I am not making allegations of accounting malfeasance at Astra International or its majority shareholder Jardine Cycle & Carriage. I have no evidence that anything untoward has happened at either company. I have no intimate knowledge of any problems with their books. But when Jardine Cycle & Carriage announced this evening that it had asked for and received yet another extension to file its financial statement, the red flags went up in my head.

The reason they have deferred announcing their financial statements is because they are trying to consolidate the earnings of Astra with their own. That’s normal procedure when a company becomes a subsidiary of a parent company. What’s unusual is that it’s taking so long.

Tonight it said:

Jardine Cycle & Carriage Limited ("JC&C" or the "Company") had previously announced that due to the magnitude of work involved and complexities in consolidating PT Astra International Tbk ("Astra") as a subsidiary, it might not be able to meet the financial results reporting deadlines under the Listing Manual for the next few financial periods.

Jardine Cycle & Carriage has received extensions before, as it announced on February 15 and May 15. In that second announcement, it clarified how it was progressing on that integration.

1. The computerised consolidation system to prepare the consolidated accounts under the Indonesian accounting standards and under the International Financial Reporting Standards ("IFRS") was implemented by Astra and the year end consolidation of the Astra group was prepared using the system.
2. Steps are being taken to improve the system and to computerise more areas of the consolidation process and generate additional reports in order to reduce the amount of manual checks and work required.
3. Training needs have been identified and workshops are being conducted to familiarise Astra staff in the use of the computerised consolidation system.
4. Training seminars and workshops are also being conducted to promote a better understanding of existing IFRS which are complex and different from Indonesian practices and to update staff on any new standards, amendments and interpretations that have become effective in this financial year.

The Company and Astra group continue to work towards timely completion of the streamlining of the consolidation and financial reporting process and improving the accounting software system.

All that sounds above board, and I certainly hope it is. I tried to ring their corporate office this evening to find out more but everyone had already gone home.

Remember China Aviation Oil, which so innocuously announced in 2004 that it was getting out of the oil derivatives trading business? I remember that announcement coming through. I presented the story on CNBC at the time, and remember remarking on air that “I didn’t even know they were into oil derivatives”. Of course, we all know how much of a disaster CAO’s oil derivatives business turned out to be. Or when Accord Customer Care announced similarly innocuously (but arguably more forebodingly) that Nokia had cancelled its contracts with them in 11 countries (except, strangely, in New Zealand). In light of these two events investors would do well not to ignore innocuous statements.