**Exhibit 1.3**

 

**MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING**

 

The accompanying restated consolidated financialstatements of Just Energy Group Inc. are the responsibility of management andhave been approved by the Board of Directors.

 

The restated consolidated financial statements have beenprepared by management in accordance with International Financial Reporting Standards as issued by the InternationalAccounting Standards Board. The restated consolidated financial statements include some amounts that are based on estimatesand judgments. Management has determined such amounts on a reasonable basis in order to ensure that the restated consolidatedfinancial statements are presented fairly, in all material respects. 

 

Just Energy Group Inc. maintains systems of internal accountingand administrative controls. These systems are designed to provide reasonable assurance that the financial information is relevant,reliable and accurate and that the Company assets are properly accounted for and adequately safeguarded.

 

The Board of Directors is responsible for ensuring thatmanagement fulfills its responsibilities for financial reporting and is ultimately responsible for reviewing and approvingthe restated consolidated financial statements. The Board carries out this responsibility principally through its AuditCommittee.

 

The Audit Committee is appointed by the Board of Directors andis composed entirely of non-management directors. The Audit Committee meets periodically with management and the external auditors,to discuss auditing, internal controls, accounting policy and financial reporting matters. The committee reviews the consolidatedfinancial statements with both management and the external auditors and reports its findings to the Board of Directors before suchstatements are approved by the Board.

 

The restated consolidated financial statements have beenaudited by Ernst & Young LLP, the external auditors, in accordance with the standards of the Public Company Accounting Oversight Board (United States) on behalf of the shareholders. Theexternal auditors have full and free access to the Audit Committee, with and without the presence of management, to discusstheir audit and their findings as to the integrity of the financial reporting and the effectiveness of the system of internalcontrols.

 

On behalf of Just Energy Group Inc.

 

 

| /s/ Scott Gahn          |   | /s/ Jim Brown           |
|-------------------------|--------|-------------------------|
|                    |   |                    |
| Scott Gahn              |   | Jim Brown               |
|                    |   |                    |
| Chief Executive Officer |   | Chief Financial Officer |

 

 

Toronto, Canada

 

August 14, 2019

 

 

**MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIALREPORTING**

 

The management of Just Energy Group Inc. (“the Company”)is responsible for establishing and maintaining adequate internal control over financial reporting, and has designed such internalcontrol over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparationof financial statements for external purposes in accordance with International Financial Reporting Standards as issued by the InternationalAccounting Standards Board.

 

Management has used “Internal Control – IntegratedFramework” to evaluate the effectiveness of internal control over financial reporting, which is a recognized and suitableframework developed by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (COSO). Because ofits inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projectionsof any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changesin conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Management has evaluated the design and operation of theCompany’s internal control over financial reporting as of March 31, 2019, and has concluded that such internal controlover financial reporting were not effective as a result of identifying a material weakness as described in theCompany’s management discussion and analysis -- August 14, 2019 (restated).

 

Ernst & Young LLP, the independent auditors appointed bythe shareholders of the Company who have audited the consolidated financial statements, have also audited internal control overfinancial reporting and have issued their report on the following page.

 

 

 

| /s/ Scott Gahn          |   | /s/ Jim Brown           |
|-------------------------|--------|-------------------------|
|                    |   |                    |
| Scott Gahn              |   | Jim Brown               |
|                    |   |                    |
| Chief Executive Officer |   | Chief Financial Officer |

 

 

Toronto, Canada

 

August 14, 2019

 

 

 

****

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

 

To the Shareholders and the Board of Directors of Just Energy GroupInc.

 

**Opinion on Internal Control over Financial Reporting**

 

We have audited Just Energy Group Inc.’s internal controlover financial reporting as of March 31, 2019, based on criteria established in Internal Control-Integrated Framework issued bythe Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, becauseof the effect of the material weakness described below on the achievement of the objectives of the control criteria, Just EnergyGroup Inc. (the Company) has not maintained effective internal control over financial reporting as of March 31, 2019, based onthe COSO criteria.

 

In our report dated May 15, 2019, we expressed an unqualified opinionthat the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2019,based on the COSO criteria. Management has subsequently identified a deficiency in controls related to management failing to effectivelyoperate a control to capture appropriate expected credit loss rates to be reflected in the estimated allowance for doubtful accountsdue to insufficient analysis of a rapid deterioration of the aging of the Company’s accounts receivable and has further concludedthat such deficiency represented a material weakness as of March 31, 2019. As a result, management has revised its assessment,as presented in the accompanying Management’s Report on Internal Control over Financial Reporting, to conclude that the Company’sinternal control over financial reporting was not effective as of March 31, 2019. Accordingly, our present opinion on the effectivenessof March 31, 2019’s internal control over financial reporting as of March 31, 2019, as expressed herein, is different fromthat expressed in our previous report.

 

A material weakness is a deficiency, or combination of deficiencies,in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’sannual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness hasbeen identified and included in management’s report.

 

Management has identified a material weakness in controls relatedto the Company’s failure to effectively operate a control to capture appropriate expected credit loss rates to be reflectedin the estimated allowance for doubtful accounts due to insufficient analysis of a rapid deterioration of the aging of the Company’saccounts receivable.

 

We also have audited, in accordance with the standards of thePublic Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated statements of financialposition as of March 31, 2019 and 2018, and the related consolidated statements of income (loss), comprehensive income(loss), changes in shareholders’ equity (deficit) and cash flows for the years then ended and the related notes. Thismaterial weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2019consolidated financial statements, and this report does not affect our report dated August 14, 2019, which expressed anunqualified opinion thereon.

 

**Basis for Opinion**

 

Just Energy Group Inc.’s management is responsible for maintainingeffective internal control over financial reporting and for its assessment of the effectiveness of internal control over financialreporting included in the accompanying Management’s Report. Our responsibility is to express an opinion on Just Energy GroupInc.’s internal control over financial reporting based on our audit. We are a public accounting firm registered with thePCAOB and are required to be independent with respect to Just Energy Group Inc. in accordance with U.S. federal securities lawsand the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audit in accordance with the standards of the PCAOB.Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal controlover financial reporting was maintained in all material respects.

 

Our audit included obtaining an understanding of internal controlover financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectivenessof internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.We believe that our audit provides a reasonable basis for our opinion.

 

**Definition and Limitations of Internal Control Over FinancialReporting**

 

A company’s internal control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with International Financial Reporting Standards as issued by the InternationalAccounting Standards Board. A company’s internal control over financial reporting includes those policies and proceduresthat (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositionsof the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparationof financial statements in accordance with International Financial Reporting Standards as issued by the International AccountingStandards Board, and that receipts and expenditures of the company are being made only in accordance with authorizations of managementand directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,use, or disposition of the company’s assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financialreporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subjectto the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policiesor procedures may deteriorate.

