The Star returns to positive EBITDA as Sydney and Gold Coast revenue turns higher

The Star swings back to quarterly EBITDA profit

The Star Entertainment Group Limited (ASX:SGR) has delivered its first positive quarterly group EBITDA in the latest reporting sequence, posting $12 million for Q1 FY27 compared with a $13 million loss a year earlier and a $9 million loss in the June quarter. The $25 million year-on-year improvement gives the casino operator a more tangible sign of operational recovery, although it does not remove the financial and regulatory conditions still attached to that recovery.

Group revenue rose 2% year on year to $284 million and 8% from the previous quarter. Operating expenses fell 12% from the prior comparative period to $202 million, while unallocated corporate costs declined 29% to $23 million. The company attributed the improvement to revenue growth at its owned properties and cost-saving initiatives.

Sydney and Gold Coast produce the quarter's main lift

The Star Sydney and The Star Gold Coast generated combined revenue of $279 million, up 5% from Q1 FY26 and 9% from Q4 FY26. It was the first quarterly year-on-year revenue increase since The Star began quarterly reporting for the period ended September 2024. Electronic gaming machine revenue drove the increase, with the company pointing to recent marketing and revenue initiatives.

Combined segment EBITDA rose to $35 million from $14 million a year earlier. Gold Coast contributed $20 million, nearly double its prior-year result, on 12% higher revenue, while Sydney recorded $15 million of segment EBITDA compared with $3 million previously. Sydney's gaming growth was partly offset by weaker table-game and non-gaming revenue, including the effect of increased complimentary investment and the sale of its Event Centre in September 2025.

The improvement sits alongside the Sydney licence suspension extension, under which the NSW regulator kept the licence suspended and extended the manager's appointment to June 2027. The Gold Coast licence suspension has also been deferred to March 2027, with independent oversight continuing.

Brisbane's operating performance improves as fee revenue falls

The Star Brisbane's managed resort produced record EBITDAM of $37 million, up from $13 million in Q1 FY26 and $26 million in the previous quarter. That measure captures the operating performance of the resort before The Star's management fee and excludes costs incurred directly by the property owner, so it is not equivalent to the group's reported Brisbane segment EBITDA.

The distinction matters. The Star recognised only $4.5 million of Brisbane operator-fee revenue in the quarter, down from $13.8 million a year earlier after the amended Casino Management Agreement took effect. Brisbane segment EBITDA was therefore nil, despite the resort's stronger underlying operating measure. The amended fee followed the first stage of the JVP transaction completed in March 2026, part of the restructuring covered in the company's US$390 million refinancing earlier this year.

Cash generation remains the unresolved test

The Star said operating free cash flow excluding one-off items was positive and expects FY27 to be its first year of net annual operating cash inflows before one-off items in more than two years. The Appendix 4C, however, reported net cash used in operating activities of $15.5 million for the quarter. One-off proceeds included a tax settlement and returned rebate duty, while the cash flow statement also included a payment relating to historical underpaid casino duties.

Cash and cash equivalents fell from $267 million at 30 June to $239 million at 30 September. Including $80 million of restricted deposits, total cash and cash deposits were $319 million. The group reported $579.9 million of drawn financing facilities, leaving $6 million of unused facilities, while an outstanding $11.6 million payment-in-kind liability is intended to be settled through shares subject to shareholder approval.

Licence restrictions and going-concern risks remain active

The company said it maintained sufficient liquidity and continued to improve operations, but stressed that its position remained subject to material uncertainties, some of which are interdependent and outside its control. Those matters will be reassessed when the half-year financial statements are filed, and The Star said there was no assurance they would be resolved by then.

The remediation plan is shifting more customer-facing functions to the individual properties, while corporate retains oversight of remediation, legal, compliance, technology, audit, tax and consolidated reporting. The next evidence investors need is not simply another improved EBITDA quarter, but sustained cash generation alongside progress on the Sydney and Gold Coast licence processes and the proposed conversion of the PIK liability.