WCE Holdings Bhd posted its fifth consecutive quarterly loss of RM30.89 mil for the first quarter ended June 30 (1Q21), on the back of a recognition of interest expense worth RM40.3 mil under its toll concession segment.
In a bourse filing today, the highway construction company said that its finance costs rose to RM41.02 mil compared with RM3.05 mil last year for the West Coast Expressway on sections which were completed and open for traffic.
WCE added that earnings were also bogged by a share of loss amounting to RM300,000 from associates during the first quarter of this year compared to a share of profit of RM8 mil a year ago.
Among the reasons, a temporary halt in construction activities in the Bandar Rimbayu development as a result of the implementation of the Movement Control Order.
On a quarter-to-quarter basis, WCE posted a widened net loss versus a net loss of RM11.99 mil for 4Q20. Revenue dropped sharply to RM44.53 mil from RM121.47 mil.
WCE’s project involves the development of a 233km tolled highway (West Coast Expressway) from Banting, Selangor to Taiping, Perak and it is being built on a build-operate-transfer basis, with a concession period of up to maximum of 60 years.
The project is divided into 11 sections and four sections have been opened for traffic and commenced tolling. Section 8 (Hutan Melintang — Teluk Intan) was opened for traffic on May 31, 2019, followed by Section 9 (Kampung Lekir — Changkat Cermin) and 10 (Changkat Cermin — Beruas) on Sept 23, 2019, and Section 5 (Bandar Bukit Raja — Kapar) was opened on Dec 10, 2019.
As for prospects, WCE is expecting to incur losses in early years of its toll operations due to cessation of capitalisation of interest expenses for completed sections and the non-cash expenditure in respect of the amortisation of infrastructure development expenditure.
But the group said the commencement of toll operations of the West Coast Expressway is expected to improve the future financial performance of the group in terms of cash flow and is expected to provide the group a stable recurrent income over the concession period.
WCE’s shares dropped 1.85% at 26 sen after the market closed today.
