Versant Partners Initiates Coverage of Discovery Air

Versant Partners released a report on Discovery Air (DA.A:TSX) today.

Discovery acquired Wellington Financial Fund II portfolio company Top Aces in 2007.

Current price: $1.28
One-year target: $2.00
Target return: 56%

Investment Thesis

We are initiating coverage of Discovery Air with a BUY recommendation and a one-year target price
of $2.00 per share. We believe that the company’s component subsidiaries are solidly positioned for
organic growth and that there are additional opportunities to create value for shareholders
through further consolidation.

VALUATION

We base our valuation on a 20× P/E multiple applied to our F2009 EPS estimate of $0.10. Our
target therefore represents 56% upside potential from the current share price.

FOCUS POINTS

Proven track record of acquiring niche Canadian aviation companies with strong profitability and
solid organic growth prospects.

A major presence in Northern Canada, which is currently benefiting from a boom in natural
resources-related activity.

Top Aces, the most recent major acquisition, provides a significant opportunity to provide
training support for Canada’s military and brings a strong foundation to bid on similar
opportunities in the United States and abroad.

We believe that there are still numerous privately held niche aviation companies that would fit
Discovery Air’s acquisition criteria.“

See Versant Partners Report on Discover Air

MJW
(disclosure - Wellington Financial Fund II and certain managers/LPs own shres in DA.A as a result of the acquisition of portfolio company Top Aces.)