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Wednesday 19 May, 2004

Financial Serv. Auth

FSA fines Universal Salvage

Financial Services Authority
19 May 2004


For immediate release

19 May 2004

£100,000 levied in fines for Listing Rule breach

The Financial Services Authority today fined Universal Salvage PLC ('Universal')
£90,000 for breaching the Listing Rules.  Martin Christopher Hynes ('Mr Hynes'),
former Chief Executive Officer of Universal, has also been fined £10,000 for
being knowingly concerned in the breach.

The FSA found that Universal breached the Listing Rules by failing to notify the
market of the loss of a major contract, which was likely to lead to a
substantial movement in the price of its listed securities.  Mr Hynes was the
Director best placed to take the appropriate steps to ensure that Universal
notified the market without delay once the obligation was triggered on the 16
April 2002.  Universal did not make the announcement until the 23 April 2002.
The announcement also reported worse than expected trading figures.  The
company's share price fell 55% on the day of the announcement.

Andrew Procter, Director of Enforcement, said:

'The delay, and therefore this enforcement action, could have been avoided
entirely by the taking of responsible preparatory measures by the company when
it first emerged that the contract might not be renewed.  Mr Hynes was aware of
this development and was the director best placed to ensure that Universal
complied with its obligations under the listing rules.

'The obligation on listed companies, and their directors, to inform the market
without delay of any changes to their business is a fundamental protection for
shareholders.  Timely disclosure is vital to ensuring the smooth operation of
efficient, orderly and clean markets.  That this is the second director of a
listed company that we have fined in as many months demonstrates how seriously
we expect firms to take these responsibilities.'

Universal is involved in the vehicle salvage business.  In 1998 it won a
contract with Direct Line which by March 2002 accounted for approximately 40% of
the vehicles it handled.  Direct Line first told Universal that it intended to
terminate this contract at a meeting on 18 March 2002 attended by, amongst
others, Mr Hynes.  Universal tried in correspondence to persuade Direct Line not
to terminate the contract, but Direct Line confirmed the termination in a letter
received by Universal on 16 April 2002.

In the meantime Universal conducted an analysis as to the likely financial
impact of the contract being terminated and explored options for costs savings
with a view to presenting the findings to a Board Meeting on 18 April 2002.
However, upon receiving confirmation of the termination of the contract,
Universal took no steps to obtain advice from West LB, its corporate advisers,
bring the Board Meeting forward or take any other preparatory measures.

At the Board Meeting on Thursday 18 April, it was agreed to seek advice from
West LB as to whether to make an announcement to the market regarding the loss
of the Direct Line contract and also poor trading figures in the final quarter
of the then-current financial year.  Mr Hynes was given responsibility for
consulting with West LB.  Mr Hynes contacted West LB later that day and met with
them on the afternoon of Monday 22 April.  At that meeting West LB advised
Universal to make an announcement to the market.  The announcement was released
through the Regulatory Information Service at 3.24pm on Tuesday 23 April

In deciding the appropriate fine for Universal and Mr Hynes the FSA gave credit
to both parties for their co-operation in the investigation and in resolving the
matter expeditiously.


 1. The full text of the Decision from the Regulatory Decisions Committee of the
    FSA and its censure is available at

 2. Paragraph 9.1 of the Listing Rules states that:

'A company must notify the Company Announcements Office without delay of any
major developments in its sphere of activity which are not public knowledge
which may:

a)      by virtue of the effect of those developments on its assets and
liabilities or financial position or on the general course of its business, lead
to substantial movement in the price of its listed securities.

3.      Under section 91(2) of the Financial Services and Markets Act 2000 if
the FSA considers that a director of a company was knowingly concerned in the
company's contravention of the Listing Rules, it may impose on him a penalty of
such amount as it considers appropriate.

 4. FSA took on new powers under the Financial Services and Markets Act 2000 on 1
    December 2001.  The disciplinary sanctions available to the FSA for breaches
    of the Listing Rules that take place on or after 1 December 2001 include a
    fine or a public statement.

 5. The FSA regulates the financial services industry and has four objectives
    under the Financial Services and Markets Act 2000: maintaining market
    confidence; promoting public understanding of the financial system; securing
    the appropriate degree of protection of consumers; and fighting financial

 6. The FSA aims to maintain efficient, orderly and clean financial markets and
    help retail consumers achieve a fair deal.


Press:                          Kate Burns                020 7066 3232
                                Outside office hours      07625 197 939

Public:                         FSA Consumer Helpline     0845 606 1234


                      This information is provided by RNS
            The company news service from the London Stock Exchange