Market announcement

Title

Liven AS - Consolidated unaudited interim report for the IV quarter and 12 months of 2024

Message

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]