 

/s/ Ernst & Young LLP

 

Toronto, Canada

 

May 15, 2019, except for the effect of the material weakness describedin the 2nd paragraph above, as to which the date is August 14, 2019**.**

 

 

 

 

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

 

To the Shareholders and the Board of Directors of Just Energy GroupInc.

 

**Opinion on the Consolidated Financial Statements**

 

We have audited the accompanying consolidated statements offinancial position of Just Energy Group Inc. as of March 31, 2019 and 2018, and the related consolidated statements of income(loss), comprehensive income (loss), changes in shareholders’ equity (deficit) and cash flows for each of the two yearsin the period ended March 31, 2019 and the related notes (collectively referred to as the “consolidated financialstatements”). In our opinion, the consolidated financial statements present fairly, in all material respects, thefinancial position of Just Energy Group Inc. at March 31, 2019 and 2018, and its financial performance and its cash flows forthe years then ended, in accordance with International Financial Reporting Standards (IFRSs) as issued by the InternationalAccounting Standards Board.

 

**Restatement of 2019 Financial Statements**

 

As discussed in Note 5 to the (consolidated) financial statements,the 2019 consolidated financial statements have been restated to correct a misstatement.

 

**Adoption of New Accounting Standards**

 

As discussed in Note 7 to the consolidated financial statements,Just Energy Group Inc. changed its method of accounting for Revenue and Financial Instruments in 2019 due to the adoption of IFRS15, *Revenue from Contracts with Customers* and IFRS 9, *Financial Instruments*.

 

**Report on Internal Control over Financial Reporting**

 

We also have audited, in accordance with the standards of the PublicCompany Accounting Oversight Board (United States) (“PCAOB”), Just Energy Group Inc.’s internal control overfinancial reporting as of March 31, 2019, based on criteria established in Internal Control-Integrated Framework (2013) issuedby the Committee of Sponsoring Organization of the Treadway Commission (“COSO”) and our report dated May 15, 2019,except for the effect of the material weakness described in the second paragraph of the report, as to which the date is August14, 2019**,**expressed an adverse opinion on the effectiveness of Just Energy Group Inc.’s internal control over financialreporting.

 

**Basis for Opinion**

 

These consolidated financial statements are the responsibility ofJust Energy Group Inc.’s management. Our responsibility is to express an opinion on the Just Energy Group Inc.’s consolidatedfinancial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independentwith respect to Just Energy Group Inc. in accordance with the U.S. federal securities laws and the applicable rules and regulationsof the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of thePCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidatedfinancial statements are free of material misstatement, whether due to error or fraud. Our audits included performing proceduresto assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performingprocedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts anddisclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significantestimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believethat our audits provide a reasonable basis for our opinion.

 

/s/ Ernst & Young LLP

 

We have served as Just Energy Group Inc.’s auditor since 2011

 

Toronto, Canada

 

           August 14, 2019****

 

 

 

 

**JUSTENERGY GROUP INC.****RESTATED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION**

**As at March 31***(in thousands of Canadian dollars)*

 

|                                                       |   |        |   | 2019                      |       |   |        |   |
|------------------------------------------------------------|--------|--------|--------|---------------------------|------------|--------|--------|--------|
|                                                       |   | Notes  |   | (Restated – Note 5) |       |   | 2018   |   |
| ASSETS                                                     |   |   |   |                      |       |   |   |   |   |   |
| Current assets                                             |   |   |   |                      |       |   |   |   |   |   |
| Cash and cash equivalents                                  |   |   |   | $                         | 9,927      |   |   | $      | 48,861 |   |
| Restricted cash                                            |   |   |   |                      | 4,048      |   |   |   | 3,515 |   |
| Trade and other receivables                                |   | 9      |   |                      | 672,615    |   |   |   | 658,844 |   |
| Gas in storage                                             |   |   |   |                      | 2,943      |   |   |   | 2,342 |   |
| Fair value of derivative financial assets                  |   | 14     |   |                      | 144,512    |   |   |   | 218,769 |   |
| Income taxes recoverable                                   |   |   |   |                      | 18,973     |   |   |   | 5,617 |   |
| Other current assets                                       |   | 10     |   |                      | 169,240    |   |   |   | 112,214 |   |
|                                                       |   |   |   |                      | 1,022,258  |   |   |   | 1,050,162 |   |
| Non-current assets                                         |   |   |   |                      |       |   |   |   |   |   |
| Investments                                                |   | 11     |   |                      | 36,897     |   |   |   | 36,314 |   |
| Property and equipment, net                                |   | 12     |   |                      | 25,862     |   |   |   | 18,893 |   |
| Intangible assets, net                                     |   | 13     |   |                      | 472,656    |   |   |   | 401,926 |   |
| Fair value of derivative financial assets                  |   | 14     |   |                      | 9,255      |   |   |   | 64,662 |   |
| Deferred income tax assets                                 |   | 21     |   |                      | 1,092      |   |   |   | 9,449 |   |
| Other non-current assets                                   |   | 10     |   |                      | 49,512     |   |   |   | 19,987 |   |
|                                                       |   |   |   |                      | 595,274    |   |   |   | 551,231 |   |
| Assets classified as held for sale                         |   | 18     |   |                      | 8,971      |   |   |   | - |   |
|                                                       |   |   |   |                      | 604,245    |   |   |   | 551,231 |   |
| TOTAL ASSETS                                               |   |   |   | $                         | 1,626,503  |   |   | $      | 1,601,393 |   |
|                                                       |   |   |   |                      |       |   |   |   |   |   |
| LIABILITIES                                                |   |   |   |                      |       |   |   |   |   |   |
|                                                       |   |   |   |                      |       |   |   |   |   |   |
| Current liabilities                                        |   |   |   |                      |       |   |   |   |   |   |
| Trade and other payables                                   |   | 15     |   | $                         | 714,110    |   |   | $      | 590,018 |   |
| Deferred revenue                                           |   | 16     |   |                      | 43,228     |   |   |   | 38,710 |   |
| Income taxes payable                                       |   |   |   |                      | 11,895     |   |   |   | 5,486 |   |
| Fair value of derivative financial liabilities             |   | 14     |   |                      | 79,387     |   |   |   | 86,288 |   |
| Provisions                                                 |   | 20     |   |                      | 7,205      |   |   |   | 4,714 |   |
| Current portion of long-term debt                          |   | 19     |   |                      | 37,429     |   |   |   | 121,451 |   |
|                                                       |   |   |   |                      | 893,254    |   |   |   | 846,667 |   |
| Non-current liabilities                                    |   |   |   |                      |       |   |   |   |   |   |
| Long-term debt                                             |   | 19     |   |                      | 687,943    |   |   |   | 422,053 |   |
| Fair value of derivative financial liabilities             |   | 14     |   |                      | 63,658     |   |   |   | 51,871 |   |
| Deferred income tax liabilities                            |   | 21     |   |                      | 4,124      |   |   |   | 6,918 |   |
| Other non-current liabilities                              |   |   |   |                      | 61,339     |   |   |   | 57,349 |   |
|                                                       |   |   |   |                      | 817,064    |   |   |   | 538,191 |   |
| Liabilities relating to assets classified as held for sale |   | 18     |   |                      | 5,200      |   |   |   | - |   |
|                                                       |   |   |   |                      | 822,264    |   |   |   | 538,191 |   |
| TOTAL LIABILITIES                                          |   |   |   |                      | 1,715,518  |   |   |   | 1,384,858 |   |
| SHAREHOLDERS' EQUITY (DEFICIT)                             |   |   |   |                      |       |   |   |   |   |   |
| Shareholders’ capital                                |   | 22     |   |                      | 1,235,503  |   |   |   | 1,215,826 |   |
| Equity component of convertible debentures                 |   |   |   |                      | 13,029     |   |   |   | 13,029 |   |
| Contributed deficit                                        |   |   |   |                      | (25,540    | )      |   |   | (22,693 | ) |
| Accumulated deficit                                        |   |   |   |                      | (1,390,701 | )      |   |   | (1,081,139 | ) |
| Accumulated other comprehensive income                     |   |   |   |                      | 79,093     |   |   |   | 91,934 |   |
| Non-controlling interest                                   |   |   |   |                      | (399       | )      |   |   | (422 | ) |
| TOTAL SHAREHOLDERS' EQUITY (DEFICIT)                       |   |   |   |                      | (89,015    | )      |   |   | 216,535 |   |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)       |   |   |   | $                         | 1,626,503  |   |   | $      | 1,601,393 |   |

