ferrets stock to watch: dca group limited

FerretS Stock to Watch: DCA GROUP LIMITED
09:00, Monday, 11 September 2006

AN OFFER IN THE PIPELINE BUT IT'S STILL CONFIDENTIAL

Sydney - Monday - September 11: (RWE Aust Business News)
********************************************************

OVERVIEW
********

It's a fascinating time to consider taking a position in the DCA
Group Ltd (ASX:DVC) as a number of proposals from an unidentified source
came to light on Friday and at the same time drawing a query from the
ASX by the end of the day.

On Friday morning DCA Group disclosed it had received what it
called "highly conditional" proposals regarding ownership from
independent parties.

The parties stated they would only proceed with the proposal if
they had the full support of the DCA board.

UBS Investment Bank and Freehills have been appointed to assist
in considering the proposals.

The company will make a further update in the event of any
material developments.

In the afternoon DCA Group replied to the ASX over the
announcement saying the proposals had been received over the past two
weeks.

"DCA has disclosed the existence of the proposals to ASX to
ensure the market was fully informed given the abnormal price/trading in
relation to DCA shares on 8 September 2006," the company said.

"Earlier disclosure was not warranted or required in order for
DCA to comply with its continuous disclosure requirements.

"The proposals remain confidential, incomplete and commercially
sensitive.

"Accordingly, there is no further information to disclose to the
market," DCA Group said.

The company said it believes that confidentiality in relation to
the proposals has been maintained at all times and, accordingly, it does
not consider that the increase in its share price or trading volume has
resulted from a breach or lapse of confidentiality in respect of the
proposals.

SHARE PRICE MOVEMENTS
*********************

Shares of DCA Group closed 45c higher at $3.05 on Friday.
Rolling high for the year has been $4.10 and low $2.21. Dividend is 8c
to yield 2.62 per cent. Earnings per share is 15.79c while p/e ratio is
19.43. The company has 473.5 million on issue with a market cap of $1.23
billion.

Last month, DCA Group announced its full-year profit and dividend
for the year ending 30 June, reporting:

* Revenue of $953 million - up 36 per cent;

* Profit after tax and HELTHYS distribution of $73.3m - up 30
per cent;

* Basic earnings per share of 15.7c - up 14 per cent;

* Final fully franked dividend of 4c per share - unchanged;

* Total dividends for the year of 8c per share - up 14 per cent.

Managing director David Vaux said the results were consistent
with market guidance and included the flagged NHS bid cost write-offs of
$2 million.

"We continue to demonstrate strong cash generation with
operating cash flow up 9 per cent to $125 million", Mr Vaux said.

"The company is well positioned for strong long-term growth in
demand for diagnostic imaging and aged care."

DCA Aged Care will continue to be primarily focused on
acquisitions and developments in Australia and New Zealand.

Imaging expects continuing strong demand resulting in solid
revenue growth in FY07.

This will be counterbalanced by absorbing the full-year impact
of higher remuneration costs.

While EBITDA growth will be reasonably strong, increased
depreciation charges following the completion of the fleet upgrade will
constrain I-Med's net profit growth in FY07.

Other points of note were:

* Imaging maintenance capex in FY07 will be less than
depreciation (about $56m).

* Prospective listing of a DCA property trust would improve
returns.

* Net profit after tax growth in FY07 is expected to be modest.

* In subsequent years, DCA expects stronger profit growth due to
increasing demand, stabilising remuneration costs, higher productivity
with updated equipment and IT platform, and aged care funding reforms.

BACKGROUND
**********

DCA Group is focused on health and aged care businesses which
are underpinned by attractive industry fundamentals.

Through its wholly owned subsidiaries, DCA operates businesses
in the areas of diagnostic imaging under the I-Med Network and
residential aged healthcare through DCA Aged Healthcare/Amity Group and
Guardian Healthcare Group.

The I-MED Network was formed on the 1st October 2004, when DCA
group merged its diagnostic imaging business, I-MED Ltd with MIA Group
Ltd.

The I-MED Network is the leading participant in the diagnostic
imaging industry in Australia and is well placed in the United Kingdom
where it operates under the Lodestone brand. In Australia, I-Med
operates clinics in all capital cities and in major regional and rural
centres.

It operates 229 clinics utilising the services of over 290
radiologists and radiation oncologists. The diagnostic imaging services
provided by the business cover all imaging modalities including PET, CT,
MRI, Ultrasound, Mammography, Nuclear Medicine, and general X-Rays.

In addition, the I-MED Network operates a radiation oncology
business which treats cancer patients using radiotherapy.

In the UK, Lodestone has 17 clinics and uses the services of
over 50 doctors.

DCA's purpose is to build a health and aged care company that
fulfills its duty of care to patients and residents and its duty to
increase shareholder value in an enduring way.

With approximately $2.368 billion in total assets and over 7,500
employees at June 30, DCA is a major player in the health and aged care
sectors.

It now has the scale and financial resources to be at the
forefront of medical advancements in patient care, technology change and
support systems.

"The DCA Group of people are critical to the successful
execution of our growth strategies - so we're committed to recruiting
the best people and retaining them," the company says.

ENDS