Liven AS - Consolidated unaudited interim report for the IV quarter and 12 months of 2024
A webinar on the presentation of the results (in Estonian only) will take place
on 30 January at 13:00 (EET), more information
(https://view.news.eu.nasdaq.com/view?id=b0070e17ef6e0a5a277a653b7716f2610&lang=
en).
Although there were no huge positive development leaps in the operating
environment, there were still signs of renewed optimism in the residential
property market. During the fourth quarter, we signed 34 contracts under the law
of obligation (sales contract; 2024 Q3: 32; 2023 Q4: 29) and in total during 12
months, we signed 129 sales contracts (2023: 69). Most of the new sales during
the quarter came from the Uus Meremaa ready for sale homes and from signing new
sale contracts for the Iseära phase II terraced houses and apartments under
construction. The number of new sales contracts signed during the year is
Liven's highest annual performance to date.
Liven's market share of new sales in Tallinn and the surrounding area is
estimated to have been around 10% in 2024, up from the 6-7% estimate of the
previous two years, and highest result in the market. During the year we signed
new sales contracts in the sales revenue volume of EUR 42 million.
The weekly sales ratio, which represents the number of homes going out of supply
under sales contract or paid reservations, improved to a higher level in the
third quarter compared to previous quarters and remained higher during the
fourth quarter. Over the period average was 1.7% and even exceeded 2.0% in
October. The long-term average is considered to be 1.5-2.0%.
During the fourth quarter, we handed over a total of 24 new homes in
developments completed under the real right contract (2024 Q3: 27; 2023 Q4:
74). Of these, 14 homes in phase II of the Uus-Meremaa development, 3 in phase
II of the Iseära development, 6 in phase I of the Luuslangi development and 1
home from the Magdaleena development. In the same order, the projects also had
an impact on the financial results of the fourth quarter. Revenue for the
quarter was EUR 8,164 thousand (2024 Q3: EUR 7,057 thousand; 2023 Q4: EUR
16,713 thousand) and net profit for the period was EUR -78 thousand (2024 Q3:
EUR +342 thousand; 2023 Q4: EUR +2,245 thousand). The fourth quarter results
were negatively impacted by a combination of factors, including a reduction in
the budgeted profitability of previously completed projects, increased forward-
looking costs (including marketing expenses and expenses related to Berlin
operations), a lower share of capitalizable costs and general cost inflation.
The result also includes a gain of EUR 286 thousand on the change in fair value
of the commercial property in Türi Street.
Throughout the year, we delivered 92 new homes (2023: 148) out of possible 110,
generated sales revenue of EUR 27,266 thousand (2023: EUR 35,765 thousand) and a
net profit of EUR 558 thousand (2023: EUR 775 thousand).
Assets increased by EUR 5,193 thousand during the quarter (by EUR 9,739 thousand
during the year) to EUR 78,298 thousand at the end of the period. The main
contribution to the increase in the balance was from construction related
increase in inventories of the Iseära and Regati projects and receivables from
buyers arising from the sales of the Uus-Meremaa homes close to the year-end,
which were received shortly after beginning of the new year.
During the quarter, we received new bank loans of EUR 4,110 thousand to finance
the construction of projects. Together with home deliveries, we repaid EUR
1,302 thousand of earlier construction loans. Total borrowings with other loans
increased by EUR 2,877 thousand to EUR 47,252 thousand during the quarter.
Despite the increase in the balance of construction loans, short-term loan
commitments decreased by EUR 3,332 thousand to EUR 6,405 thousand, mainly due to
a significant decrease in the loan balance of the Uus-Meremaa project and the
refinancing of the loan agreements for the Iseära development. The borrowings
increased by EUR 8,822 thousand during the year with the main contribution from
the issue of the green bonds (EUR 6,200 thousand).
The balance of cash and cash equivalents increased by EUR 1,110 during the
quarter to EUR 5,916, mainly due to sales in the fourth quarter. The balance
increased by EUR 2,184 thousand during the year.