 

Commitments and Guarantees (Note 31)

 

*See accompanying notes to the consolidated financial statements*

* *

Approved on behalf of Just Energy Group Inc.      

 

| /s/    Rebecca MacDonald |   | /s/    H. Clark Hollands |   |
|--------------------------|--------|--------------------------|--------|
| **Rebecca MacDonald**    |   | **H. Clark Hollands**    |   |
| Executive Chair          |   | Corporate Director       |   |

|   |   | 1. |
|--------|--------|----|

 

JUSTENERGY GROUP INC.CONSOLIDATED STATEMENTS OF INCOME (LOSS)FOR THE YEARS ENDED MARCH 31(*in thousands of Canadian dollars, except where indicated and per share amounts*)

 

|                                                     |   |        |   |        |      |   |        |   |
|----------------------------------------------------------|--------|--------|--------|--------|-----------|--------|--------|--------|
|                                                     |   | Notes  |   | 2019   |      |   | 2018   |   |
| CONTINUING OPERATIONS                                    |   |   |   |   |      |   |   |   |   |   |
| Sales                                                    |   | 24     |   | $      | 3,812,470 |   |   | $      | 3,623,558 |   |
| Cost of sales                                            |   |   |   |   | 3,100,255 |   |   |   | 2,983,047 |   |
| GROSS MARGIN                                             |   |   |   |   | 712,215   |   |   |   | 640,511 |   |
| EXPENSES                                                 |   |   |   |   |      |   |   |   |   |   |
| Administrative                                           |   |   |   |   | 206,820   |   |   |   | 187,250 |   |
| Selling and marketing                                    |   |   |   |   | 232,030   |   |   |   | 232,228 |   |
| Other operating expenses                                 |   | 25(a)  |   |   | 226,181   |   |   |   | 95,304 |   |
| Restructuring costs                                      |   | 20     |   |   | 16,078    |   |   |   | - |   |
|                                                     |   |   |   |   | 681,109   |   |   |   | 514,782 |   |
| Operating profit before the following                    |   |   |   |   | 31,106    |   |   |   | 125,729 |   |
| Finance costs                                            |   | 19     |   |   | (88,072   | )      |   |   | (55,972 | ) |
| Change in fair value of derivative instruments and other |   | 14     |   |   | (153,226  | )      |   |   | 474,393 |   |
| Other income, net                                        |   | 17     |   |   | 1,365     |   |   |   | 1,040 |   |
| Profit (loss) before income taxes                        |   |   |   |   | (208,827  | )      |   |   | 545,190 |   |
| Provision for income taxes                               |   | 21     |   |   | 11,229    |   |   |   | 20,671 |   |
| PROFIT (LOSS) FROM CONTINUING OPERATIONS                 |   |   |   | $      | (220,056  | )      |   | $      | 524,519 |   |
|                                                     |   |   |   |   |      |   |   |   |   |   |
| DISCONTINUED OPERATIONS                                  |   |   |   |   |      |   |   |   |   |   |
| Loss from discontinued operations                        |   | 18     |   |   | (22,379   | )      |   |   | (5,945 | ) |
| PROFIT (LOSS) FOR THE YEAR                               |   |   |   | $      | (242,435  | )      |   | $      | 518,574 |   |
|                                                     |   |   |   |   |      |   |   |   |   |   |
| Attributable to:                                         |   |   |   |   |      |   |   |   |   |   |
| Shareholders of Just Energy                              |   |   |   | $      | (242,243  | )      |   | $      | 509,276 |   |
| Non-controlling interest                                 |   |   |   |   | (192      | )      |   |   | 9,298 |   |
| PROFIT (LOSS) FOR THE YEAR                               |   |   |   | $      | (242,435  | )      |   | $      | 518,574 |   |
|                                                     |   |   |   |   |      |   |   |   |   |   |
|                                                     |   |   |   |   |      |   |   |   |   |   |
| Earnings (loss) per share from continuing operations     |   | 27     |   |   |      |   |   |   |   |   |
| Basic                                                    |   |   |   | $      | (1.54     | )      |   | $      | 3.45 |   |
| Diluted                                                  |   |   |   | $      | (1.54     | )      |   | $      | 2.65 |   |
| Loss per share from discontinued operations              |   | 18     |   |   |      |   |   |   |   |   |
| Basic                                                    |   |   |   | $      | (0.14     | )      |   | $      | (0.03 | ) |
| Diluted                                                  |   |   |   | $      | (0.14     | )      |   | $      | (0.03 | ) |
| Earnings (loss) per share available to shareholders      |   | 27     |   |   |      |   |   |   |   |   |
| Basic                                                    |   |   |   | $      | (1.68     | )      |   | $      | 3.42 |   |
| Diluted                                                  |   |   |   | $      | (1.68     | )      |   | $      | 2.62 |   |

 

See accompanying notes to the consolidated financial statements

 

|   |   | 2. |
|--------|--------|----|

 

JUSTENERGY GROUP INC.RESTATED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)FOR THE YEARS ENDED MARCH 31*(in thousands of Canadian dollars*)

