Centro Property Group was a company operating in the property development area. Its cash flows from operations and investment are outlined below.

Required
a. Examine each line item. Outline what the cash flow data is communicating to you about the operations of Centro Property Group.
b. The GFC, which started in 2008, impacted on many businesses. Hypothesise what the consequences would have been for Centro Property Group.
c. Centro Property Group did in fact get into operating trouble. ASIC took Centro Property Group and its key management to court. Judge Middleton found that the directors breached their duties when they approved the financial statements for 2006–07 which did not disclose that Centro was required to repay billions of dollars of debt within a matter of months. In short, the judge indicated that it was not a ‘mere technical oversight’ but that directors of companies must ‘apply their minds’ to the review of financial statements. Centro Property Group argued that it relied on the expert advice of the entity’s auditors in regard to whether the financial statements were materially misstated. Critique the judgement made in the case regarding the level of financial knowledge required of directors.

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Operating cash flow Investment spend Cash flow after investing Dividends paid Other financing cash flows 2001 76.28 -208.43 -132.15 -172.66 -351.93 -157.94 -23.46 -2.43 2002 2003 2004 2005 2006 23.96 247.05 269.85 98.24 107.02 -270.9 -458.95 -181.9 -1134.55 -369.06 0 -29.14 -47.61 -3.3 -11.16 Foreign exchange effects Funding surplus/(gap) -158.04 -205.1 -410.7 -183.01 0 -24.11 -0.95 0 Total 2007 01-07 309.52 1 131.92 -2878.2 -5501.99 -887.5 -99.21 -2568.68 -4370.07 0 -61.47 -144.12 -6.26 -1.32 0 0.03 -646.11 -316.2 -2.59 -28.02 0.06 0.09 -955.23 -244.62 -2887.41 -5044.11