08 March 2014

Summary company financials (m)

Year end March FY2012 FY2013 FY2014E FY2015E
Price 2.50 Revenue 683.0 869.2 1,116.2 1,259.6
Market cap (m) 363.6 25.8% 27.3% 28.4% 12.9%
Enterprise value (m) 109.7 EBITDA 62.9 83.4 109.9 98.5
9.2% 9.6% 9.8% 7.8%
Free float 61% Net income 22.7 31.2 35.9 24.4
Net cash -142.7 -212.4 -253.9 -272.4
EV/Sales 0.02 0.14 0.10 0.00
EV/EBITDA 0.3 1.5 1.0 0.0
PE 8.2 11.5 10.1 10.8
Dart Group plc
Revenue growth
EBITDA margin
We all like a high growth internet stock in theory, but it is rare to find examples trading at attractive valuation levels in practice. A
stock such as ASOS Plc may have an exciting growth story for example with 40% annual revenue growth, but its shares trade at a
heady 5.3x Enterprise Value to Revenue and more than 100x PE.

An exception, however, exists in one of the largest UK package holidays operators, internet site Jet2Holidays.com. The business is
set to comprise more than 50% of the revenue of AIM-listed, 12x PE, Dart Group Plc, and has had a remarkable growth trajectory.

Jet2Holidays.com (J2H) was launched by the parent company Dart Group Plc in 2007, and here is its annual growth since have
financials been broken out:

Year J2H customers Growth J2H Revenue % Dart Group revenue J2H EBITDA
2008 34,000
2009 36,000 6%
2010 64,000 78%
2011 98,000 53% 48m 9%
2012 216,000 120% 115m 17% 2.8m
2013 417,390 114% 245m 28% 6.8m
2014E* 848,500 103% 515m 48% 15.5m
*The estimated figures for full year to March 2014 are based on the H1 2014 disclosure from Dart Group Plc. Typically 75% of Jet2Holidays
revenue is contributed from the H1 period.

With the revenue from Jet2Holidays.com set to represent the majority of Dart Group revenues by mid calendar 2014, and growth
rates exceeding 100%, the low valuation rating of Dart looks set to become increasingly obvious.

The remaining divisions of Dart Group are not without their own value. Dart also operates the pan-European budget airline Jet2,
which, by owning 42 out of its 50 aircraft outright, is growing at 19% per annum without the operational leverage of some its
peers. Jet2 had revenues to FY March 2014 we estimate at 670m, flying 5.5m passengers. This still leaves ample room for growth,
and with Jet2 around 10% the size of Ryanair or EasyJet -- plus given Jet2s superior growth rates -- we would not discount Jet2
becoming a substantial player. Jet2 operating margins, at 5%, versus a comparable 12% margin at Ryanair and 11% margin at
EasyJet, may also have upside as this division matures.

Dart also owns logistics and distribution group Fowler Welch. At just 18% of group revenue, and with 2% growth, investors may
feel less excited about this division. It does however represent a cashflow positive contribution to the group offering stability in
periods of potential airline and travel revenue volatility. Dart guides a positive outlook for this division with a new distribution
centre allowing them to accept an encouraging pipeline of new business opportunities.

So to recap, Dart Group Plc the core value driver an internet package holidays website Jet2Holidays.com, in the forward financial
year Jet2Holidays to deliver more than 50% of group revenue and for the last 3 years been growing at c. 100% per annum. This
division is supported by businesses comprising a budget airline, and logistics, both of which are also posting positive revenue
growth.

Dart Group has net cash and a market capitalisation of 405 million. Since its listing in 1991, Dart has been led by 38% shareholder
and founder Philip Meeson. Investors looking for reassurance as to Philips ability as CEO should take comfort from Darts average
16% per annum operating profit and shareholders funds growth since 1991 (for comparison Berkshire Hathaway achieved 15% per
annum shareholders funds growth over the same period). Whilst there have been no dedicated equity raisings since IPO to finance
this growth, option issuance has increased share count by around 1% per annum. In his youth Philip was a pilot with the Royal
Airforce and also five times British Flight Aerobatics Champion. Philip has controlled Dart Group and its precursor companies since
1983 and our take is that he combines a rare combination of business pragmatism with risk taking, as well as having a lifetime of
experience in the airline and travel business sectors.