Business Opinion: During three days of evidence in the High Court last week, the chief executive of Fyffes, Mr David McCann, afforded us valuable insight into how listed companies approach the issue of disseminating information to shareholders.

Mr McCann was giving evidence in the case taken by Fyffes against Mr Jim Flavin and DCC in which they allege insider trading.

Mr McCann was being questioned by Mr Kevin Feeney SC, counsel for Mr Flavin and DCC, about the background to the company's 1999 results which were published in October that year along with a comment on trading prospects in 2000.

The extent to which who knew what, when they knew it and what they did with the information, will no doubt have a bearing on DCC's defence in the case, but does not concern us here.

What is of interest is the light shone by Mr McCann on the company's approach to sharing information with its investors.

The first thing to emerge, in this context, was that the strong profits of €82.9 million reported by Fyffes in December 1999 included €19 million of provisions written back from previous years. However, the company did not bother to inform the market that this write back, rather than underlying trading, explained the good results.

"We didn't tell anyone. We didn't have an obligation to report that detail," Mr McCann said when quizzed by counsel for DCC about this.

Mr Feeney then went on to ask Mr McCann about the prediction made by his father, the chairman of the company, Mr Neill McCann at the time. Mr McCann snr said: "the board believes from this position of strength, 2000 will be another year of growth for Fyffes.".

This was quite a tall order given that the €19 million written back in 1999 accounted for 23 per cent of the previous years' profits. A similar sized once-off source of revenue, combined with a sustained performance on the trading front would be needed for Fyffes just to stand still.

The prospects of this seemed all the more unlikely given that the company had been finding the banana market in the UK - one of its core businesses - hard going since the beginning of April.

Not surprisingly, Mr Feeney had a few questions for Mr McCann on why the company made such a bullish statement.

This following is an extract of Mr McCann's evidence on Wednesday:

Mr Kevin Feeney: It is as simple a question as I can put. Was it a true announcement?

Mr David McCann: "True" somehow suggests to me, or is asking me were there lies in it...

Mr Feeney: Well, did you believe it? Was it your expectation?

Mr McCann: It was what we believed was the correct thing to say at the time. It was what we judged was the appropriate announcement to make.

On Friday, Mr McCann went on to say that the December 14th statement did not refer to the underlying poor performance of Fyffes in 1999 and that omission resulted in a weakness in virtually every statement in the report.

That omission affected every bit of the statement in terms of accuracy, the court was told.

"The market would understand we exercise judgment about what we put into the market and in many instances a company would have price-sensitive information that it would not put into the market," Mr McCann explained.

All in all, it's is pretty shocking stuff.

How is it possible for 25 per cent of a company's annual profit to be made up of written back provisions and nobody notice? The answer to this is that presumably it was not apparent in the company's published figures, which were audited by KPMG, even to the eyes of experienced financial analysts, never mind ordinary shareholders.

This in turn raises the question as to how is it possible for a company like Fyffes to feel that it "didn't have an obligation" to tell its shareholders about the true nature of the profits it had earned.

Equally, it is mind-boggling that the company did not say that in order to better this performance the following year it would require another €19 million "windfall".

In a similar vein, it seems hard to believe that when the company chief executive was asked if the statement to shareholders about future prospects was true, he could not answer with a firm "yes". Instead, he says it was the "appropriate announcement to make". Appropriate to what, is another question.

The above probably sounds hopelessly naive to anyone who has worked for any amount of time in the quoted plc environment, but the following two are perhaps more pertinent.

Firstly: when are we going to hear something from the Irish Association of Investment Managers about what emerged last week?

Secondly: what sort of litigation has Fyffes left itself open to from investors who bought Fyffes shares on the basis that the chairman's prognosis for 2000 was true rather than merely an "appropriate announcement"?