I reckon shareholders would be better off if they did a capital return, the amount of cash they're holding is a weight on the share price. A 5 cent capital return would mean a leaner balance sheet, it still leaves them with plenty of cash, and there is more chance the market will assign a higher earnings multiple. Currently if the share price doubles to 30c, the market cap goes to $140m, an increase of $70m. If they did a 5c cap return, the share price would adjust to around 10c. If the share price doubles to 20c the market cap would be 100m, an increase of $50m. So in short its less effort to double from 10c to 20c, than it is from 15c to 30c. Also a company that generates a half yearly profit of $9.5m looks cheaper if the market cap is $50m than $70m.
(I'm using an issued capital of 500m shares for these calcs).
UML Price at posting:
14.5¢ Sentiment: None Disclosure: Held