The chief executive of fruit distributor Fyffes has told the High Court the words "true" and "honest" are not measures used in the listing rules of the stock exchange.
When compiling statements for the market, Fyffes did so from the perspective of its obligations to the market and to the company itself and believed it had complied with listing rules, Mr David McCann said.
Asked whether Fyffes had withheld any information in statements released by the company on December 14th, 1999, and March 20th, 2000, that would make those statements untrue or inaccurate, Mr McCann said that, as businessmen, they were not in the business of true and untrue but were in the business of dealing with information in the market in accordance with their obligations, which included obligations to the company. In that context, they had complied with their obligations at all times.
Asked whether the judgment exercised in the statements referred to was true and honest, Mr McCann said he had acted in good faith. He said true and honest were not measures used in listing rules; the company had to comply with listing rules and he believed it had done so.
He said the company did not address its statements from that [ true and honest] perspective but addressed statements from the perspective of its obligations and what it considered was appropriate to announce.
It did not announce some things to the market and the market understood that.
Asked how seriously he, as chief executive, and the management of Fyffes regarded their obligations to keep the market informed, Mr McCann said this was one of the obligations they had and he took it seriously.
He told Mr Kevin Feeney SC, for DCC plc, that Fyffes often held information back from the market and the market understood that companies did that. He believed Fyffes had complied with its obligations. At all times, the company had done its best and had done it acting in good faith.
Mr Feeney yesterday concluded his lengthy cross-examination of Mr McCann on the fourteenth day of proceedings by Fyffes against DCC plc, its chief executive Mr Jim Flavin and two wholly-owned DCC subsidiaries. Fyffes claims the defendants organised three share deals, totalling €106 million, in February 2000 which breached "insider-dealing" provisions of the Companies Acts.
The share sales yielded a profit of €85 million and Fyffes is claiming it is entitled to that sum. The defendants deny the claims and plead the share deals were properly organised and conducted by the DCC subsidiary, Lotus Green Limited.
Earlier yesterday, Mr Feeney read extensively from reports of food industry analysts in early 2000, which focused on Fyffes performance at that time. Mr Feeney suggested the reports indicated the market was well aware of problems within the banana sector, including euro weakness against the dollar, and that these would have an inevitable impact on the Fyffes share price.
Mr McCann said his company tried to give the market as much information as it could, within the rules. He said analysts wrote what they chose to write but all the analysts had come to the same conclusion, predicting profits of some €88 million for Fyffes in 2000.
Mr Feeney suggested analysts' reports indicated Fyffes' own forecast about its performance was the key factor influencing analysts' forecasts for Fyffes.
Mr McCann said Fyffes had said in its December 14th, 1999, outlook statement that it looked forward to a year of further growth.
Mr Feeney suggested the take-up in the Fyffes share price in early 2000 was at variance with Fyffes historic performance and indicative of a dotcom bubble.
Mr McCann said part of the share price lift in December 1999 flowed from the positive trading comment Fyffes made that month and the second share price lift in January 2000 was connected to Fyffes e-commerce business, worldoffruit.com.
Mr Feeney suggested that was "just not true". He said brokers were telling investors share purchasers were valuing Fyffes as an internet proposition and overlooking the trading situation.
Mr McCann said he had no doubt the worldoffruit story was very important in investment decisions at that time and the share price was at a level which was very unusual. Asked whether the word "mania" accurately described the situation relating to valuations put on fruit companies with internet investment, Mr McCann said the internet caused extraordinary values to be placed on companies.
Mr Feeney suggested that the Fyffes profit warning of March 20th coincided with a time when IT shares began to slide. Mr McCann said he believed Nasdaq shares went up after Fyffes profit warning but this was more of a matter for experts.
He disagreed that speculation that Fyffes might move to acquire the Dole fruit giant had any effect on Fyffes share price at the time.
Dealing with a profit warning issued by Fyffes on March 20th 2000, Mr Feeney repeatedly asked Mr McCann whether this was a bona fide statement of the company's true expectation for the trading year 2000, Mr McCann said it was a bona fide judgment by the company as was its outlook statement of December 14th, 1999. He said the company had acted in good faith on all occasions.
He said the December 14th statement, which referred to 2000 as being a year of "further" growth for Fyffes, did not set out the company's underlying concerns about difficulties in the business.
Mr Feeney again asked whether the statements of December 14th, 1999 and March 20th, 2000 indicated the true expectation of the company based on the information it then had. Mr McCann said Fyffes had information on December 14th, 1999 which was "not entirely consistent" with what it announced on that day but they felt it was too early to alert the market to the trading difficulties it was in.
Mr Feeney said he had still not received an answer to his question. Mr McCann said he could not answer the question "Yes" or "No" and had done his best to answer it.
Mr Feeney said Mr McCann could have had no doubt the market would expect the statement of March 20th, 2000, to be a true and accurate statement of Fyffes expectations.
Mr McCann said the results for Fyffes in 2000 were the worst in Fyffes history. Problems which began in 1999 were persisting and worsened into 2000 and Fyffes had never recovered later in 2000 from the losses in the first quarter of that year.
At the end of January 2000, Fyffes had underperformed for 10 months and there was nothing to suggest the situation would improve. Fyffes still hoped to benefit that year from two court cases in which it was involved. He said the March 20th announcement had said it was too early to predict the situation. It was hard to see how anyone at that point could have felt the budget would be met. The statement did hold out hope of meeting the end-of-year targets.
Mr Feeney said Fyffes still believed in March 2000 it would make expected profits of some €84 million. Mr McCann said: "That's what we said to the market." He added that Fyffes was still relying on court cases to contribute to profits.
In hindsight, he believed Fyffes had done insufficient work on its forecasts and added he personally was not involved in drafting the March 20th profit warning.
Mr Feeney said that, as chief executive, Mr McCann must have known the basis for that statement, it being only the second profit warning issued by Fyffes in 10 years. "Or was it invented?" he asked.
Mr McCann said the statement was of course not invented. He said he was struggling with it now because, with the benefit of hindsight, they knew what had occurred and he struggled with having left the possibility open of making targets for 2000.
Mr Feeney said the only logical basis for the March 20th statement and the expectation that the company could still achieve targets was that it expected trading would improve. Mr McCann said that the statement said the situation was too early to predict.
He suspected the reality was that they had not done a detailed review of what could occur in the rest of 2000 and in that sense it was too early to predict.
Mr Feeney said this was a blatant use of hindsight and, if that were true, the actions of Fyffes in the first months of 2000 would have been of someone not telling the truth. Mr McCann said he would not agree that the company statement of March 20th 2000 was untrue.
After Mr Feeney concluded his cross-examination yesterday afternoon, Mr Paul Sreenan SC, for Fyffes, began his re-examination of Mr McCann. That re-examination continues today before Ms Justice Laffoy.
