Profit Falls 42% at L1 Long Short Fund Amid Market Headwinds
L1 Long Short Fund Limited reported a net profit after tax of $99.52 million for FY2025, down 42% year-on-year, yet continues its steady dividend growth with a fully franked final dividend of 6.5 cents per share.
- Net profit after tax declined 42% to $99.52 million
- Income from ordinary activities fell 28% to $317.5 million
- Final fully franked dividend declared at 6.5 cents per share
- Net tangible asset backing per share increased slightly to $3.25 before tax
- Investment manager shifts focus to undervalued offshore stocks amid fully valued Australian market
Financial Performance Amid Market Challenges
L1 Long Short Fund Limited (ASX, LSF) has released its audited financial results for the year ended 30 June 2025, revealing a net profit after tax of $99.52 million. This represents a significant 42% decline compared to the previous year’s $170.29 million. Income from ordinary activities also dropped by 28% to $317.5 million. Despite these headwinds, the fund’s net tangible asset (NTA) backing per share before tax edged up 1% to $3.25, reflecting a resilient asset base.
Dividend Growth Continues Unabated
In a notable highlight, the Board declared a fully franked final dividend of 6.5 cents per share, payable on 7 October 2025. This follows an interim dividend of 6.25 cents paid earlier in April. Since initiating dividends in 2021 at 1.5 cents per share, LSF has achieved a compound annual growth rate of 23% in dividends, underscoring a commitment to delivering consistent income to shareholders. The company’s strong franking credit balance supports the sustainability of this dividend policy.
Investment Strategy and Market Outlook
The fund’s investment manager faced a challenging environment characterized by macroeconomic uncertainty, geopolitical risks, and a pronounced style headwind favoring Growth stocks over Value stocks. Australian market leadership was narrow, with Financials and Information Technology sectors dominating returns, sectors where LSF held limited or short positions. Nevertheless, the fund delivered positive absolute returns, particularly in gold equities, infrastructure, and select UK companies, through a disciplined quality value approach.
Looking ahead, the investment manager views the Australian equity market as fully valued, with several large-cap stocks trading at premium multiples relative to global peers. Consequently, the portfolio is increasingly tilted towards undervalued offshore stocks exhibiting strong earnings growth, shareholder-friendly management, and conservative balance sheets. This strategic positioning aims to capture compelling medium-term returns despite a slowing global macroeconomic backdrop.
Risk Management and Corporate Governance
LSF continues to manage a comprehensive risk framework overseen by its Audit & Risk Committee, addressing market, credit, liquidity, and leverage risks inherent in its long-short investment strategy. The fund maintains an on-market share buy-back program of up to 10%, though no shares were repurchased during the year. The Board comprises experienced independent and non-independent directors, with remuneration aligned to governance best practices. Ernst & Young audited the financial statements, confirming fair valuation of investments and accuracy of fee calculations.
Upcoming Annual General Meeting
The company has scheduled its Annual General Meeting for 11 November 2025, with details to be released shortly. Shareholders are reminded of the nomination deadline for director positions on 16 September 2025.
Bottom Line?
While profits have softened, L1 Long Short Fund’s disciplined approach and dividend growth signal resilience amid evolving market dynamics.
Questions in the middle?
- How will LSF’s offshore investment focus perform amid global economic uncertainties?
- What impact will continued Growth versus Value stock divergence have on LSF’s returns?
- Will the company activate its share buy-back program to support share price in volatile markets?
