Ann: FY23 Full-year results presentation, page-324

PLS hedge forward AUD/USD.

HedgingThe Company is exposed to the risk of movements in foreign currency exchange rates as a result of its revenues being received in US dollars (USD), whilst the Company’s functional currency is Australian dollars (AUD) and the majority of costs are paid in AUD. The Company has a Risk Management and Hedging Policy which outlines the Company’s approach to financial risk management, with the objective to control exposures consistent with the Company’s risk tolerances. During FY23, the Company adopted a Hedging Strategy to provide a framework to manage foreign exchange risk. The underlying principle of the Hedging Strategy is to establish a framework for managing the conversion of USD sales receipts to AUD. Where a high degree of certainty exists over USD sales receipts (sales with a 3 month timeframe), forward foreign exchange contracts are used to manage foreign exchange risk (committed hedging). Where there is less certainty over USD sales receipts (sales within a 4-15 month timeframe), option contracts are used to manage foreign exchange risk (uncommitted hedging). The volume of hedging and mix of committed versus uncommitted hedging is determined using target return levels, these targets are assessed regularly using forecasting models. Further information regarding these derivative financial instruments including accounting policy and open positions at the reporting period is contained in note 3.3 to the Financial Statement