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Stock exchange orders Garuda to restate first quarter results

The Indonesia Stock Exchange (BEI) has ordered Garuda Indonesia to restate its first quarter financial results, just after the country's Financial Services Authority (OJK) ordered the same for the carrier's 2018 earnings.

BEI instructed Garuda to submit its restatement by 26 July, after it was found to have violated a stock exchange order on the submission of financial reports. The airline is to also hold public exposure events detailing reasons behind the revision.

A warning letter was issued to Garuda, which was fined Rp250 million ($17,700) for violating the stock exchange order.

"Imposition of the penalty and request to 'repair and restate' Garuda's financial statement [for the quarter ended] 31 March 2019, and request by BEI for Garuda to hold public exposure events are done in order to conduct a regular, fair, and efficient securities trading, while also maintaining public confidence in the Indonesian capital market," says BEI in its 28 June press release.

Garuda's first quarter results showed an operating profit of $49.4 million, a turnaround from the $66 million operating loss in the previous quarter. Revenue for the quarter to 31 March rose 11.9% to $1.1 billion. It also posted an attributable net profit of $20.5 million.

BEI's order to Garuda comes hours after the OJK ordered the carrier to restate its 2018 financial statement. This was made after questions were raised over the way it booked future revenue from an inflight wi-fi and entertainment deal as an operating item.

OJK gave Garuda 14 days to submit a restated financial report, and imposed three separate fines, each Rp100 million, on Garuda, the company's directors, and its commissioner members, for violating stipulated standards on annual reports.

Weeks prior to OJK's order, two of Garuda's commissioners questioned the accounting treatment of the deal, which saw the airline report a $101 million full-year operating profit for 2018, after booking a one-off $242 million deal with Mahata Aero Teknologi as an operating item.

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