AE Portfolio Aggressive Holding Amalgamated Holdings Ltd (ASX: AHD) is the No. 1 movie exhibitor in Australia and New Zealand, operating primarily under the Event and BCC brands. It’s also the dominant cinema operator in Germany under the Cinestar brand.

It’s the 11th-largest cinema group globally, with more than 1,000 screens in Australia, New Zealand and Germany.

Although “the movies” has the reputation of a “recession-resistant” industry that dates to the Golden Age of Hollywood in the 1930s and ’40s, this perception is somewhat removed from reality.

It’s true that movie-going represents a cheaper entertainment alternative during times of economic distress, but the most significant factor in box office numbers remains the quality of the product exhibited.

Hollywood has gotten better at turning out dependable hits in recent years by relying on sequels, prequels, spinoffs and reboots featuring popular characters and story lines. Franchise movies slated for release in 2014 had predecessor sales of USD4.12 billion, down slightly from last year’s record USD4.17 billion.

But in 2015 that figure should jump to USD4.55 billion. Reliable hits abound for 2015, including the latest installments from the Avengers, Hunger Games, Star Wars, James Bond, Despicable Me and Fast and Furious franchises.

According to the most recent data available from the Australian Bureau of Statistics, an estimated 11.7 million Australians–67 percent of those aged 15 years and over–had been to a cinema in the preceding 12 months.

Going to the movies was an activity that most people (90 percent) enjoyed more than once, with over half (53 percent) of all attendees visiting a cinema five times or more during the preceding 12-month period.

Overall cinema attendance in Germany showed a slow but steady decline from 2009 through 2013. Traditional screens have held their own against multiplex screens, having nearly half of the total market, 49.2 percent against 46.9 percent for the multiplex screens.

Despite falling attendance, total box office exceeded EUR1 billion for both 2012 and 2013 due to rising ticket prices. And multiplexes take in 50.6 percent of box-office revenue.

Germany remains a static but stable cinema market and one that is still worth a billion euros per year.

In the Hotel and Resort markets, Amalgamated operates under the Rydges, QT and Atura brands. It also owns the Thredbo Alpine Resort and has significant property holdings.

Although there was no dividend growth during fiscal 2014, Amalgamated has a solid track record of boosting its payout, with six total increases over the past five years. The five-year dividend growth rate is 6.8 percent.

The company has been paying a dividend since November 1986, with no cuts since 2001, and the interim and final cuts that year were the only ones in the company’s 26-year payout history. A net cash position and low overall debt provide plenty of safeguard for the dividend going forward.

Making movies work as an investment is a matter of smoothing out box office revenue that can be as volatile as any Hollywood diva or director.

Amalgamated generates solid revenue from on-screen advertising and merchandise sales in its theaters.

And it’s one of the most technically advanced theater operators in the world, having upgraded exhibition technology to accommodate 3D, digital and IMAX projection that supports premium ticket prices.

Management has also updated legacy properties into new revenue generators, closed sites and converted them to hotel developments and sold others for third parties to develop.

Net profit after tax (NPAT) for the fiscal year ended June 30, 2014, was AUD78.6 million, a decline of 8.4 percent compared to fiscal 2013. Normalized profit before finance costs, significant items and tax declined by 2.4 percent to AUD115 million.

Results were heavily impacted by one of the worst ski seasons on record at the Thredbo alpine resort, the impact of the FIFA World Cup on German cinema results and a generally soft film lineup over the first quarter and a June slate that fell short compared to a prior corresponding period that broke records for ticket sales.

On a positive note, the Hotels segment posted generally strong results, particularly QT Sydney.

Total revenue for the year was AUD1.097 billion, a 5.5 percent increase compared to fiscal 2013.

Finance costs were up 22.9 percent to AUD6.9 million, while income tax expense increased 12 percent to AUD33.1 million.

Amalgamated declared a final dividend of AUD0.27 per share, taking the full-year dividend to AUD0.42. Both figures are in line with respective prior corresponding periods.

Earnings per share (EPS) slipped 8.5 percent to AUD0.497. The payout ratio for the period was 84.5 percent.

Major film releases for the year included The Hobbit: The Desolation of Smaug, Hunger Games: Catching Fire and Frozen. All three films did more than AUD30 million at the Australian box office. The Lego Movie did more than AUD25 million.

Earnings for Australian cinema exhibition were up 5.4 percent to AUD63.2 million. Box office was down 3.2 percent to AUD406 million.

Screen advertising grew by 20 percent to offset the impact of a weaker film lineup on ticket sales, while operating costs were significantly lower. And merchandising revenue per admission was also higher.

