Investor's Champion Blog
Provides refreshingly forthright, independent comment on predominantly small cap companies and specialist investment funds. Informed opinion, based on first-hand research, but pulls no punches in exposing management weaknesses.

Dart Group - a positive trading update, but corporate governance issues remain!

The pre-close trading update from Dart Group, the somewhat bizarrely structured low cost airline ( and distribution group (Fowler Welch-Coolchain) resulted in a steep rise in the share price. I have always considered this an interesting little company but one which leaves any analyst scratching their head.

Since the announcement of its interim results in December, the Group has continued to trade ahead of market (2 brokers cover!) expectations over the second half of the financial year with cash flow remaining strong and positive cash balances at year end – expectations are for £7m to £10m cash at year end. Full year results are now expected to be ahead of current market expectations (previously 10.2p per share), as a result of both the strong trading performance and one-off treasury gains, driven by the strength of the US dollar.

The driver of this has been which has apparently benefited from a cautious approach to its winter schedule, supplemented by a strong charter programme. Fowler Welch-Coolchain, performed in line. also appears to have benefited from the collapse of airline XL, which led to some additional one-off flying.

All very positive and the shares do look cheap trading as they are at sub 5x current year estimates and sub 1x EV/EBITDA for the current year. However, the real issue with Dart is the dominating influence of the group’s Chief Executive, who also happens to be Executive Chairman, 40% shareholder and unfortunately somewaht reluctant shareholder communicator- why bother if you own 40%!

Given the hullabaloo surrounding corporate governance at the moment isn’t it time for Dart to appoint an independent Chairman and indeed other independent Directors. The board of this substantial business with revenues of over £400m currently consists of 2 Execs and 2 Non Execs!

I also remain unconvinced of the logic behind the 2 unconnected businesses sitting in a small AIM quoted group. Sector classification is bizarrely Industrial Transportation yet approximately 70% of revenue is from Aviation with the closest quoted peer probably Easyjet!

Each operating businesses would clearly be attractive to different acquirers yet any deal is almost solely dependent on one individual – it’s an interesting one!


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