 

|                                                                                 |   |        |     |   |        |   |
|--------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|
|                                                                                 |   | 2019   |     |   | 2018   |   |
| PROFIT (LOSS) FOR THE YEAR                                                           |   | $      | (242,435 | )      |   | $      | 518,574 |   |
| Other comprehensive income to be reclassified to profit or loss in subsequent years: |   |   |     |   |   |   |   |   |
| Unrealized gain on translation of foreign operations from continuing operations      |   |   | 4,217    |   |   |   | 2,843 |   |
| Unrealized gain on translation of foreign operations from discontinued operations    |   |   | 805      |   |   |   | 867 |   |
| Unrealized gain on revaluation of investment, net of tax                             |   |   | -        |   |   |   | 17,863 |   |
|                                                                                 |   |   | 5,022    |   |   |   | 21,573 |   |
| TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR, NET OF TAX                           |   | $      | (237,413 | )      |   | $      | 540,147 |   |
|                                                                                 |   |   |     |   |   |   |   |   |
| Total comprehensive income (loss) attributable to:                                   |   |   |     |   |   |   |   |   |
| Shareholders of Just Energy                                                          |   | $      | (237,221 | )      |   | $      | 530,849 |   |
| Non-controlling interest                                                             |   |   | (192     | )      |   |   | 9,298 |   |
| TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR, NET OF TAX                           |   | $      | (237,413 | )      |   | $      | 540,147 |   |

 

*See accompanying notes to the consolidated financial statements*

                 

|   |   | 3. |
|--------|--------|----|

 

JUSTENERGY GROUP INC.RESTATED CONSOLIDARED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITYFOR THE YEARS ENDED MARCH 31*(in thousands of Canadian dollars*)

 

|                                                         |   |        |   | 2019                      |       |   |        |   |
|--------------------------------------------------------------|--------|--------|--------|---------------------------|------------|--------|--------|--------|
|                                                         |   | Notes  |   | (Restated – Note 5) |       |   | 2018   |   |
| ATTRIBUTABLE TO THE SHAREHOLDERS                             |   |   |   |                      |       |   |   |   |   |   |
| Accumulated earnings                                         |   |   |   |                      |       |   |   |   |   |   |
| Accumulated earnings, beginning of year                      |   |   |   | $                         | 754,639    |   |   | $      | 259,571 |   |
| Adjustment for revision                                      |   | 5      |   |                      | -          |   |   |   | (14,208 | ) |
| Adjustment for adoption of recent accounting pronouncements  |   | 7      |   |                      | 20,711     |   |   |   | - |   |
| Profit (loss) for the period, attributable to shareholders   |   |   |   |                      | (242,243   | )      |   |   | 509,276 |   |
| Accumulated earnings, end of year                            |   |   |   |                      | 533,107    |   |   |   | 754,639 |   |
|                                                         |   |   |   |                      |       |   |   |   |   |   |
| DIVIDENDS AND DISTRIBUTIONS                                  |   |   |   |                      |       |   |   |   |   |   |
| Dividends and distributions, beginning of year               |   |   |   |                      | (1,835,778 | )      |   |   | (1,749,471 | ) |
| Dividends and distributions declared and paid                |   | 30     |   |                      | (88,030    | )      |   |   | (86,307 | ) |
| Dividends and distributions, end of year                     |   |   |   |                      | (1,923,808 | )      |   |   | (1,835,778 | ) |
| DEFICIT                                                      |   |   |   | $                         | (1,390,701 | )      |   | $      | (1,081,139 | ) |
|                                                         |   |   |   |                      |       |   |   |   |   |   |
| ACCUMULATED OTHER COMPREHENSIVE INCOME                       |   |   |   |                      |       |   |   |   |   |   |
| Accumulated other comprehensive income, beginning of year    |   |   |   | $                         | 91,934     |   |   | $      | 70,361 |   |
| Adjustment for adoption of recent accounting pronouncements  |   | 7      |   |                      | (17,863    | )      |   |   | - |   |
| Other comprehensive income                                   |   |   |   |                      | 5,022      |   |   |   | 21,573 |   |
| Accumulated other comprehensive income, end of year          |   |   |   | $                         | 79,093     |   |   | $      | 91,934 |   |
|                                                         |   |   |   |                      |       |   |   |   |   |   |
| SHAREHOLDERS’ CAPITAL                                  |   | 22     |   |                      |       |   |   |   |   |   |
| Common shares                                                |   |   |   |                      |       |   |   |   |   |   |
| Common shares, beginning of year                             |   |   |   | $                         | 1,079,055  |   |   | $      | 1,070,076 |   |
| Share-based units exercised                                  |   |   |   |                      | 9,483      |   |   |   | 11,954 |   |
| Acquisition of businesses                                    |   | 17     |   |                      | -          |   |   |   | 8,966 |   |
| Repurchase and cancellation of shares                        |   |   |   |                      | -          |   |   |   | (11,941 | ) |
| Common shares, end of year                                   |   |   |   | $                         | 1,088,538  |   |   | $      | 1,079,055 |   |
|                                                         |   |   |   |                      |       |   |   |   |   |   |
| Preferred shares                                             |   |   |   |                      |       |   |   |   |   |   |
| Preferred shares, beginning of year                          |   |   |   | $                         | 136,771    |   |   | $      | 128,363 |   |
| Shares issued                                                |   | 22     |   |                      | 10,447     |   |   |   | 9,260 |   |
| Shares issuance costs                                        |   |   |   |                      | (253       | )      |   |   | (852 | ) |
| Preferred shares, end of year                                |   |   |   |                      | 146,965    |   |   |   | 136,771 |   |
| SHAREHOLDERS’ CAPITAL                                  |   |   |   | $                         | 1,235,503  |   |   | $      | 1,215,826 |   |
|                                                         |   |   |   |                      |       |   |   |   |   |   |
| EQUITY COMPONENT OF CONVERTIBLE DEBENTURES                   |   |   |   |                      |       |   |   |   |   |   |
| Balance, beginning of year                                   |   |   |   | $                         | 13,029     |   |   | $      | 13,508 |   |
| Add: Issuance of convertible debentures                      |   | 19(d)  |   |                      | -          |   |   |   | 7,130 |   |
| Less: Redemption of convertible debentures                   |   | 19(g)  |   |                      | -          |   |   |   | (7,609 | ) |
| Balance, end of year                                         |   |   |   | $                         | 13,029     |   |   | $      | 13,029 |   |
|                                                         |   |   |   |                      |       |   |   |   |   |   |
| CONTRIBUTED SURPLUS (DEFICIT)                                |   |   |   |                      |       |   |   |   |   |   |
| Balance, beginning of year                                   |   |   |   | $                         | (22,693    | )      |   | $      | 58,266 |   |
| Add:    Share-based compensation expense      |   | 25(a)  |   |                      | 6,133      |   |   |   | 18,353 |   |
| Redemption of convertible debentures                         |   | 19(e)  |   |                      | -          |   |   |   | 7,126 |   |
| Non-cash deferred share grant distributions                  |   |   |   |                      | 72         |   |   |   | 45 |   |
| Less:    Purchase of non-controlling interest |   |   |   |                      | 1,462      |   |   |   | (89,010 | ) |
| Share-based units exercised                                  |   |   |   |                      | (9,483     | )      |   |   | (11,954 | ) |
| Share-based compensation adjustment                          |   |   |   |                      | (1,031     | )      |   |   | (5,519 | ) |
| Balance, end of year                                         |   |   |   | $                         | (25,540    | )      |   | $      | (22,693 | ) |
|                                                         |   |   |   |                      |       |   |   |   |   |   |
| NON-CONTROLLING INTEREST                                     |   |   |   |                      |       |   |   |   |   |   |
| Balance, beginning of year                                   |   |   |   | $                         | (422       | )      |   | $      | - |   |
| Distributions to non-controlling shareholders                |   |   |   |                      | -          |   |   |   | (9,603 | ) |
| Foreign exchange impact on non-controlling interest          |   |   |   |                      | 215        |   |   |   | (117 | ) |
| Profit (loss) attributable to non-controlling interest       |   |   |   |                      | (192       | )      |   |   | 9,298 |   |
| Balance, end of year                                         |   |   |   | $                         | (399       | )      |   | $      | (422 | ) |
| TOTAL SHAREHOLDERS' EQUITY (DEFICIT)                         |   |   |   | $                         | (89,015    | )      |   | $      | 216,535 |   |