New Zealand generated growth of 12.6 percent to AUD4.2 million, as cost savings offset a 0.8 percent box office decline. Merchandising revenue was up 2.7 percent. The company also completed its digital rollout in New Zealand.

German exhibition earnings declined by 43.1 percent to 14.9 million, as box office declined by 13.3 percent.

German productions represented 20 percent of total box office, while live broadcasts of opera and other alternative content continued to grow in popularity, contributing a share of 1.6 percent versus 1 percent a year ago.

Amalgamated also opened an IMAX screen in Karlsruhe.

Occupancy across Amalgamated’s owned hotels grew by 4.9 percentage points to 72.2 percent, while the average room rate was up 4.6 percent to AUD157.

Hotels generated a profit of AUD32.8 million, up 59.8 percent compared to fiscal 2013.

The unit added four hotels under management during the year, including Rydges Sydney Central, and opened the fifth Australian QT Hotel in Canberra.

Amalgamated also launched the new value brand Atura Hotels, with the first property opening on the site of the company’s Skyline Drive property in Blacktown, Western Sydney.

Atura Hotel Blacktown was recently awarded Australia’s best mid-range hotel accommodation in the yearly Australian Hotel Association Awards for Excellence. It also won best mid-range hotel accommodation of the year at the New South Wales Tourism Accommodation Association Awards in July.

Earnings at the Thredbo Alpine Resort slid 44.9 percent to AUD6.5 million. It was one of the worst summers on record in the Southern Hemisphere, with any material snowfall during the season followed by warm winds and rain. The season closed on Sept. 16, 2013, three weeks before the traditional season end.

Skier days declined by 37,380 days on the prior year, with the average lift ticket price declining by AUD5.76 to AUD43.56 due to a higher proportion of season pass sales and discounted pricing in times of poor snow during the early and later periods of the season.

Normalized summer revenue grew by 6 percent to AUD10.5 million, with the Thredbo Alpine Hotel delivering 17 percent revenue growth and Mountain Biking up 23 percent.

The movie business has proven its ability to withstand softer economic conditions and to support Amalgamated’s other interests.

Amalgamated remains well placed to benefit from Hollywood’s ability to churn out tent-pole feature films capable of supporting multiple sequels, building and establishing loyal fans who will line up ahead of premiers to buy tickets.

Upside will be driven by box office that’s likely to be driven by another string of strong, tent-pole-type offerings from Hollywood over the balance of 2014 and into 2015.

Next year, in particular, looks likely to be a record-breaking year for box-office sales.

Amalgamated Holdings is now a buy under USD9 on the Australian Securities Exchange (ASX) using the symbol AHD.

Amalgamated Holdings closed at AUD9.50 on the ASX on Oct. 9. Based on the prevailing exchange rate as of this writing, that’s USD8.35 in US dollar terms.

Amalgamated Holdings’ fiscal year runs from Jul. 1 to Jun. 30. The company reports full financial and operating results twice a year; it typically posts first-half results in late February, with full fiscal year numbers out in late August.

Interim dividends are usually declared in February, along with financial and operating results for the first half of the fiscal year, with payment typically made a month later, in March. Final dividends are usually declared in August, along with fiscal year results, with payment made in September.

Amalgamated’s final dividend in respect of fiscal 2014 of AUD0.27, declared on Aug. 21, 2014, was paid on Sept. 18, 2014, to shareholders of record on Sept. 4. Shares traded ex-dividend on this declaration as of Sept. 2.

The fiscal 2014 final dividend was flat compared to fiscal 2013.

The most recent interim dividend of AUD0.15 per share was declared Feb. 20, 2014. It was paid March 20, 2014, to shareholders of record as of March 6. Shares traded ex-dividend on this declaration as of Feb. 28.

The fiscal 2014 interim dividend was also flat compared to fiscal 2013.

Management will declare the interim dividend for fiscal 2015 on or about Feb. 19, 2015, when it reports financial and operating results for the first six months of the financial year.

Dividends paid by Amalgamated are “qualified” for US tax purposes. Dividends will be taxed at a rate of 5 percent to 15 percent for investors’ first USD450,000 a year of income for couples and USD400,000 for single filers. Above that the maximum tax rate is 20 percent.

The Australian government withholds 5 percent to 15 percent, based on the US-Australia tax treaty on double taxation. The two countries have not taken the step of eliminating withholding from dividends paid in respect of shares held in a US IRA, as have the US and Canada.

Among the analysts who cover the stock three rate it a “buy” according to Bloomberg’s standardization of brokerage house recommendation terminology, while one rates it a “hold.” One brokerage that covers Amalgamated rates the stock a “sell.”