Hi bvw1705,The cash flow figures are very important IMO as its...

Hi bvw1705,

The cash flow figures are very important IMO as its related to "cash management". Many succuessful and profitable businesses have gone into liquidation because they have not manage their cash in a wise way, so when we look at the cash flows we try to estimate/analyze the liquidity risk of the company especially that companies use the accrual method of accounting.

According to my calculations, the total number of shares is 517m, so the company will need around 18m to pay 3.5c distribution per share. If we accept jp37's calc as is (12m net cash after amortisation and capex) the company will need around 6m extra cash and they will probably get it from cash reserves, sale of assets, or from their debt facility.

Paying big dividends can make the share more attractive to investors, but it has its side effects on the company as well. This cash can be used to reduce gearing, or to expand and invest, so paying too much/unsustainable dividends can have a negative impact on the company in the long term.

In my case, i am not a long term holder of AJA, so i dont really care about the long term outlook of the company (sorry guys), and its the only share i am holding at the moment. I decided to buy it for the following reasons:

1- Its a defensive share and has no correlation with the rest of the market or its sector hence the XPJ lost around 90 points during the last couple of weeks while AJA's SP is relatively stable.

2- We are too close to distribution day, so i think its the perfect time to buy now at the current cheap price before its too late.

3- I remember the last two distributions, the SP has gone up to 44c. and then dropped to 40c the day following the ex dividend day , i expect the same to happen this year, so its not only the distribution that makes AJA a great buy atm, but the possiblity of a decent capital gain in the coming four weeks, so i think the potential reward is much bigger than the potential risk.

I am planning to sell after i get my dividends, and i might buy her again after reading the results for the second half of 2010.