Suncor Energy Foundation Financial Statements December 31, 2015 April 5, 2016 Independent Auditor’s Report To the Board of Directors of Suncor Energy Foundation We have audited the accompanying financial statements of Suncor Energy Foundation, which comprise the statement of financial position as at December 31, 2015 and the statements of operations and changes in net assets and the statement of cash flows for the year then ended, and the related notes, which comprise a summary of significant accounting policies and other explanatory information. Management’s responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian accounting standards for not-for-profit organizations, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. PricewaterhouseCoopers LLP th Suite 3100, 111-5 Avenue SW, Calgary, Alberta, Canada T2P 5L3 T: +1 403 509 7500, F: +1 403 781 1825 “PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Suncor Energy Foundation as at December 31, 2015 and the results of its operations and its cash flows for the year then ended in accordance with Canadian accounting standards for not-for-profit organizations. Chartered Professional Accountants Suncor Energy Foundation Statement of Financial Position December 31, December 31, 2015 2014 $ $ Assets Cash and cash equivalents 12,050,513 24,514,320 Interest receivable - 30,445 Prepaid expense - 39,800 GST and other receivable 13,149 13,371 Total assets 12,063,662 24,597,936 Liabilities 65,232Payable to Suncor Energy Services Inc. (Note 5) 202,997 Accounts payable and accrued liabilities 18,430 33,385 83,662Total liabilities 236,382 Net Assets Unrestricted net assets 11,980,000 24,361,554 11,980,000 24,361,554 Total liabilities and net assets 12,063,662 24,597,936 see accompanying notes Approved by the Members of the Board of Directors , Member - Member Suncor Energy Foundation Statements of Operations and Changes in Net Assets December 31, December 31, 2015 2014 $ $ Revenues Contributions (Note 5) 4,500,000 19,530,000 Interest income 161,331 312,587 Total revenues 4,661,331 19,842,587 Donations Inspiring Innovation 3,068,525 3,170,430 Building Skills & Knowledge 4,358,584 4,349,000 Collaborating for Our Energy Future 1,609,000 1,492,000 Engaging Citizens 2,949,563 2,896,032 Cultivating Community Leaders 2,710,250 3,286,500 Local Relationship Investment 1,359,190 715,046 Total donations 16,055,112 15,909,008 Administration expenses (Note 5) Salaries and benefits 789,957 850,680 Professional services 42,215 101,494 Travel 17,278 99,542 Event projects 62,865 206,863 Communications 2,577 43,666 Rentals - office space and furniture 70,253 69,489 Miscellaneous 2,629 12,165 Total administration expenses 987,774 1,383,898 Total expenditures 17,042,886 17,292,906 Excess of revenues over expenditures (12,381,555) 2,549,681 Net Assets - Beginning of year 24,361,555 21,811,874 Net Assets - End of year 11,980,000 24,361,555 4 Suncor Energy Foundation Statements of Cash Flows For the period ended December 31, December 31, 2015 2014 $ $ Cash provided by (used in) Operating activities Excess of revenues over expenditures (12,381,555) 2,549,680 Net change in non-cash working capital (82,252) (37,721) Net increase in cash and cash equivalents (12,463,807) 2,511,959 Cash and cash equivalents - Beginning of year 24,514,320 22,002,361 Cash and cash equivalents - End of year 12,050,513 24,514,320 The composition of cash and cash equivalents is as follows: December 31, December 31, 2015 2014 (Overdraft) / Cash 2,052,138 (485,680) Guaranteed Investment Certificates 9,998,375 25,000,000 12,050,513 24,514,320 5 Suncor Energy Foundation Notes to Financial Statements 1. Purpose Suncor Energy Foundation (the "Foundation") was incorporated under Part II of the Canada Corporations Act as a not-for-profit organization on November 8, 1996 and commenced active operations in April 1998. The Foundation was issued a certificate of continuance under the Canada Not-for-Profit Corporations Act on January 3, 2014. The Foundation is a registered charity under the Income Tax Act of Canada and accordingly, is exempt from corporate income tax. The Foundation's purpose is to manage the contributions of Suncor Energy Inc. and its subsidiaries' (collectively "Suncor") to areas of corporate interest. Areas of corporate interest include Cultivating Community Leaders, Inspiring Innovation, Engaging Citizens, Building Skills, Local Relationship Investment and Knowledge and Collborating on our Energy Future. Suncor is the sole contributor to the Foundation and the Foundation is economically dependant on Suncor. The contributions from this entity are directed towards areas of corporate interest through Canadian registered charities. The Foundation is also registered under the Charitable Fundraising Regulation of Alberta and has considered all required disclosures under Section 7(2) of Regulation in preparing the financial statements. 2. Summary of Significant Accounting Policies These financial statements are prepared in accordance with accounting standards for not for profit organizations as set out in Part III of the Chartered Professional Accountants Handbook, as issued by the Canadian Accounting Standards Board. Use of estimates The financial statements of the Foundation have been prepared in accordance with Canadian generally accepted accounting principles which require management to make assumptions and estimates that affect the reported amount of assets, liabilities, revenues and expenses. Actual amounts could differ from those estimates. Revenue recognition The Foundation follows the deferral method of accounting for contributions. Unrestricted contributions are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Interest income is recognized as revenue in the period it is earned. Cash and cash equivalents Cash and cash equivalents include deposits with banks and short term investments with original maturity of less than 90 days. Donated services A portion of the Foundation's work is dependent on voluntary services. As a result of the difficulty in determining their value, these contributed services are not recognized in the financial statements. 6 Suncor Energy Foundation Notes to Financial Statements 3. Financial Instruments The Foundation initially measures financial assets and financial liabilities at their fair value. It subsequently measures all its financial assets and financial liabilities at amortized cost. The financial assets of the Foundation include cash and cash equivalents, interest receivable, prepaid expense and GST and other receivable. The financial liabilities measured at amortized cost include accounts payable and accrued liabilities, payable to Suncor Energy Services Inc. and payable to Suncor Energy Inc. The Foundation is exposed to various risks through its financial instruments and has a comprehensive risk management framework to monitor, evaluate and manage these risks. The following analysis provides information about the Foundation's risk exposure and concentration. Credit risk Credit risk arises from the potential that a counter party will fail to discharge its obligations. The Foundation does not consider that it is exposed to significant credit risk. Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Foundation does not consider that it is exposed to significant liquidity risk. Market risk Market Risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The Foundation does not consider that it is exposed to significant market risk. Interest rate risk