 

See accompanying notes to the consolidated financial statements                    

|   |   | 4. |
|--------|--------|----|

 

JUSTENERGY GROUP INC.RESTATED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED MARCH31

*(inthousands of Canadian dollars)*

 

| **Net inflow (outflow) of cash related to the following activities**  |   | Notes  |   | 2019                      |     |   | 2018   |   |
|-----------------------------------------------------------------------|--------|--------|--------|---------------------------|----------|--------|--------|--------|
| **OPERATING**                                                         |   |        |   | (Restated – Note 5) |     |   |        |   |
| Profit (loss) from continuing operations before income taxes          |   |   |   | $                         | (208,827 | )      |   | $      | 545,190 |   |
| Loss from discontinued operations before income taxes                 |   | 18     |   |                      | (22,375  | )      |   |   | (5,942 | ) |
| Profit (loss) before income taxes                                     |   |   |   |                      | (231,202 | )      |   |   | 539,248 |   |
|                                                                  |   |   |   |                      |     |   |   |   |   |   |
| Items not affecting cash                                              |   |   |   |                      |     |   |   |   |   |   |
|  Amortization of intangible assets                               |   | 25(a)  |   |                      | 22,655   |   |   |   | 16,547 |   |
|  Depreciation of property and equipment                          |   | 25(a)  |   |                      | 4,771    |   |   |   | 4,073 |   |
|  Amortization included in cost of sales                          |   |   |   |                      | 2,666    |   |   |   | 3,116 |   |
|  Share-based compensation                                        |   | 25(a)  |   |                      | 6,133    |   |   |   | 18,353 |   |
|  Financing charges, non-cash portion                             |   |   |   |                      | 18,223   |   |   |   | 14,547 |   |
|  Other                                                           |   |   |   |                      | (110     | )      |   |   | (369 | ) |
|  Change in fair value of investments                             |   |   |   |                      | -        |   |   |   | 1,289 |   |
|  Change in fair value of derivative instruments and other        |   | 14     |   |                      | 153,226  |   |   |   | (474,393 | ) |
|  Adjustment required to reflect net cash receipts from gas sales |   | 32(a)  |   |                      | 4,186    |   |   |   | (2,876 | ) |
|  Net change in working capital balances                          |   | 32(b)  |   |                      | (12,973  | )      |   |   | (36,425 | ) |
|  Adjustment for non-cash discontinued operations                 |   |   |   |                      | 405      |   |   |   | 231 |   |
|  Income taxes paid                                               |   |   |   |                      | (12,435  | )      |   |   | (21,319 | ) |
| Cash inflow (outflow) from operating activities                       |   |   |   |                      | (44,455  | )      |   |   | 62,022 |   |
|                                                                  |   |   |   |                      |     |   |   |   |   |   |
| INVESTING                                                             |   |   |   |                      |     |   |   |   |   |   |
|  Purchase of property and equipment                              |   |   |   |                      | (5,159   | )      |   |   | (4,838 | ) |
|  Purchase of intangible assets                                   |   |   |   |                      | (38,383  | )      |   |   | (30,938 | ) |
|  Acquisition of businesses                                       |   |   |   |                      | (4,281   | )      |   |   | (10,832 | ) |
|  Short-term investments                                          |   |   |   |                      | -        |   |   |   | 25,532 |   |
| Cash outflow from investing activities                                |   |   |   |                      | (47,823  | )      |   |   | (21,076 | ) |
|                                                                  |   |   |   |                      |     |   |   |   |   |   |
| FINANCING                                                             |   |   |   |                      |     |   |   |   |   |   |
|  Dividends paid                                                  |   | 30     |   |                      | (87,959  | )      |   |   | (86,261 | ) |
|  Repayment of long-term debt                                     |   |   |   |                      | (173,366 | )      |   |   | (100,000 | ) |
|  Issuance of long-term debt                                      |   |   |   |                      | 253,242  |   |   |   | 100,000 |   |
|  Share swap payout                                               |   |   |   |                      | (10,000  | )      |   |   | - |   |
|  Debt issuance costs                                             |   |   |   |                      | (18,132  | )      |   |   | (4,115 | ) |
|  Credit facilities withdrawal                                    |   |   |   |                      | 79,462   |   |   |   | 53,857 |   |
|  Issuance of preferred shares                                    |   |   |   |                      | 10,447   |   |   |   | 9,260 |   |
|  Preferred shares issuance costs                                 |   |   |   |                      | (352     | )      |   |   | (2,114 | ) |
|  Shares repurchase                                               |   |   |   |                      | -        |   |   |   | (11,941 | ) |
|  Distributions to non-controlling interest                       |   |   |   |                      | -        |   |   |   | (9,603 | ) |
| Cash inflow (outflow) from financing activities                       |   |   |   |                      | 53,342   |   |   |   | (50,917 | ) |
|                                                                  |   |   |   |                      |     |   |   |   |   |   |
| Effect of foreign currency translation on cash balances               |   |   |   |                      | 2        |   |   |   | 1,456 |   |
|                                                                  |   |   |   |                      |     |   |   |   |   |   |
| Net cash outflow                                                      |   |   |   |                      | (38,934  | )      |   |   | (8,515 | ) |
| Cash and cash equivalents, beginning of year                          |   |   |   |                      | 48,861   |   |   |   | 57,376 |   |
|                                                                  |   |   |   |                      |     |   |   |   |   |   |
| Cash and cash equivalents, end of year                                |   |   |   | $                         | 9,927    |   |   | $      | 48,861 |   |
|                                                                  |   |   |   |                      |     |   |   |   |   |   |
| Supplemental cash flow information:                                   |   |   |   |                      |     |   |   |   |   |   |
| Interest paid                                                         |   |   |   | $                         | 52,836   |   |   | $      | 38,551 |   |

 

See accompanying notes to the consolidated financial statements                    

 

|   |   | 5. |
|--------|--------|----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

| **** |
|------|

| **1.** |  | **ORGANIZATION** |
|--------|--|------------------|

 

Just Energy Group Inc. (“JEGI”, “Just Energy” or the “Company”) is a corporationestablished under the laws of Canada to hold securities and to distribute the income of its directly or indirectly owned operatingsubsidiaries and affiliates. The registered office of Just Energy is First Canadian Place, 100 King Street West, Toronto, Ontario,Canada. The consolidated financial statements consist of Just Energy and its subsidiaries and affiliates. The consolidated financialstatements were approved by the Board of Directors on August 14, 2019.