Consolidated statement of financial position
(in thousands of euros) 31.12.2024 31.12.2023
----------------------------------------------------------------------------
Current assets
Cash and cash equivalents 5,905 3,721
Trade and other receivables 1,270 1,326
Prepayments 385 321
Inventories 67,902 62,112
----------------------------------------------------------------------------
Total current assets 75,462 67,480
----------------------------------------------------------------------------
Non-current assets
Prepayments 44 0
Investment property 1,350 0
Property, plant and equipment 423 388
Intangible assets 401 296
Right-of-use assets 618 395
----------------------------------------------------------------------------
Total non-current assets 2,836 1,079
----------------------------------------------------------------------------
TOTAL ASSETS 78,298 68,559
----------------------------------------------------------------------------
Current liabilities
Borrowings 6,405 17,106
Trade and other payables 11,234 9,121
Provisions 99 2,384
----------------------------------------------------------------------------
Total current liabilities 17,739 28,611
----------------------------------------------------------------------------
Non-current liabilities
Borrowings 40,851 21,328
Trade and other payables 1,398 469
Provisions 72 29
----------------------------------------------------------------------------
Total non-current liabilities 42,322 21,826
----------------------------------------------------------------------------
Total liabilities 60,061 50,437
----------------------------------------------------------------------------
Equity
Share capital 1,190 1,183
Share premium 9,562 9,339
Share option reserve 317 363
Own (treasury) shares 1 -1
Statutory capital reserve 118 115
Retained earnings (prior periods) 6,491 6,347
Profit for the year 558 775
Total equity attributable to owners of the parent 18,237 18,122
----------------------------------------------------------------------------
Total equity 18,237 18,122
----------------------------------------------------------------------------
TOTAL LIABILITIES AND EQUITY 78,298 68,559
----------------------------------------------------------------------------
Consolidated statement of comprehensive income
2024 12 2023 12
2024 Q4 2023 Q4 months months
(in thousands of (October- (October- (January- (January-
euros) December) December) December) December)
-------------------------------------------------------------------------------
Revenue 8,164 16,713 27,266 35,765
Cost of sales ?7,477 -13,867 ?23,429 -32,681
-------------------------------------------------------------------------------
Gross profit 687 2,846 3,837 3,084
-------------------------------------------------------------------------------
Distribution costs ?439 -332 ?1,418 -1 022
Administrative
expenses ?426 -266 ?1,419 -1 200
Other operating
income 279 -26 312 14
Other operating
expenses ?10 1 ?26 -8
-------------------------------------------------------------------------------
Operating profit 91 2,222 1,287 868
-------------------------------------------------------------------------------
Finance income 23 8 79 17
Finance costs ?199 15 ?647 -6
Total finance income
and finance costs ?177 23 ?568 11
-------------------------------------------------------------------------------
Profit before tax ?86 2,245 719 879
-------------------------------------------------------------------------------
Income tax expense 8 0 ?162 -104
-------------------------------------------------------------------------------
Net profit for the
year ?78 2,245 558 775
-------------------------------------------------------------------------------
Attributable to
owners of the
parent ?78 2,245 558 775
-------------------------------------------------------------------------------
Comprehensive
income for the year -78 2,245 558 775
-------------------------------------------------------------------------------
Attributable to
owners of the
parent -78 2,245 558 775
-------------------------------------------------------------------------------
Basic profit/loss
per share -0.007 0.190 0.047 0.066
Diluted profit/loss
per share -0.006 0.184 0.046 0.064
-------------------------------------------------------------------------------
The customer satisfaction score for the last 12 months, collected at different
stages of the customer journey, increased to 9.2 out of 10 by the end of the
year (Q3 2024: 8.4; Q4 2023: 8.0). The improvement in the score reflects our
focused efforts on increasing the number responses and the feedback results
throughout the year.
Key events
In development projects: At the beginning of 2024, the detailed spatial plan for
Kadaka tee 88 was adopted, and the construction of the Iseära phase II apartment
buildings began in the summer, the last five terraced houses. In the spring, we
signed an agreement for long-term financing of commercial space in the Väike-
Tallinn project, and in the autumn we started pre-sales of the Jalami 6
apartment building in Luuslangi phase II. In the second half of the year, design
specifications were issued for the design of a 30-apartment apartment building
at Virmalise 3, and the Kalda 5 property in Nõmme was acquired with the existing
detailed spatial plan and building permit, and an architectural competition was
held during the year. In the last quarter of 2024, we refinanced loan agreements
related to the Iseära development with an outstanding balance of EUR 4,873
thousand and financed infrastructure construction. The new loan amount was EUR
5,700 thousand maturing in the fourth quarter of 2027. For a more detailed
overview of events and developments in the development projects, see the
"Overview of projects" section.
According to the Kantar EMOR survey, published in the fourth quarter, Liven was
this time in first place in the reputation ranking of real estate developers,
ahead of the competitors in terms of reputation index, attitude and
attractiveness of developments.
In addition, during the year we increased share capital in connection with the
employee share option program, paid EUR 635 thousand in dividends, and issued
public green bonds in the amount of EUR 6 200 thousand. There have been no
significant events since the reporting date that would not have been reflected
in the financial statements for the fourth quarter.
Significant developments in the economic environment in the period under review
Throughout 2024, the 6-month Euribor (Euribor) decreased, with the Euribor at
3.86% at the beginning of 2024 and reaching 2.586% by the end of 2024
(30.09.2024: 3.11%)
As inflation in the euro area has been slowing as expected, the Governing
Council of the European Central Bank decided to cut key interest rates by 25
basis points in December, as it did on three previous occasions in 2024. This
decision was in line with previous forecasts by economic analysts.
