09:32     IDS<02387> - Announcement (1)                                       

    The Stock Exchange of Hong Kong Limited takes no responsibility for       
    the contents of this announcement, makes no representation as to its      
    accuracy or completeness and expressly disclaims any liability            
    whatsoever for any loss howsoever arising from or in reliance upon        
    the whole or any part of the contents of this announcement.               
                                                                              
    INTEGRATED DISTRIBUTION SERVICES GROUP LIMITED                            
    (Incorporated in Bermuda with limited liability)                          
    (Stock Code: 2387)                                                        
                                                                              
    COMMENCEMENT OF BUSINESS OF IDS MARKETING (PHILIPPINES), INC.             
    CONNECTED TRANSACTION                                                     
    ACQUISITION AND SERVICE AGREEMENT RELATING TO                             
    JDH (PHILIPPINES), INC.                                                   
                                                                              
    On 9 March 2005, IDS Marketing (Philippines) entered into the             
    Acquisition and Service Agreement with JDH (Philippines), pursuant        
    to which IDS Marketing (Philippines) has conditionally agreed to          
    acquire from JDH (Philippines) the Inventory, the Motor Vehicles and      
    the IT Equipment and to provide the Service to JDH (Philippines).         
    The aggregate purchase price for the acquisition of the Inventory,        
    the Motor Vehicles and the IT Equipment will not exceed US$2,520,000      
    (approximately HK$19,656,000). The service fees payable by JDH            
    (Philippines) for the Service will be not more than US$1,293,000          
    (approximately HK$10,085,400).                                            
                                                                              
    JDH (Philippines) is wholly owned by LFD, which is a controlling          
    shareholder of the Company. Accordingly, JDH (Philippines) is a           
    connected person of the Company and the acquisitions under the            
    Transaction constitutes a connected transaction, and the Service to       
    be provided under the Transaction constitutes a continuing connected      
    transaction, for the Company under the Listing Rules. Pursuant to         
    the Listing Rules, as each of the applicable Percentage Ratios is         
    less than 2.5%, the Transaction is only subject to announcement and       
    reporting requirements and does not require the approval of the           
    independent shareholders of the Company. Details of the Transaction       
    are accordingly disclosed in this announcement and will be disclosed      
    in the Company's forthcoming annual report pursuant to Rule 14A.45        
    of the Listing Rules.                                                     
                                                                              
    As disclosed in the Prospectus, the Company, with a view to               
    developing its marketing operation in the Philippines, intended IDS       
    Marketing (Philippines), which was incorporated in the Philippines        
    in July 2004 as a wholly owned subsidiary of the Company, to commence     
    the Group's marketing and distribution activities in the Philippines      
    in accordance with the Company's business strategy going forward.         
    Such strategy focuses on undertaking new business contracts on a          
    balanced risk/reward basis. JDH (Philippines) is in the process of        
    closing down its business and is expected to cease its operations         
    by end of 2005.                                                           
                                                                              
    As set out in the section headed ``Connected Transactions ---             
    Pre-listing connected transaction to be completed after listing''         
    of the Prospectus, it was agreed between IDS Marketing (Philippines)      
    and JDH (Philippines) that IDS Marketing (Philippines) would,             
    conditional upon the principals who had terminated their                  
    distribution contracts with JDH (Philippines) and had appointed IDS       
    Marketing (Philippines) as their new distributor requesting IDS           
    Marketing (Philippines) to purchase the inventory of JDH                  
    (Philippines) related to such principals and such requests being          
    accepted by IDS Marketing (Philippines), purchase such inventory.         
    IDS Marketing (Philippines) is in discussion with the                     
    above-mentioned principals on the possibility of appointing IDS           
    Marketing (Philippines) to act as their distributor.                      
                                                                              
    In view of the foregoing, on 9 March 2005, IDS Marketing (Philippines)    
    entered into the Acquisition and Service Agreement with JDH               
    (Philippines), pursuant to which IDS Marketing (Philippines) has          
    conditionally agreed to acquire from JDH (Philippines) the Inventory,     
    the Motor Vehicles and the IT Equipment, and to provide the Service       
    to JDH (Philippines).                                                     
                                                                              
    To enhance the business relationship with such principals across the      
    region and to position IDS Marketing (Philippines) as the sole            
    supplier of goods of such principals, the Company considers that it       
    would be in the best interest of IDS Marketing (Philippines) to           
    acquire the Inventory. Also, to facilitate the commencement of the        
    marketing and distribution businesses by IDS Marketing                    
    (Philippines), the Company considers that it would also be in the         
    best interest of IDS Marketing (Philippines) to acquire the Motor         
    Vehicles and the IT Equipment.