The Queensland developer FKP Property Group was having serious financial difficulties well before it disclosed them to the sharemarket, a Federal Court has found.

Despite the company saying it had a 'sound' balance sheet at its half-year results briefing in February, the Federal Court has found FKP was having severe cash flow problems by the end of last December.

"Put simply, the undisputed evidence at trial showed that by the end of 2007 FKP was facing a time of financial hardship," Justice Michelle Gordon said in a judgment made on December 18.

The Age