Limited
                           ("ADSL" or the "Company")

                                 Trading update
                   Acquisition of Shanghai beverage business

1. Trading update

The Board of ADSL is pleased to announce that the Group's trading in the last
quarter of 2007 was in line with the Board's expectations.

Our Shanghai Wine Mall, ADSL's first in China, commenced trading in November
2007, retailing imported wines to on-trade customers and consumers. There has
been significant local interest from our existing customer base. Our product
range comprises European and New World wines at accessible price points sourced
directly from vineyards and local distributors, representing a wider range of
imported wines than our customers have typically been able to obtain before. We
intend to replicate this model in other major population centres in China as
opportunities arise.

The awareness of ADSL and its operations amongst potential on-trade and retail
customers in the geographical areas of China where ADSL is currently trading has
increased following the successful opening of the wine mall and the
recently-announced acquisition of the business of Gao Li Yuan in Chengdu. Upon
completion of this acquisition in Chengdu, the ADSL Group will be directly
servicing approximately 2,000 on-trade and retail outlets in China.

Negotiations to supply our private label beverages to other retail chains
including additional Carrefour retail fascias, to complement our ongoing
arrangements with Carrefour's DIA fascia, are progressing satisfactorily and
further announcements will be made as appropriate.

In December 2007, Vitality Tianjin commenced production of its own brand
(Kelsoloch) mixers and these will be distributed by ADSL initially to existing
hotel, restaurant and cafe customers that already purchase branded alcohol lines
from ADSL.

2. Shanghai acquisition

The Board is pleased to announce that ADSL has today agreed to acquire certain
of the trade assets and intellectual property rights of Shanghai Run Ke Trading
Co Ltd. ("Run Ke"). The consideration to be paid by ADSL to the vendor, Mr Qi
Zhi, is up to a maximum of RMB 7.0 million, comprising upfront cash
consideration of RMB 1.75 million, plus deferred consideration up to a maximum
value of RMB 5.25 million in new ordinary shares in ADSL, to be allotted
pursuant to an employment contract based on the achievement of profit targets by
the Run Ke business in the period ending 31 December 2010, as is described in
more detail below.

Accordingly, ADSL and Mr Qi have entered into a conditional trade asset sale and
purchase agreement (the "Agreement") by which Shanghai Singxia ("Singxia"), a
wholly owned subsidiary of ADSL, is to acquire certain assets and intellectual
property rights of Run Ke. The upfront consideration of RMB1.75 million in cash
is to be paid to Mr Qi within 10 days after the acquired assets are transferred
to Singxia.

Completion of the Agreement is conditional, inter alia, upon the following
conditions:

 1. the value of the acquired trade assets being audited and assessed by a
    qualified licensed valuer being not lower than 50 per cent of RMB 1.75
    million;
 2. Run Ke terminates its existing business and repays all its debts without
    delay, and deregisters its business from the relevant PRC authorities within
    a reasonable time agreed by both parties; and
 3. any other regulatory approvals as may be required being obtained regarding
    the transfer of the assets and intellectual property of Run Ke to Singxia.

In addition, ADSL has entered into an employment contract with Mr Qi whereby he
is to be appointed as the Manager of the Run Ke business division once taken
over by ADSL's Singxia subsidiary. Under the terms of his employment contract,
Mr Qi is to receive the above deferred consideration by way of the issue and
allotment to him of new ordinary shares in ADSL at the prevailing ADSL share
price at the time of their issue up to a maximum value of RMB 5.25 million,
payable, subject to the achievement by the Run Ke trade of minimum profit
targets in the three financial years ending 31 December 2010, as follows: (a) 50
per cent provided the Run Ke trade reports audited profits of approximately RMB
2.3 million in respect of the 2008 financial year, (b) 25 per cent subject to
audited profits of RMB 2.6 million in 2009 and (c) the remainder subject to
audited profits of RMB 2.8 million in 2010. In addition, Mr Qi will receive a
gross monthly salary of RMB 20,000.

Run Ke is a beverage distribution business located in Shanghai. It distributes
branded beverages to a number of major hotels, restaurants and cafes in Zhabei,
a residential district of Shanghai that is populated predominantly with middle
income families. Singxia has been focusing on the commercial and entertainment
segment of the Shanghai market. The growing out-of-home consumption of food and
beverage makes restaurants close to residential areas increasingly important.
Upon completion of the acquisition by ADSL, Run Ke will complement Singxia's
existing geographical coverage in the Shanghai area. The latest financial
statements of Run Ke for the 11 month period ended 30 November 2007 submitted to
the China tax authority report gross revenues and profit before tax of
approximately RMB 18 million and RMB 0.94 million respectively. As at 30
November 2007, Run Ke's gross assets were approximately RMB 1.75 million.

Following completion of the acquisition, Run Ke will be integrated into our
Singxia operations in Shanghai under the management and supervision of Andrew
Tan, the General Manager of Singxia, with the objective of deriving economies of
scale through obtaining better trading terms with suppliers and customers. With
the inclusion of Run Ke, Singxia will manage and distribute the ADSL product
range of imported wines, Snapples (Cadbury Schweppes juice flavoured tea) and
local brands to national supermarket accounts and around 300 second and third
tier wholesalers in the Shanghai area.

Steve Wong, ADSL's Chief Executive, commented:

"Following the recently-announced acquisition of the business of Gao Li Yuan in 
Chengdu, we expect the addition of Run Ke and the excellent management skills of 
Mr Qi to enable us to enhance our strong position in the Shanghai market place, 
which is one of the largest consumer markets in China.  By adding the beverage 
products and other supplies of Run Ke and Gao Li Yuan to ADSL's existing beverage 
distribution infrastructure we expect Run Ke will contribute positively to the 
Group's revenues and profits.

We continue to seek ways of improving our coverage through the major cities in 
China and have several other acquisition and joint venture prospects which we 
are currently evaluating."

Given the nature of the proposed investment and acquisition, the Company has
provided such disclosure as is required in accordance with Schedule 4 of the AIM
Rules as a Substantial Transaction. A further announcement will be made in due
course following the completion of the Agreement.

For further information please contact:

Asia Distribution Solutions Limited
Michael Kingshott, Non Executive Chairman                   020 7583 8833
Steve Wong, Managing Director                              +852 9025 0988
Paul Chow, Chief Financial Officer                         +852 2528 3323

Evolution Securities China Limited
(Financial adviser and broker)
Barry Saint                                                 020 7220 4850
Armen Ho                                                    020 7220 4850

Evolution Securities Limited
(Nominated adviser)
Jeremy Ellis                                                020 7071 4300

cityPROFILE
Jonathan Gillen                                             020 7448 3244


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