Three state government companies under the Penang Development Corporation (PDC) have been unsatisfactory in their financial performance, the Auditor-General's Report 2011 reveals.

PDC is the state development agency, with Chief Minister Lim Guan Eng as its chairperson.

According to the report, an audit carried out on PDC's tourism arm, Penang Global Tourism Sdn Bhd (PGTSB), from May to September last year found a generally unsatisfactory financial performance.

As a non-profit company, the report said, PGTSB incurred losses before tax for the 2008 and 2010 financial years, while profit before tax was recorded in 2009.

The report, which is available online, says PGTSB set no targets for tourist arrivals and grants received from the state government for promotion and marketing activities were also used to finance State Tourism Office activities.

"There was a lack of monitoring in the distribution of tourism brochures. The PGTSB website development was not updated and mobile applications that could not be fully utilised led to wastage," the report says.

Another PDC company, PDC Nusabina Sdn. Bhd, which is involved in public works, also suffered from unsatisfactory financial performance.

In general, the audit report said, PDC Nusabina recorded losses before tax from 2008 to 2010.

Project not completed according to schedule

Other complaint about the company included the issue of variation orders for the Pinggiran Damai Project that the company undertook before the cost was confirmed.

"The Pinggiran Damai Project failed to be completed according to schedule, even though the project superintending officer was granted an extension of time to complete the project," the audit report states.

The third company posting an unsatisfactory financial performance last year was PDC Homes Sdn Bhd, which was re-activated at the end of 2007 as a second property development company under the PDC.

The company has an authorised capital of RM5 million and a paid-up capital of RM1.5 million.

"PDC Homes recorded losses before tax from 2008 to 2010 because it had not yet received any income from the project that was carried out," the report says.

"PDC Homes could only implement one project, the Quartermile Development Project, out of four that were planned," the report adds.

The report further stated that as at December last year, the sales of the Quartermile project were not successful, even though it was launched in April

"Since there is no earning from sales, PDC Homes encountered a cash flow problem that made it unable to pay to PDC the loan interest of RM49,973 and the land cost of RM1.62 million for the Quartermile project," the audit report says.

"The Quartermile project was not well monitored, resulting in the construction works being carried out without the approval from the local authorities," it adds.

"The quality of the construction work was not satisfactory, the project did not follow the contract specifications and some of the contract preliminary terms were not complied with."

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