Fyffes standing by December statement

An outlook statement of December 14th, 1999 that the Fyffes board believed 2000 would be a year of "further growth", accurately and honestly reflected the board's view, the High Court was told yesterday.

Fyffes board member Mr Jimmy Tolan said he did not think it was unusual in a plc for preliminary announcements to be drafted five times. The company would not have made the statement unless it honestly believed it, and he did not believe the company was seeking to withdraw from the statement.

Mr Tolan said that the alleged price-sensitive information available to DCC plc chief executive Mr Jim Flavin at the time of controversial share sales in Fyffes in February 2000 comprised information that the fruit distributor was underperforming by €14 million at the end of the first quarter of the 2000 financial year (which for Fyffes begins in November).

That information was cumulative information gleaned from November 1999 management accounts, a December 1999 summary trading report and a forecast for January 2000, Mr Tolan said.

Mr Michael Cush SC, for DCC, and Mr Flavin suggested that neither the information in the November accounts nor in the December statement was price-sensitive.

Mr Tolan disagreed. He said one part of the information could not be isolated; it was "an emerging story", and it did not emanate from one document. It was information that had to be put in the context of previous events.

Mr Cush said that there was no escaping the conclusion that, as far as November and December were concerned, the information given to the Fyffes board on December 9th was slightly worse than the alleged price-sensitive information given to board members on January 6th (the November accounts), and even worse than the alleged price-sensitive information made available to the board on January 26th (the December statement).

Mr Tolan did not accept that. He said the December meeting had estimates only. The information had hardened by January and had become more certain. In January, it was known that the deficit was €14 million.

Mr Cush also suggested that various analysts' reports showed that the market was aware of Fyffes' trading difficulties in its first quarter. Mr Tolan disagreed.

Mr Cush suggested that the key to Fyffes' claim was January 2000. Mr Tolan said: "No, it's cumulative." The key issue was that Fyffes was €14 million behind, he said. It was clear to him in January that, to meet its half-year targets, Fyffes would need non-trading income.

Mr Tolan was being cross-examined on the 16th day of proceedings, in which Fyffes alleges that DCC and Mr Flavin set up a €106 million sale of Fyffes shares in February 2000 in a manner that breached insider dealing provisions of the Companies Acts. The action is against DCC plc, Mr Flavin and two wholly-owned DCC subsidiaries.

The defendants deny the claims, and plead that the share deals were properly organised by the DCC subsidiary Lotus Green Ltd. They also deny that DCC or Mr Flavin were in possession of price-sensitive information at the time of the transactions.

Yesterday, Mr Tolan agreed that a central question in the case was whether the information that Fyffes alleges to be price-sensitive was in fact price-sensitive. He understood that price-sensitive information was information about a company which, if known to the market, would be likely to have a material effect on the share price.

Mr Cush said that there were three categories of information which had a bearing on the court's assessment of whether the information was price-sensitive or not.

The court had to look at information already in the market, price-sensitive information and information of which the market was unaware.

Mr Cush put to Mr Tolan that a forecast for November and December 1999 allegedly put by Fyffes finance director Mr Frank Gernon to the Fyffes board, including Mr Flavin, on December 9th, 1999 suggested that Fyffes' underperformance for those months would be worse than it actually was. Mr Gernon had forecast a loss of €6.3 million, but the loss was some €3.9 million.

Mr Tolan said he personally had no recollection of Mr Gernon having spoken at the meeting about the situation for January 2000.

The figures being referred to were contained in a handwritten note of Mr Gernon's, which was not distributed to the Fyffes board.