Cape Town - Essential Beverage Holdings, the venture capital company, said yesterday recent distribution agreements with Tigon and Phambili Enterprises to distribute its products in South Africa and North America would boost forecast earnings for the year to October 31 2000 by 46 percent.
News of the financial implications of the distribution agreements on Essential`s earnings resulted in the share surging 33,3 percent to close at 28c on the JSE yesterday.
But Richard Axtell, the managing director of Essential, cautioned that the effects of the distribution agreements on the results for this financial year would depend on the timing of the initial sales orders.
He said the company was expecting to finalise these orders within the next three weeks.
Until then the effect on this year`s earning could not be quantified.
Axtell said Essential expected the distribution deals to push the company`s forecast earnings of R32,7 million for the financial year ending October 31 2000 to R47,7 million.
This would translate into earnings of 24,1c a share.
Axtell said the effects of the deals on earnings were based on the assumption Essential could supply a minimum of 4,41 million cases of its herb and vitamin-enriched mineral water at an exchange rate of R6 to the dollar.
The company`s Essential Waters range include flavoured brands such as Femme, Restore, De-Tox and Sleep.
Essential`s distribution agreement for South Africa was clinched with Food Flair, a Tigon subsidiary, to distribute 185 000 cases of Essential Waters over three years.
The company`s US deal is two pronged.
Heavenly Beverages, another Tigon subsidiary, has agreed to distribute almost 1,88 million cases over three years in New Mexico, California, Washington, Oregon, Idaho, Colorado, Nevada, Texas and Arizona.
Phambili Enterprises and its associate company, Shirra Panwest, have agreed to distribute 10 million cases of Essential Waters in Canada, India, Japan, Taiwan and Thailand over two years.
Axtell said in addition to the distribution agreements Essential would carry out extensive direct sales, incorporating the use of the Internet and e-grocery techniques.