Fyffes' share price surge at the end of 1999 and early 2000 was primarily, if not totally, due to the impact of the company's launch of an e-commerce venture worldoffruit.com, corporate finance adviser Tom Byrne told the High Court yesterday.

He said that comments from brokers and press reports around this time reflected that the stock market perceived Fyffes as a serious internet or dotcom prospect.

In a report presented to the court, Mr Byrne said Fyffes, as a major distributor of fresh fruit, decided in 1999 to launch a business-to-business online trading system.

The initial response from the market was muted and it was not until a preliminary statement was issued that Fyffes' share price began rising.

It rose by over 20 per cent at the end of 1999. That upward movement accelerated in early 2000.

Mr Byrne said that a number of companies announced they were getting involved in the internet space, but Fyffes was a well established company.

There had been a widespread belief that worldoffruit.com would float later in 2000 and this served to fuel Fyffes' share increase. He believed that the share price increase at that time was due primarily if not totally to the impact of worldoffruit.com.

Michael Cush SC for DCC and Mr Flavin asked to what Mr Byrne attributed the fall in Fyffes' shares from a high on February 18th, 2000 and prior to a profit warning.

Mr Byrne said that sceptics were querying whether the valuations attributed to dotcom companies at that time were justified.

Mr Byrne was giving evidence as an expert witness on behalf of DCC, its chief executive Jim Flavin, and two subsidiaries S&L Investments and a Dutch company, Lotus Green (which owned 10.5 per cent of Fyffes shares). Yesterday was the 70th day of the hearing before Ms Justice Mary Laffoy.

Fyffes' claim concerns the sale of the DCC shareholding by Lotus Green between February 3rd and 14th, 2000 for €106 million, which yielded a profit of €86 million.

Fyffes alleges that the share deals were organised by DCC and Mr Flavin and breached "insider dealing" provisions in the Companies' Acts.

The defendants deny the claims and say Lotus Green dealt in the shares in a proper manner and that Mr Flavin had no involvement other than passing on to Lotus Green unsolicited bids for shares.

Mr Byrne told the court that he could understand the demand for Fyffes' shares coming between February 3rd and 14th following a period of constant positive comment about worldoffruit.com.

Fyffes was a world player in the fresh produce area and was saying that it was going to develop an e-commerce portal for that area.

These were people who were highly respected and had a good track record, he said.

Mr Byrne said that, apart from a reference to a reduction of 10 per cent in banana import volumes in Europe in fiscal 2000, the Fyffes outlook was a positive one, as reflected by comments of the Fyffes chairman, who indicated that "2000 would be another year of growth for Fyffes".

This was obviously the company's expectation at the time.

Fyffes' management could have taken the opportunity to insert a more cautionary comment in its preliminary statement if it had any concerns at that stage.

In the absence of such a statement, the market could reasonably assume that there were no expected trading difficulties which might impact on the market's assessment of Fyffes.

Analysts would have had no reason to materially change their forecast based on the preliminary statement and there was no evidence that they did in the month following its release.

A reasonable investor could only conclude that Fyffes did not believe that the projected losses for the first quarter of fiscal 2000 were of such significance that they would impact on the share price at the time.

This may have been because the first quarter was generally Fyffes' weakest and its management believed that there would be a recovery aided by cost-cutting and falling banana quantities, which was expected to lead to better prices.

In his opinion, at the time of the release by Fyffes of the preliminary statement, the company did not believe that there was trading information available which could materially impact on the share price.

Earlier, during cross-examination by Paul Gallagher SC for Fyffes, PricewaterhouseCoopers (PwC) partner Michael McGrail, who was also called on behalf of DCC companies and Mr Flavin, agreed that he had not read the Fyffes budget presentation for 2000 in preparing his 2004 report for the current legal proceedings.

He (Mr McGrail) formed the view, having spoken to a PwC colleague about the 2000 budget, that it was was not significant in terms of the opinion they were assessing in preparing the 2004 report. They were looking at Fyffes' first-quarter results compared to the previous year. It was clear in the management accounts (the November 1999 accounts said to be one of two pieces of alleged price sensitive information which Flavin had) what the budget position was and also clear in the Fyffes board minutes the view the board took in relation to performance against budget.

The budget concerned the full 12 months and, on behalf of DCC, he had been concerned with the alleged price sensitive information which covered two months.

Mr Gallagher asked if Mr McGrail was told that there was an allegation by Fyffes of the significance of the information in the December trading report, which would have been more apparent to Mr Flavin because of information which Mr Flavin had gleaned not only from other earlier board meetings but also from the budget.

Mr McGrail said he was aware of this claim but, in relation to the documentation which he had received to prepare his 2004 report, there was no such evidence.

The hearing resumes on Tuesday.