Only "insiders" knew in early 2000 that Fyffes plc was underperforming on the previous year by €14 million, a Fyffes executive director told the High Court yesterday.
Mr Jimmy Tolan, a member of the Fyffes board since 1999, said the market would not have had such precise information which, Fyffes claims in legal proceedings against DCC plc over controversial share sales in February 2000, was price-sensitive.
Mr Michael Cush SC, counsel for DCC, put it to Mr Tolan that the fact that Fyffes had granted 900,000 share options on January 25th, 2000 to some 40 to 50 people , including company secretary Mr Philip Halpenny, and had announced that information to the market, showed that Fyffes itself did not believe that information which had been made available by then to board members was price-sensitive.
Mr Tolan said he did not have a view on that assertion. He believed at the end of January 2000 that he had significant information that Fyffes was underperforming, but he had not considered it in the terms of being price-sensitive. He believed he had addressed his mind to that issue after Fyffes issued a profit warning on March 20th, 2000.
Mr Cush put it to Mr Tolan that it was a fact that Fyffes and no one within it took the view at the end of January 2000 that the alleged price-sensitive information was price-sensitive. Mr Tolan said he took the view at that time that Fyffes needed non-trading income to meet its half-year targets for 2000.
Referring to Fyffes' claim that it hoped to meet its half-year targets with gains from two court cases in which it was involved in early 2000, Mr Cush suggested there was not, until well into February 2000 and after the share sales, a single document in the case which linked the court cases with making the half-year figures. Mr Cush said DCC chief executive Mr Jim Flavin, who was also a director of Fyffes, had seen no such document.
Mr Tolan said there was no discussion with Mr Flavin about making the half-year figures. He said Mr Flavin had received by late January the information that Fyffes was €14 million behind the previous year.
Earlier, after Mr Cush put to Mr Tolan a number of questions regarding whether a company may deal in shares if it is in possession of price-sensitive information, Mr Bryan Murray SC, for Fyffes, objected that the various relevant stock exchange and other rules and codes had not been opened in full to Mr Tolan.
Ms Justice Laffoy said she had concerns about the concept of fact in the case and said there would be primary facts and there would be expert opinion. It seemed to her that what had been presented as fact on some occasions to date was almost verging on advocacy and she wanted the legal teams to take stock of that.
The judge said she was concerned whether the line of questioning to Mr Tolan regarding such matters (stock exchange listing rules) was a proper line of questioning for a witness who was proffered as a witness on the basis of his being a chartered accountant. Where an issue is a legal issue, it should be a matter for legal submission, she said, adding that she had become "perturbed" by the particular line of questioning.
Mr Cush, for DCC plc and Mr Flavin, was continuing his cross-examination of Mr Tolan on the 17th day of proceedings taken by Fyffes over alleged "insider dealing" by DCC in Fyffes shares on three dates in February 2000. The €106 million share sales yielded a profit of €85 million for DCC. The case is against DCC, Mr Flavin and two wholly owned DCC subsidiaries. The defendants deny that the share sales breached "insider dealing" provisions of the Companies Acts and plead the transactions were properly organised by Lotus Green Limited, one of the defendant DCC subsidiaries.
Yesterday, Mr Cush read to Mr Tolan reports from various analysts, dated between December and February 2000, relating to the performance of Fyffes and other companies involved in the fruit industry.
Mr Cush suggested the reports showed various analysts were aware of the difficulties in trading being experienced by Fyffes in early 2000 and that the market analysis of Fyffes' position was based on the market's own knowledge and on what Fyffes was telling it.
Mr Tolan said he disagreed with Mr Cush's analysis of what market feeling was towards Fyffes in the wake of its December 14th preliminary results and outlook statement which had predicted 2000 would be a year of "further growth" for Fyffes. He said various analysts did note difficulties in the banana market but they also differentiated Fyffes from its competitors and still predicted that Fyffes would meet, if not outstrip, its 2000 targets.
Mr Cush said he agreed that the analysts had maintained growth forecasts for Fyffes but said the various reports showed the market knew of Fyffes' trading difficulties. Mr Tolan said there was no comparison between Fyffes' earnings and performance and that of its competitors. He said there was "a world of difference" between what an analyst was seeking to infer and the precise information available to the company at the end of January that it was €14 million behind the prior year.
He also rejected a suggestion by Mr Cush that several documents, including Fyffes' budget, showed the anticipated real recovery for Fyffes was expected from February 2000.
Mr Cush suggested that media and market comment showed Fyffes' share price had begun to fall in March prior to the company issuing a profit warning on March 20th, 2000. He said the comments showed that, prior to the profit warning, dot.com mania had gone too far. Mr Tolan disagreed. He said the NASDAQ index was on March 24th, 2000 just 1.25 per cent below its peak. Mr Cush said his side would argue the NASDAQ index was not an appropriate comparator.
