Chairman may not have seen upbeat statement

Fyffes company secretary Mr Philip Halpenny told the High Court yesterday that he did not know if Fyffes' then chairman Mr Neil McCann saw a "statement from the chairman" which was issued to shareholders in mid-February 2000.

The statement, dated January 31st, said the company expected 2000 would be a year of further growth for Fyffes and it was received by shareholders some five weeks prior to the issuing of a profit warning by Fyffes.

Mr Halpenny said he was involved in drafting the statement which was sent out to shareholders with the annual report for the fiscal year ending October 31st, 1999. He did not know if Mr Neil McCann saw the statement. He said the annual report was "always out of date" and was not a document that would disseminate price-sensitive information.

The section in the statement dealing with the outlook for 2000 was almost identical to the outlook contained in a December 14th results statement from the company, he said. That statement had also said the board expected 2000 to be another year of growth for Fyffes.

Mr Halpenny denied a suggestion by Mr Michael Ashe SC, for DCC plc, that it was "just wrong" to say the reason for the March 20th, 2000, profit warning was Fyffes' poor trading in the first quarter of the fiscal year 2000 (beginning November 1st, 1999).

Mr Halpenny said it was a fact that Fyffes had not achieved its budgeted targets in November, December and January. Had Fyffes not been behind performance in those months, it would not have been in the same position on March 20th.

He rejected a suggestion that a letter from Fyffes in August 2000 to DCC chief executive Mr Jim Flavin, in which Fyffes sought information about the controversial €106 million sale in February 2000 of the DCC stake in Fyffes, was "a fishing expedition".

He agreed that the letter opened with a statement that Fyffes had received queries from the Irish Stock Exchange (ISE) about the circumstances of the DCC sale. He also agreed that the letter was not written specifically because of the ISE inquiries and said it was written as a result of Fyffes' own consideration of events in the wake of the DCC sale and the conclusion of the Fyffes board on June 30th, 2000, that Fyffes should inquire into the sale more deeply.

The letter to Mr Flavin was issued after Fyffes consulted with their lawyers, he said. The reference in the letter to Fyffes of having received inquiries from the ISE was to let Mr Flavin know of the stock exchange inquiry, details of which were reported in the media.

He agreed that the letter could be interpreted as Fyffes collecting information for the ISE. He also agreed that Fyffes was trying to get information on the share sales but disagreed the letter was a "fishing expedition". Fyffes' board believed it was entitled to a full explanation of the DCC sale and that was the point of the letter to Mr Flavin.

Mr Halpenny agreed that he had accepted in February 2000 share options granted to him in January 2000 without considering whether there was a need to consult the Fyffes chairman.

He was not aware of the issuing of share options to a number of senior Fyffes employees in January 2000. He believed some of those employees were governed by procedures which the company had in place in relation to the granting of options. He did not know if the options were consented to by the chairman but did not expect that they were.

He said the options issue involved a different set of circumstances to the DCC sale. He had concerns relating to whether the DCC sale fell within the provisions of the ISE Model Code but Fyffes' solicitors had advised, having learned on February 3rd that the DCC sale had proceeded, that the issue was for Mr Flavin to deal with.

Mr Halpenny was being cross-examined on the 29th day of proceedings in which Fyffes alleges that DCC and Mr Flavin breached "insider dealing" provisions of the Companies Act in the manner in which the share sales of February 3rd, 8th and 14th, 2000 were organised.

The action is against DCC, Mr Flavin and two DCC subsidiaries, all of whom deny the claims.