 

|  |
|--|

| 2. |  | OPERATIONS |
|----|--|------------|

 

Just Energy is a leading consumer company focused on essential needs, including electricity and natural gascommodities; on health and well-being, through products such as water quality and filtration devices; and on utility conservation,bringing energy efficient solutions and renewable energy options to consumers. Currently operating in the United States (“U.S.”),Canada and the United Kingdom (“U.K.”), Just Energy serves residential and commercial customers. Just Energy is theparent company of Amigo Energy, EdgePower Inc., Filter Group Inc., Green Star Energy, Hudson Energy, Interactive Energy Group,Just Energy Advanced Solutions, Tara Energy and TerraPass.

 

Just Energy’s currentcommodity product offerings include fixed, variable, index and flat rate options. By fixing the price of natural gas or electricityunder its fixed-price or price-protected program contracts for a period of up to five years, Just Energy’s customers offsettheir exposure to changes in the price of these essential commodities. Variable rate products allow customers to maintain competitiverates while retaining the ability to lock into a fixed price at their discretion. Flat-bill products allow customers to pay a flatrate each month regardless of usage. Just Energy derives its margin or gross profit from the difference between the price at whichit is able to sell the commodities to its customers and the related price at which it purchases the associated volumes from itssuppliers.

 

Through the Filter Group business acquired by Just Energyon October 1, 2018, Just Energy provides subscription-based, home water filtration systems to residential customers, includingunder-counter and whole-home water filtration solutions. In addition, Just Energy markets smart thermostats, offering the thermostatsas a stand-alone unit or bundled with certain commodity products. The smart thermostats are currently manufactured and distributedby ecobee Inc. (“ecobee”), a company in which Just Energy holds a 8% fully diluted equity interest. Just Energy alsooffers green products through its JustGreen program. The JustGreen electricity product offers customers the option of having allor a portion of their electricity sourced from renewable green sources such as wind, solar, hydropower or biomass. The JustGreengas product offers carbon offset credits that allow customers to reduce or eliminate the carbon footprint of their homes or businesses.Additional green products allow customers to offset their carbon footprint without buying energy commodity products and can beoffered in all states and provinces without being dependent on energy deregulation. Just Energy also provides energy managementsolutions to both Consumer and Commercial customers in the form of value added products and services which include, but are notlimited to, LED retrofit lighting and HVAC controls, as well as enterprise monitoring.

 

Just Energy markets its productofferings through several sales channels including brokers, online marketing, retail and affinity relationships, and door-to-door.

 

In March 2019, Just Energy formally approved and commenceda process to dispose of its businesses in Germany, Ireland and Japan. The decision was part of a strategic transition to focuson the core business in North America and the U.K. The disposal of the operations is expected to be completed within the next 12months. At March 31, 2019, these operations were classified as a disposal group held for sale and as a discontinued operation.Previously, these operations were reported within the Consumer segment.

 

|   |   | 6. |
|--------|--------|----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

|  |
|--|

| 3. |  | BASIS OF PRESENTATION |
|----|--|-----------------------|

 
| **(a)** |  | **Compliance with IFRS** |
|---------|--|--------------------------|

 

The consolidatedfinancial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) asissued by the International Accounting Standards Board (“IASB”). The policies applied in these consolidated financialstatements were based on IFRS issued and outstanding as at March 31, 2019.

 

The consolidatedfinancial statements are presented in Canadian dollars, the functional currency of Just Energy, and all values are rounded to thenearest thousand, except where indicated. The Company’s consolidated financial statements are prepared on the historicalcost basis of accounting, except as disclosed in the accounting policies set out below.

 
| **(b)** |  | **Principles of consolidation** |
|---------|--|---------------------------------|

 

The consolidatedfinancial statements include the accounts of Just Energy and its directly or indirectly owned subsidiaries as at March 31, 2019.Subsidiaries are consolidated from the date of acquisition and control, and continue to be consolidated until the date that suchcontrol ceases. Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with theinvestee and has the ability to affect these returns through its power over the investee. The financial statements of the subsidiariesare prepared for the same reporting period as Just Energy, using consistent accounting policies. All intercompany balances, income,expenses, and unrealized gains and losses resulting from intercompany transactions are eliminated on consolidation.

 
| **(c)** |  | **Comparative consolidated financial statements** |
|---------|--|---------------------------------------------------|

 

Certain figures in the comparativeconsolidated financial statements have been reclassified from statements previously presented to conform to the presentation ofthe current year’s consolidated financial statements. This includes consolidating the unbilled revenues with trade receivablesand separating out the discontinued operations’ results from prior fiscal years. The changes were made to consolidate lineitems that are alike in nature and for comparability of results.

 

|  |
|--|

|  |
|--|

| 4. |  | SIGNIFICANT ACCOUNTING POLICIES |
|----|--|---------------------------------|

** **

**Cashand cash equivalents and restricted cash**

 

All highlyliquid temporary cash investments with an original maturity of three months or less when purchased are considered to be cash equivalents.For the purpose of the consolidated statements of cash flows, cash and cash equivalents consist of cash and cash equivalents asdefined above, net of outstanding bank overdrafts.

 

Restrictedcash includes cash and cash equivalents, where the availability of funds is restricted by debt arrangements or held in escrow aspart of prior acquisition agreements.	

 

|   |   | 7. |
|--------|--------|----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

**Accruedgas receivable/accrued gas payable or gas delivered in excess of consumption/deferred revenue**

 

Accrued gasreceivable from Just Energy’s customers is stated at fair value and results from customers consuming more gas than has beendelivered by Just Energy to local distribution companies (“LDCs”). Accrued gas payable represents Just Energy’sobligation to the LDCs for the customers’ excess consumption, over what was delivered to the LDCs.

 

Gas deliveredto LDCs in excess of consumption by customers is stated at the lower of cost and net realizable value. Collections from customersin advance of their consumption of gas result in deferred revenue.

 

Assumingnormal weather and consumption patterns, during the winter months, customers will have consumed more than was delivered, resultingin the recognition of accrued gas receivable/accrued gas payable. In the summer months, customers will have consumed less thanwhat was delivered, resulting in the recognition of gas delivered in excess of consumption/deferred revenue.

 

These adjustmentsare applicable solely to the Ontario, Manitoba, Quebec, Saskatchewan and Michigan gas markets.

