KUALA LUMPUR (Aug 23): WCE Holdings Bhd saw its net loss widen to RM26.41 million for the first quarter ended June 30, 2023 (1QFY2024) from RM14.13 million  a year earlier, mainly due to the RM37.2 million interest cost for the completed sections of the West Coast Expressway (WCE) project.

Revenue rose 10.29% to RM116.04 million from RM105.21 million in 1QFY2022, contributed by construction activities and the toll revenue segments, the highway concessionaire said on Wednesday (Aug 23).

“The toll concession segment has reported a loss before tax in the current quarter mainly due to interest expense incurred in relation to project financing for completed sections of the WCE project,” said the group in a filing with Bursa Malaysia.

The WCE project involves the development of 233km of tolled highway from Banting, Selangor to Taiping, Perak (including 40km of highway to be constructed later).  The build-operate-transfer project has a concession period of up to 60 years effective from Dec 20, 2013.

“The interest expense was capitalised as part of the infrastructure development expenditure prior to the completion of construction works,” the group said.

WCE Holdings said the group is expected to incur losses in the early years of toll operations due to the cessation of capitalisation of interest expenses for completed sections. Nonetheless, the group said it is still expecting a surplus from toll operations before accounting for this interest expense.

The toll project is divided into 11 sections, of which four sections — Section 5 (Bandar Bukit Raja - Kapar), Section 8 (Hutan Melintang - Teluk Intan), Section 9 (Kampung Lekir - Changkat Cermin) and Section 10 (Changkat Cermin - Beruas) — have been opened to traffic.

WCE Holdings is targeting to complete another four sections by March 31, 2024. These are Section 1 (Banting - South Klang Valley Expressway or SKVE); Section 2 (SKVE - Shah Alam Expressway or Kesas); Section 6 (Bandar Bukit Raja Utara - Assam Jawa) and Section 11 (Beruas - Taiping South).

“The final three sections namely, Section 3 (Kesas - Federal Highway Route 2), Section 4 (Federal Highway Route 2 - New North South Klang Straits Bypass) and Section 7 (Assam Jawa - Tanjung Karang) are targeted for completion by the end of 2024. Going forward, the additional sectional toll revenue is expected to further improve the future financial performance of the group in terms of cash flows and operating results,” the group added.

WCE’s shares slipped half a sen or 0.72% to close at 69 sen on Wednesday (Aug 23). This gives the group a market value of RM2.05 billion.