Kimlun Corporation Berhad Annual Report 2018

31. Financial risk management objectives and policies (cont'd) (b) Liquidity risk Liquidity risk is the risk that the Group and the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group's and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group's and the Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities. To ensure continuity of funding, the Group's and the Company's policy is to manage the debt maturity profile, operating cash flows and the availability of funding to support the operating cycle of the business. Analysis of financial instruments by remaining contractual maturities The table below summarises the maturity profile of the Group's and of the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations. On demand or within One to More than one year five years five years Total 2018 RM RM RM RM Group Financial liabilities: Trade and other payables 447,958,290 - - 447,958,290 Loans and borrowings 199,062,270 83,745,733 3,064,637 285,872,640 Total undiscounted financial liabilities 647,020,560 83,745,733 3,064,637 733,830,930 Company Financial liabilities: Other payables 259,395 - - 259,395 Total undiscounted financial liabilities 259,395 - - 259,395 2017 Group Financial liabilities: Trade and other payables 370,754,882 - - 370,754,882 Loans and borrowings 51,836,690 89,195,424 2,435,329 143,467,443 Total undiscounted financial liabilities 422,591,572 89,195,424 2,435,329 514,222,325 Company Financial liabilities: Other payables 387,064 - - 387,064 Total undiscounted financial liabilities 387,064 - - 387,064 (c) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of the Group's and the Company’s financial instruments will fluctuate because of changes in market interest rates. The Group’s primary interest rate risk relates to interest-bearing borrowings. The investments in financial assets including fixed deposits are mainly short term in nature and they are not held for speculative purposes. The Group manages its interest rate exposure by using a mix of fixed and floating rate debts and actively reviewing its debt portfolio, taking into account the investment holding period and nature of its assets. Annual Report 2018 114 For the financial year ended 31 December 2018 (cont’d) NOTES TO THE FINANCIAL STATEMENTS