 

**Gasin storage**

 

Gas in storagerepresents the gas delivered to the LDCs in Illinois, Indiana, New York, Ohio, Georgia, Maryland, California and Alberta. The balancewill fluctuate as gas is injected into or withdrawn from storage.

 

Gas in storageis valued at the lower of cost and net realizable value, with cost being determined on a weighted average basis. Net realizablevalue is the estimated selling price in the ordinary course of business.

 

**Propertyand equipment (“P&E”)**

 

Propertyand equipment are stated at cost, net of any accumulated depreciation and impairment losses. Cost includes the purchase price and,where relevant, any costs directly attributable to bringing the asset to the location and condition necessary and/or the presentvalue of all dismantling and removal costs. Where major components of property and equipment have different useful lives, the componentsare recognized and depreciated separately. Just Energy recognizes, in the carrying amount, the cost of replacing part of an itemwhen the cost is incurred and if it is probable that the future economic benefits embodied in the item can be reliably measured.When significant parts of property and equipment are required to be replaced at intervals, Just Energy recognizes such parts asindividual assets with specific useful lives and depreciates them accordingly. Likewise, when a major inspection is performed,its cost is recognized in the carrying amount of the equipment as a replacement if the recognition criteria are satisfied. Allother repair and maintenance costs are recognized in the consolidated statements of income (loss) as a general and administrativeexpense when incurred. Depreciation is provided over the estimated useful lives of the assets as follows:

 

 

|   |   | 8. |
|--------|--------|----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

| Asset category                      | Depreciation method | Rate/useful life |
|-------------------------------------|---------------------|------------------|
| Furniture and fixtures              | Declining balance   | 20%              |
| Office equipment                    | Declining balance   | 20%              |
| Computer equipment                  | Declining balance   | 30%              |
| Leasehold improvements              | Straight-line       | Term of lease    |
| Thermostats                         | Straight-line       | 5 years          |
| Installed assets (water filtration) | Straight-line       | 4-7 years        |

 

An item of property and equipmentand any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected fromits use or disposal. Any gain or loss arising on derecognition of the asset is included in the consolidated statements of income(loss).

 

The usefullives and methods of depreciation are reviewed at each financial year-end and adjusted prospectively, if appropriate.

 

**Businesscombinations**

 

All identifiable assets acquired and liabilities assumed are measured at the acquisition date at fairvalue. The Company records all identifiable intangible assets including identifiable assets that had not been recognized by theacquiree before the business combination. Any excess of the cost of acquisition over the Company’s share of the net fairvalue of the identifiable assets acquired and liabilities assumed is recorded as goodwill. During the measurement period (whichis within one year from the acquisition date), Just Energy may adjust the amounts recognized at the acquisition date to reflectnew information obtained about facts and circumstances that existed as of the acquisition date. Adjustments related to facts andcircumstances that did not exist as at the consolidated statement of financial position dates are taken to the consolidated statementsof income (loss). The Company records acquisition-related costs as expenses in the periods in which the costs are incurred withthe exception of certain costs relating to registering and issuing debt or equity securities which are accounted for as part ofthe financing. Non-controlling interest is recognized at its proportionate share of the fair value of identifiable assets and liabilities,unless otherwise indicated.

 

**Goodwill**

 

Goodwillis initially measured at cost, which is the excess of the cost of the business combination over Just Energy’s share in thenet fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities. Any negative difference isrecognized directly in the consolidated statements of income (loss).

 

Afterinitial recognition, goodwill is measured at cost, less impairment losses. For the purpose of impairment testing, goodwill is allocatedto each of Just Energy’s operating segments that are expected to benefit from the synergies of the combination, irrespectiveof whether other assets and liabilities of the acquiree are assigned to those segments. 	

 

**Intangibleassets**

 

Intangibleassets acquired outside of a business combination are measured at cost on initial recognition. Intangible assets acquired in abusiness combination are recorded at fair value on the date of acquisition. Following initial recognition, intangible assets arecarried at cost less any accumulated amortization and/or accumulated impairment losses.

|   |   | 9. |
|--------|--------|----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

Intangibleassets with finite useful lives are amortized over the useful economic life and assessed for impairment whenever there is an indicationthat the intangible asset may be impaired. The amortization method and amortization period of an intangible asset with a finiteuseful life are reviewed at least annually. Changes in the expected useful life or the expected pattern of consumption of futureeconomic benefits embodied in the asset are accounted for by changing the amortization period or method, as appropriate, and aretreated as changes in accounting estimates. The amortization expense related to intangible assets with finite lives is recognizedin the consolidated statements of income (loss) in the expense category associated with the function of the intangible assets.Intangible assets consist of gas customer contracts, electricity customer contracts, sales network, brand and goodwill, acquiredthrough business combinations and asset purchases, as well as software, commodity billing and settlement systems and informationtechnology system development.

 

Internallygenerated intangible assets are capitalized when the product or process is technically and commercially feasible, the future economicbenefit is measurable, Just Energy can demonstrate how the asset will generate future economic benefits and Just Energy has sufficientresources to complete development. The cost of an internally generated intangible asset comprises all directly attributable costsnecessary to create, produce and prepare the asset to be capable of operating in the manner intended by management.

 

The goodwilland certain brands are considered to have indefinite lives and are not amortized, rather tested annually for impairment. The assessmentof indefinite life is reviewed annually. The Filter Group brand is treated as a finite life asset and amortized due to its historyof rebranding.

 

Gains orlosses arising from disposal of an intangible asset are measured as the difference between the net disposal proceeds and the carryingamount of the asset, and are recognized in the consolidated statements of income (loss) when the asset is derecognized.

 

| Intangible asset category                 | Amortization method | Rate/useful life |
|-------------------------------------------|---------------------|------------------|
| Customer contracts                        | Straight-line       | Term of contract |
| Contract relationships                    | Straight-line       | Term of contract |
| Commodity billing and settlement system   | Straight-line       | 5 years          |
| Sales network and affinity relationships  | Straight-line       | 5-8 years        |
| Information technology system development | Straight-line       | 3-5 years        |
| Software                                  | Straight-line       | 1 year           |
| Technology                                | Straight-line       | 15 years         |
| Brand (Filter Group)                      | Straight-line       | 10 years         |

 

**Impairment of non-financialassets**

 

Just Energy assesses whether there is an indication that an asset may be impaired at each reporting date.If such an indication exists or when annual testing for an asset is required, Just Energy estimates the asset's recoverable amount.The recoverable amounts of goodwill and intangible assets with an indefinite useful life are tested annually. The recoverable amountis the higher of an asset's or cash-generating unit's (“CGU”) fair value less costs to sell and its value-in-use. Value-in-useis determined by discounting estimated future pre-tax cash flows using a pre-tax discount rate that reflects the current marketassessment of the time value of money and the specific risks of the asset. The recoverable amount of assets that do not generateindependent cash flows is determined based on the CGU to which the asset belongs.

|   |   | 10. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

An impairmentloss is recognized if an asset's carrying amount or that of the CGU to which it is allocated is higher than its recoverable amount.Impairment losses of CGUs are first charged against the value of assets in proportion to their carrying amount.