In Estonia, the annual rate of increase in consumer prices was 3.9% in the
fourth quarter of 2024 (third quarter of 2024: 3.0%). In total, the consumer
price index rose by 3.5% in 2024 compared with the average for 2023. Changes in
the prices of food and non-alcoholic beverages had the largest impact on the
index.
According to the latest data from Statistics Estonia, the estimated annual
increase in average gross wages in the fourth quarter (8.3%) exceeded the
increase in prices. Despite this, consumer confidence, which had remained low
for a long time, remained weak in the latest quarter. Consumers are more likely
to view the purchase of durable goods as a bargain in the next 12 months than
they do now, leading to a general sentiment to continue to be on hold and to
delay purchasing decisions. Based on the recent data from the Institute of
Economic Research, the consumer confidence indicator is at its lowest level of
the year in the fourth quarter (Q4 2024 average: -36; 9-month 2024 average: -31;
2023 average: -30).
Despite the above, there were signs of activation of home buyers in the market.
For example, according to the Land Statistical Office's transaction statistics,
the number of transactions of apartments (residental) in Tallinn increased by
14.8% compared to the previous quarter (Q4 2024: 2,466 transactions; Q3
2024: 2,149 transactions). Activity has increased in the last two quarters of
2024. Overall, the number of transactions for the purchase and sale of
apartments in Tallinn has decreased by 3% (2024: 8,274 transactions;
2023: 8,537 transactions). However, activity has increased mainly in the
aftermarket and sales of new developments have remained rather subdued.
Compared to the third quarter of 2024, the offer prices of new developments
remained stable in the fourth quarter of 2024, showing an increase only of
0.2%. On an annual basis, offer prices have increased by 3.9% on average
compared to 2023. Based on the data collected from the market, the number of
transactions increased by 52% compared to the previous quarter (Q4 2024: 559
transactions; Q3 2024: 368 transactions), which is also 33% higher than the
sales performance in Q4 2023 (421 transactions). On an annual basis, the number
of sales of new developments in 2024 increased by 34.7% compared to 2023.
Due to the completion of construction of several development projects in spring
and summer 2024 and the modest sales volume, the stock of unsold ready-to-move-
in apartments remained relatively high in the end of quarter, reaching 1,011
apartments (Q3 2024: 931; Q4 2023: 889). Consequently, options for homebuyers
and market competition remain high.
Outlook for the future
Despite some recovery in the market in the second half of 2024, the external
environment's impact on demand and sales will remain a key challenge in 2025. We
expect a continuation of the gradual improvement in the external factors
affecting the residential real estate sector, in particular the decline in
interest rates and real wage growth. We are ready to quickly provide new supply
to the market in case of increase in demand.
The coming years will continue to be environmentally challenging and risky,
including for all levels of the public sector. Despite positive developments,
significant challenges remain in Tallinn's planning procedures. We continue to
expect several long-drawn-out procedures to reach a conclusion in the first half
of 2025. Planned tax rate increases and additional taxes will increase the sales
prices of new developments in the coming years, reducing incomes and the
availability of real estate.
In real estate development, results are achieved with a significant time lag and
an increase in marketing expenses in the periods preceding the sales growth. The
2025 year result largely reflects the conditions and decisions of 2024, when we
started construction on the Iseära and Regati projects. In 2025, we have the
potential to deliver a maximum of 194 residential and commercial units with
total sales of up to EUR 75 million. At the start of the year the balance of
signed sales contracts is at 88 at a total sales proceeds volume of EUR 31
million.
In the past two challenging years we have not been able to meet our 20% return
on equity target, but largely as a result of the developments of the Regati and
Iseära projects, we expect a significant improvement in financial performance in
2025 and 2026. Given the continuation of the past six months sales pace the
projected sales revenue for 2025 is about EUR 55 million which we expect to
suffice for meeting the 20% return on equity target.
With the decisions and actions undertaken in 2025, we will lay foundation for
our economic performance in 2026 and 2027. Achieving good results continuously
requires improvements in external factors as well as internal efforts to improve
efficiency. During the year, we continue the pre-sales of Luuslangi phase II and
Wohngarten projects, will start with the pre-sales of the next phases of Iseära
as well as with the pre-sale of several new projects. Upon reaching sufficiently
high levels of pre-sales also with the construction. There is sufficient
capacity in the development portfolio for the next 3-4 years, but we continue to
actively negotiate and consider acquisition alternatives to increase the
development portfolio.
Joonas Joost
Liven AS CFO
E-mail: [email protected]