Final witness says data not 'at all likely' to move Fyffes share price

An investments expert has told the High Court that confidential information on Fyffes plc which was available to DCC plc chief executive Jim Flavin prior to the €106 million sale of the DCC stake in Fyffes in February 2000 would not have been "at all likely" to move the Fyffes share price had it been generally available in the market.

However, John Lawrie agreed the information would have conveyed "a possibility" that Fyffes targets for the financial year 2000 might not be met and that it showed a worsening trend for Fyffes.

He also agreed it was "probably true" that it would have been, as Paul Gallagher SC, for Fyffes, suggested, "well nigh impossible" for any investor to make an accurate prediction as to the extent of Fyffes losses for the first quarter of the financial year 2000 (beginning November 1999) or about variances in those figures from budget or prior year. That would be equally true of all companies at the time, Mr Lawrie added.

If Fyffes' trading in the first quarter of 2000 was sufficiently bad for publication of the figures to be likely to materially affect the share price, then the Fyffes board would have had to issue a profit warning, he said.

The evidence indicated that the board had positively not contemplated issuing a profit warning prior to the share deals of February 2000. No warning was actually issued until March 20th, 2000.

Mr Lawrie said he also noted that the then Fyffes chairman, Neil McCann, had written to a shareholder, Tom Cunningham in May 2000 stating that Fyffes had expected trade to improve in February and March 2000 and had not regarded figures for trading in November and December 1999 as particularly significant.

Mr McCann's letter was written in the context of complaints by Mr Cunningham about the profit warning issuing only in March 2000.

The evidence of Mr Lawrie, called as an expert for the DCC side, concluded yesterday, bringing to a close after 77 days the evidence in the proceedings by Fyffes.

The company alleges "insider dealing" in connection with the February 2000 share sales, which yielded a profit of €85 million for DCC.

Ms Justice Mary Laffoy has adjourned the case to July 5th to allow the parties complete their submissions on the legal issues in the case. The hearing of oral submissions on those issues will begin on July 5th.

The core legal issues to be determined are whether Mr Flavin "dealt", within the meaning of the relevant legislation, in the Fyffes shares on three days in February 2000 and, if he dealt, whether he had price-sensitive information - defined in the Companies Acts as information likely to materially affect the share price - at the time of the Fyffes share sales.

The proceedings are against DCC, Mr Flavin and two DCC subsidiaries - S&L Investments Limited and Lotus Green Limited.

The defendants deny the claims of insider dealing. They plead the share sales were properly organised by Lotus Green, a Dutch-registered subsidiary to which beneficial ownership of the Fyffes stake was transferred in 1995 by DCC and S&L with the purpose of avoiding payment of capital gains tax on any subsequent sale of the stake.

In direct examination yesterday by Kevin Feeney SC, for DCC, Mr Lawrie, a former chief investment manager for Scottish Provident in Ireland who was in charge of the Irish equity portfolio from 1980, said he came into contact with both Fyffes and DCC in the course of his work.

Scottish Provident had held 3-5 per cent of the shares of both companies.

He was in contact with Mr Flavin and Carl McCann of Fyffes in the course of his work.

In relation to Fyffes, he regarded Neil McCann as a very talented and astute businessman but he did not regard Carl McCann as the driving force behind Fyffes.

Regarding DCC, he formed the impression that Mr Flavin kept a very tight control on his business. He had "crossed swords" with Mr Flavin on a number of occasions but he had a "fair respect" for him also.

Having examined the two documents available to Mr Flavin in early 2000, which are alleged to contain price-sensitive information, it was his view that the first document, Fyffes management accounts for November 1999, "would almost certainly have had no impact whatever" had it been made public.

He could see no reasonable interpretation that could have been put on the figures that would have made it improper, never mind illegal, for a director to deal in the shares.

His view on the second document - Fyffes summary trading report for December 1999 - was less clear cut. It contained evidence of three months of poor results and he believed that a director would have a duty to consider the possible impact on the market of the figures set out.

The director would also have to take into account that the causes of the poor figures were not specific to the company but were well known within the market.