These are the results for the last five years of Lingkaran Trans Kota Holdings Berhad (Litrak), the concessionaire for the Damansara Puchong Expressway (LDP), a major 40km highway in the Klang Valley.
Traffic volume along the LDP has increased by 3.3 per cent since last year, contributing to a higher profit in 2013. Earlier, in 2007, the government had agreed to compensate Litrak with RM150m after coming out with a revised toll structure for the period 2007-2010.
This is an extract from the Chairman’s Statement in the Annual Report for the firm:
As Damansara-Puchong Highway (LDP) is now considered a mature highway, traffic growth mentioned above is a fair reflection of the traffic pattern for a matured urban highway. The double digit revenue growth that we achieved in the previous year was the result of the scheduled toll increase due on 1 January 2011 for LDP of which the Government of Malaysia has decided to defer until further notice. In the meantime, the Group has therefore made the necessary accruals based on the terms of the Concession Agreement signed together with the Government of Malaysia.
Although revenue only registered a gradual increase, Group profit net of tax, representing total comprehensive income for the year, managed to record a sizeable increase of 57.2% from RM83.2 million achieved in the previous financial year ended 31 March 2012 to RM130.8 million gained in the current financial year ended 31 March 2013.
The Group profit net of tax, representing total comprehensive income for the year of RM130.8 million is the highest that has ever been achieved by the Group and the significant increase of RM47.6 million compared to the previous year is mainly attributable to the following:
1. The increase in Group revenue of RM10.6 million which was due to higher traffic volume on the LDP.
2. A substantial decrease in the charge for Group depreciation and amortisation of RM50.8 million from RM104.9 million expensed out in the previous financial year ended 31 March 2012 to RM54.1 million charged out for the current financial year ended 31 March 2013. The lower charge is solely due to an adjustment that was made in the previous year to take into account the latest toll revenue projections study for LDP that was concluded in the first quarter of calendar year 2012 by an independent consulting firm.
3. An increase in Group income tax expense by RM12.5 million as a result of higher Group profit before tax.
The major enhancement project known internally as LDP5 which commenced in November 2009 was fully completed on schedule during the financial year just ended. It has now been just over half a year since the final package was completed and we are pleased to see that traffic flow at the upgraded areas has improved.
As the upgrading works involved the northern, southern and central sections of LDP, tollable traffic has also increased during the year at all toll plazas. The average weekday tollable traffic now stands at 497,000 vehicles compared to 481,000 vehicles reported in the previous year. This represents an increase in tollable traffic of 3.3% which is significantly higher than the growth of 1.3% in corresponding previous year.
Of course, the firm has had to carry out upgrading work to cater for the higher traffic flow and dispersal.
The main shareholder of the company is the well-connected Gamuda Bhd (44.9 per cent).
According to an extract from a report in Sin Chew:
The government has yet to make an announcement on the margins of increase in 15 highway toll rates, but according to Sin Chew Daily, tolls on Damansara-Puchong Highway (LDP) and the Western KL Traffic Dispersal System (Sprint Highway) can be increased by 50 sen and RM1 respectively from January 2014 as per the contract.
A Litrak Highway spokesperson told Sin Chew Daily, according to the contract signed with the government, its two highways, namely LDP and Sprint can be increased to RM2.10 and RM2.50 respectively next year.
He said the company has yet to receive any official notice from the government on toll rate adjustment and the actual margin of increase is therefore yet to be decided.
The concession agreement
This is for 29 years but the last time the toll structure was revised, the concession period was extended by one year to 2030.
Also, “under the Concession Agreement, the Government will make available the land required for the Highway, subject to reimbursement by LITRAK to acquire land of up to RM98 million”.
According to the Litrak Annual Report 2013:
Pursuant to the provisions of the Second Supplemental Concession Agreement executed between LITRAK and the Government on 4 September 2007 and via the Government Gazette No. P.U.(A) 443 dated 26 December 2006, the Government had revised the toll rates structure for LITRAK effective from 1 January 2007 to 31 December 2010 as follows:
Class of vehicle
Revised toll rates (RM)
Class 1 1.60
Class 2 3.20
Class 3 4.80
Class 4 0.80
Class 5 1.60
In consideration of LITRAK agreeing to the above revised toll rate structure, the Government has agreed to provide
LITRAK, with a sum of RM150 million cash compensation (paid in two equal tranches within the calendar years of 2007 and 2008) and a one-year extension to the Concession Period (from 14 August 2029 extended to 14 August 2030).
The toll rates were scheduled to revert to those in the Concession Agreement from 1 January 2011 onwards, but the
Government has decided that the toll rate increase will be deferred until further notice. Based on past negotiations with the Government, the Group is, however, optimistic that terms of the Concession Agreement will be observed by all parties concerned.
So what do you think? Is the concession agreement fair or lopsided?