L1 Long Short Fund has delivered a dramatic earnings upgrade in FY26, with profit after tax surging to $634.6 million from $99.5 million in the prior year. Earnings per share jumped to 100.41 cents from just 15.91 cents, a six-fold increase that reflects substantially stronger performance from the underlying portfolio. The company’s net tangible asset backing has also expanded, rising to 4.32 dollars per share on a pre-tax basis and 3.25 dollars on an after-tax basis, up from 3.95 and 3.12 dollars respectively in FY25.
Alongside this earnings performance, the Board has lifted its dividend commitment to shareholders. Investors have received or will receive a total of 14.6 cents per share across four distributions during and after the financial year: three interim dividends of 3.50, 3.60, and 3.70 cents, capped with a final dividend of 3.80 cents to be paid on 23 September 2026. This brings the company’s dividend CAGR to 22 percent over the six years since its first payout of 1.5 cents per share in October 2020. The Board moved to a quarterly dividend cadence during FY26, replacing the previous semi-annual schedule and signaling confidence in sustained earnings power.
The fully franked nature of the dividends underscores the strength of LSF’s underlying cash generation. The company’s franking credits balance remains robust, suggesting the Board sees durable capacity to maintain and grow the dividend stream. For Australian investors, the combination of growing distribution income with full franking is a material benefit, as it provides both yield and tax efficiency through the franking credit mechanism.
The earnings expansion and NTA growth together suggest the fund’s portfolio companies have performed well through the period. Income before tax nearly quadrupled to $1.29 billion, indicating both operational strength across the portfolio and substantial gains on the investment book. The scale of these gains, coupled with the Board’s willingness to distribute so much of the profit, speaks to the quality of underlying holdings and the fund’s ability to monetize value when appropriate.
For investors, the shift to quarterly dividends is particularly significant because it reflects not just a near-term commitment but a structural decision to reshape shareholder returns and capital distribution. This typically signals management confidence that the profit base can sustain this new rhythm. Shareholders should watch for commentary in the Annual Report regarding portfolio concentration, market conditions, and the durability of these earnings levels. The announcement does not yet provide detail on how much of the $1.29 billion in pre-tax income came from realised gains versus recurring earnings from portfolio companies, which will be material context for assessing sustainability. The final dividend ex-date is 1 September, with the allocation price for the Dividend Reinvestment Plan calculated over the five trading days from that date.
This announcement is price sensitive and has been flagged as material by the ASX.
View the full ASX announcement (PDF)
About L1 Long Short Fund Limited (ASX: LSF)
L1 Long Short Fund Limited is a listed investment company (LIC) listed on the Australian Securities Exchange that implements a long/short investment strategy. The fund aims to achieve strong, positive, risk-adjusted returns over the long term measured in Australian dollars whilst seeking to preserve shareholder capital. It operates as a closed-ended investment vehicle managed by L1 Capital, with assets under management of approximately 2.7 billion dollars.
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