The last witness in the long-running action by Fyffes against DCC alleging insider dealing in connection with the €106 million sale of the DCC stake in Fyffes in early 2000 will begin his evidence today.
The testimony from John Lawrie, a retired chief investment manager with Scottish Provident who is being called as an expert witness by DCC, is expected to conclude tomorrow.
Ms Justice Mary Laffoy, who has heard 76 days of evidence, is expected to adjourn the proceedings to allow the parties exchange written submissions on the legal issues. The hearing will then resume with oral legal submissions by the parties.
The action is against DCC, its chief executive Jim Flavin and two DCC subsidiaries - S&L Investments and Lotus Green.
The defendants have denied insider dealing and have pleaded the sales were properly organised by Lotus. The latter is a Dutch-registered subsidiary to which beneficial ownership of the Fyffes stake was transferred in 1995 by DCC and S&L with the objective of avoiding payment of capital gains tax on any subsequent sale of the shareholding.
Yesterday, Paul Sreenan SC, for Fyffes, concluded his cross-examination of Frank O'Brien, a financial markets consultant who was called as an expert witness for DCC and has given evidence that information regarding Fyffes accounts for November and December 1999, which was available to Mr Flavin in January 2000, was not price sensitive.
Mr Sreenan suggested the Fyffes share price had drifted from July 1999 until the company released its preliminary results on December 14th, 1999. Mr O'Brien said there was a broad trend downwards from February 1999, which accelerated in the latter half of the year, due to the market's disillusionment with the banana sector.
He agreed the rise in the share price from early 2000 was almost certainly due to Fyffes proposed e-commerce venture worldoffruit.com.
He agreed the share price had reacted to the Fyffes profit warning of March 20th, 2000. He said there was news in that announcement which the market didn't expect.
He agreed he had written in an article on April 6th, 2000, that analysts had reduced their forecasts in response to the profit warning. He wasn't sure if they all had.
He also agreed that news of a multiples price war would be a matter of concern for the market, particularly if such a war was to affect Fyffes' UK operation.
He agreed cost control was a fundamental element of managing a produce business and was a primary means of achieving profit. He agreed cost control in Fyffes was not something new.
He said the unusual thing about the financial year to the end of October 1999 was a substantial reduction in costs as opposed to cost control.
Mr O'Brien said it was known that bananas were a far bigger proportion of Fyffes' profit than its turnover. He agreed the market believed in the second half of 1999 that the margins on bananas were good. He agreed that, from the Fyffes accounts available to Mr Flavin in January 2000, the court now knew the margins on bananas were negative for November and December 1999.
He agreed the article he had written in April 2000 did not say the figures for Fyffes in 1999 showed a margin "squeeze". He said the article was not a professional, institutional investment article but was for the "man on the street".
When he placed a value of €2.20 on Fyffes shares in April 2000, he was valuing the core business at €2 and allocating a 20 cent value to worldoffruit.com.
In re-examination by Michael Cush SC, for DCC, Mr O'Brien said he would attach significance to situations where negative trading information came in the form of profit warnings. He said the primary source of robust data was a company because it knew what was going on.
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