Contents 3 Report of the Board of Directors’ Responsibilities for the Financial Statements 4 Report of the Audit Committee to Shareholders 6 Management’s Discussion and Analysis of the Consolidated Financial Statements 16 Independent Auditor’s Report 21 Statement of Financial Position 27 Statement of Comprehensive Income 30 Statement of Changes in Equity 34 Statement of Cash Flows 39 Notes to the Consolidated and Separate Financial Statements Report of the Board of Directors’ Responsibilities for the Financial Statements The main priority of the Board of Directors is to supervise the Company’s operations, making sure they are in line with good corporate governance policy and that the financial statements and financial information appearing in the Company’s annual report are accurate, complete and adequate. Its duty is also to make sure that the financial statements are in line with Thai Financial Reporting Standards and that an appropriate accounting policy has been chosen and is being carefully pursued on a regular basis. In addition, the Board of Directors must also ensure that the Company has an effective internal control system to assure the credibility of its financial statements. The Board also ensures protection over potential conflicts of interest through systems which are place to prevent unusual transactions. Connected transactions which might lead to possible conflicts of interest are closely monitored to ensure they are genuine transactions and are reasonably carried out, based on the normal course of business and for the Company’s maximum benefits, and that the Company is in compliance with relevant laws and regulations. The Audit Committee has already reported the result of its action to the Board of Directors and has also reported its opinions in the Audit Committee’s Report as seen in the annual report. The Board of Directors is of the opinion that the Company’s internal control system has been prove to be satisfactory. The Board was able to obtain reasonable assurance on the credibility of the Company’s financial statements as at 31 December 2016 which the Company’s auditor has audited based on Thai Standards on Auditing. The auditor is of the opinion that the financial statements present fairly the Company’s financial position and the results of its operations in accordance with generally accepted accounting principles. (Mr. Chanin Vongkusolkit) (Mrs. Somruedee Chaimongkol) Chairman of the Board Chief Executive Officer 4 Annual Report 2016 Banpu Public Company Limited Report of the Audit Committee to Shareholders Dear Shareholders of Banpu Public Company Limited, The Audit Committee of Banpu Public Company Limited consists of 3 independent directors who have knowledge and experiences in the fields of financial accounting and economics, including Mr. Teerana Bhongmakapat, as Chairman of Audit Committee, with Mr. Rutt Phanijphandand and Mr. Suthad Setboonsarng, as committee members. Mr. Vorravit Varutbangkul, Head of Internal Audit, is the Secretary of the Audit Committee. The Audit Committee performs their roles and Board-assigned duties independently under the good corporate practices and in accordance with the criteria and guidelines for the Audit Committee, as stipulated in the regulations of the Stock Exchange of Thailand (SET). The Audit Committee focuses on enhancing the good corporate governance, risk management, internal control and effective internal audit. Additionally, the Audit Committee continually supports the development of internal auditing to add value to the organization. In 2016, the Audit Committee held 9 meetings with the joining of executives, Internal Audit, and the external auditors in related agenda. In addition, the Audit Committee held a closed meeting with the external auditors without the presence of the management. The results of Audit Committee meeting are regularly reported to Board of Director. The Audit Committee’s main activities can be summarized as follows: 1. Review of Financial Information: The Audit Committee reviewed the quarterly financial information and the 2016 financial statements that had been prepared in conformance with Thai Financial Reporting Standards (TFRS). The Audit Committee reviewed key matters in the financial statements including disclosure of notes to financial statements, key accounting policies and changes in accounting estimates, and significant issues prepared by reviewed or audited by the external auditors. The Audit committee applied the sufficient explications from executives and related persons to assure that financial statements of the Group have been prepared accurately, timely, and in accordance with the prescribed laws and the Generally Accepted Accounting Principles, together with sufficient disclosure for the benefit of investors and users of the financial statements. 2. Review of Internal Control and Internal Audit: The Audit Committee reviewed internal control assessment results which are quarterly reported by Internal Audit Department of Banpu Group. The reports include the areas of accounting, finance, fraud, safeguard of assets, operation, monitoring, and compliance with relevant law and regulations. The Internal Audit Department performed the independent and proactive review to ensure that the internal control system was effective and efficient. The Company also supported the internal auditors and internal auditing works to meet international standards. Therefore, the Internal Audit Department is able to monitor significant issues timely and to efficiently protect the benefit of shareholders and relevant stakeholders. 3. Review of Compliance: The Audit Committee reviewed that the Group duly complied with related laws and regulations. The Group has established a system to continually audit, monitor, and regularly report compliance issues by Corporate Compliance Department. From the review in 2016, there’s no significant issue was found. 4. Corporate Governance: The Audit Committee has reviewed the code of conduct and maintained that the management and employees strictly followed the prescribed principles. In 2016, Banpu had initiated policies and procedure regarding Related Parties Transactions for clear practices. In addition, the Audit Committee has reviewed the connected transactions between Banpu, its subsidiaries, and other related parties to assure that those transactions were reasonable, carried out for the Group benefit and strictly followed the SEC’s and SET’s rules and regulations. 5 Annual Report 2016 Banpu Public Company Limited 5. Review of Risk Management: The Audit Committee examined the enterprise risk management and mitigation plans particularly related to key risks such as declining coal prices, currency fluctuations, changing laws and regulations in the countries that Banpu has invested. The Company had regularly monitored the progress of risk management on the quarterly basis and promptly responded to the key risks in reducing any impacts from potential business uncertainties. The Audit Committee and executives highly emphasized on the risk management process and viewed that the risk assessment and its mitigation plans were properly managed. In 2016, the Company’s key corporate risks have been improved partly due to the recovery of coal industry, and its monitoring and corrective actions effectively pursued by the management. In the first half of 2016, coal industry still confronted with the continually declining coal prices. The executives carefully managed the Company to maintain revenues and sales. For the second half, global coal prices tended to recover and, as a result, the risk of lower coal price dropped rapidly. Besides, the cost reduction program has been effectively executed such that the administrative expenses and logistic costs were substantially reduced. During the past several years, global economic slowdown aggravated pressures to government agencies in various countries to raise their tax efforts in order that their governments could sufficiently finance their national budget needs. Banpu had focused attention on this significant risk by pushing forward continual and prudent work, resulting in the reduction of the risk. Moreover, Banpu emphasized more on financial and exchange rate management as the financial markets and exchange rates were increasingly volatile and anticipated to continue their volatilities into the future. The company has closely monitored the situation and enhanced the systemic risk management along with the uses of financial instruments in order to manage and hedge against such risks. In terms of business strategy, Banpu has focused on the risk diversification by following developments in the coal industry and new businesses, especially natural gas business and renewable energy. The progress has been reported to the Audit Committee periodically. 6. Appointment of Auditors and Audit Fees for 2017: The Audit Committee considered selection of auditors based on Banpu’s evaluation criterias, including their independence, quality, standards of work, and qualifications in accordance with SET requirements. The Audit Committee proposed the appointment of auditors to the Board of Directors for shareholders approval. The following individuals of PricewaterhouseCoopers ABAS Ltd. (PwC) were nominated: 1. Ms. Amornrat Permpoonvatanasuk, CPA, License No. 4599; and/or 2. Ms. Sukhumaporn Wong-Ariyaporn, CPA, License No. 4843; and/or 3. Mr. Vichien Khingmontri CPA, License No. 3977; For the year 2017, the audit fee was proposed to be THB 2,317,000. The Audit Committee also acknowledged