Circadian returns capital to investors

Long-time biotech investment group Circadian (ASX: CIR) is planning to return AUD$0.50 cents per share to investors after posting a $5.8 million profit for the 2003-2004 financial year with an even better profit forecast for next year.

The payment was foreshadowed by the company when it announced its annual financial results at the beginning of August.

The proposed distribution will comprise a capital return of $0.38 and an unfranked special dividend of $0.12, with the split made purely for tax purposes, according to director Graeme Kaufman. Shareholder approval will be sought at a general meeting on October 8, with the record date scheduled for October 15.

With $17.4 cash to hand at the end of the financial year, Circadian will have to borrow money to cover the $20.1 million distribution while it waits for its $26.5 million pre-tax share from the sale of Axon Instruments earlier this year, said Kaufman.

Kaufman said the response from shareholders and analysts had been positive, and would be good news for the sector as a whole.

"It shows that further down the track as companies mature, biotechs can return value to their shareholders," he said.

"While we could spend this cash on new projects, it's very hard to find good projects. At the end of the day, there is a limit to how much we can put in [to R&D]," he said.

At the time of writing, Circadian's share price had risen nearly nine per cent to $2.47.