 

In the consolidatedstatements of income (loss), an impairment loss is recognized in the expense category associated with the function of the impairedasset.

 

For assetsexcluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognizedimpairment losses may no longer exist or may have decreased. If such indication exists, Just Energy estimates the asset’sor CGU’s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptionsused to determine the asset’s recoverable amount since the last impairment loss was recognized. The reversal is limited sothat the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have beendetermined, net of amortization, had no impairment loss been recognized for the asset in prior years. Such a reversal is recognizedin the consolidated statements of income (loss).

 

Goodwillis tested for impairment annually and when circumstances indicate that the carrying value may be impaired. Goodwill is tested atthe segment level as that is the lowest level at which goodwill is monitored. Impairment is determined for goodwill by assessingthe recoverable amount of each segment to which the goodwill relates. Where the recoverable amount of the segment is less thanits carrying amount, an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods.

 

**Leases**

 

A lease is an arrangement wherebythe lessor conveys to the lessee, in return for a payment or series of payments, the right to use an asset for an agreed periodof time. Where Just Energy determines that the contractual provisions of a contract contain, or are, a lease and result in thecustomer assuming the principal risks and rewards of ownership of the asset, the arrangement is a finance lease. Assets subjectto finance leases are not reflected as property and equipment and the net investment in the lease, represented by the present valueof the amounts due from the lessee, is recorded as a financial asset, classified as a finance lease receivable. The payments consideredto be part of the leasing arrangement are apportioned between a reduction in the lease receivable and finance lease income. Thefinance lease income element of the payments is recognized using a method that results in a constant rate of return on the netinvestment in each period and is reflected in financing income.

 

IFRS 15,*Revenue from Contracts with Customers*(“IFRS 15”) requires the estimation of total consideration over the contractterm and the allocation of that consideration to all performance obligations in the contract based on their relative stand-aloneselling prices. As such, consideration is allocated towards the performance obligation related to the finance lease and commodityrevenue if a customer has a contract with Just Energy for a thermostat and electricity and/or power that was entered into at thesame time.

 

The determinationof whether an arrangement is or contains a lease is based on the substance of the arrangement at the inception date and whetherfulfillment of the arrangement is dependent on the use of a specific asset or assets, or the arrangement conveys a right to usethe asset.

 

*JustEnergy as a lessee*

 

Operatinglease payments are recognized as an expense in the consolidated statements of income (loss) on a straight-line basis over the leaseterm.

|   |   | 11. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

*JustEnergy as a lessor*

 

Leases whereJust Energy does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases.Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognizedover the lease term on the same basis as rental income.

 

Just Energy considers itself to be a dealer lessor with respect to its lease arrangements for thermostatsas it has given the customer the choice of either buying or leasing the thermostat. A finance lease of an asset by a dealer lessorgives rise to profit or loss equivalent to that resulting from an outright sale of the underlying asset, at normal selling prices.Just Energy recognizes revenue based on the fair value of the thermostat at the time of completed installation of the thermostat,at which point in time Just Energy has transferred control of the thermostat to the customer. Just Energy also recognizes the costof sale on the thermostat through cost of goods sold.

 

**Financialinstruments**

 

For comparability purposes, the accounting policies below discuss the previous financial instruments treatmentunder IAS 39, Financial Instruments: Recognition and Measurement (“IAS 39”). IAS 39 was applied in fiscal 2018. Forfiscal 2019, the Company adopted IFRS 9, *Financial Instruments* (“IFRS 9”), as discussed in Note 7, “AccountingPolicies and New Standards Adopted”.

 

*Financialassets and liabilities*

 

Just Energy classifies its financial assets as either (i) financial assets at fair value through profitor loss, (ii) loans and receivables, (iii) other financial assets, or (iv) available for sale, and its financial liabilities aseither (i) financial liabilities at fair value through profit or loss or (ii) other financial liabilities. Appropriate classificationof financial assets and liabilities is determined at the time of initial recognition or when reclassified in the consolidated statementsof financial position.

 

Financialinstruments are recognized on the trade date, which is the date on which Just Energy commits to purchase or sell the asset.

 

*Financialassets at fair value through profit or loss*

 

Financialassets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initialrecognition as at fair value through profit or loss. Financial assets are classified as fair value through profit or loss if theyare acquired for the purpose of selling or repurchasing in the near term. This category includes derivative financial instrumentsentered into that are not designated as hedging instruments in hedge relationships as defined by IAS 39. Included in this classare primarily physical delivered energy contracts, for which the own-use exemption could not be applied, financially settled energycontracts and foreign currency forward contracts.

 

An analysisof fair values of financial instruments and further details as to how they are measured are provided in Note 14. Related realizedand unrealized gains and losses are included in the consolidated statements of income (loss).

|   |   | 12. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

*Loansand receivables*

 

Loans andreceivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loansand receivables are initially recognized at fair value net of transaction costs. They are subsequently measured at amortized costusing the effective interest rate method less any impairment. The effective interest amortization is included in finance costsin the consolidated statements of income (loss).

 

*Financialassets classified as available for sale*

 

Available for sale financial assetsare held at fair value with gains and losses included in other comprehensive income. Just Energy uses this classification for assetsthat are not derivatives and are not held for trading purposes or otherwise designated at fair value through profit or loss, orat amortized cost.

 

*Derecognition*

 

A financialasset is derecognized when the rights to receive cash flows from the asset have expired or when Just Energy has transferred itsrights to receive cash flows from the asset.

 

*Impairmentof financial assets*

 

Just Energyassesses whether there is objective evidence that a financial asset is impaired at each reporting date. A financial asset is deemedto be impaired if there is objective evidence of impairment as a result of one or more events that have occurred after the initialrecognition of the asset (an incurred “loss event”) and that loss event has an impact on the estimated future cashflows that can be reliably estimated.

 

For significantindividual financial assets carried at amortized cost, Just Energy assesses if impairment significantly exists. Insignificant financialassets are assessed collectively. If Just Energy determines that no objective evidence of impairment exists for an individuallyassessed financial asset, it includes the asset in a group of financial assets with similar credit risk characteristics and collectivelyassesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continuesto be, recognized are not included in a collective assessment of impairment.

 

If thereis objective evidence that an impairment loss has occurred, the amount of the loss is measured as the difference between the asset’scarrying amount and the present value of estimated future cash flows. The present value of the estimated future cash flows is discountedat the financial asset’s original effective interest rate.

 

The carryingamount of the asset is reduced through the use of an allowance account and the amount of the loss is recognized in profit or loss.Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discountthe future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of other incomein the consolidated statements of income (loss).

 

Loans andreceivables, together with the associated allowance, are written off when there is no realistic prospect of future recovery. If,in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after theimpairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account.If a write-off is later recovered, the recovery is credited to other operating costs in the consolidated statements of income (loss).

|   |   | 13. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

*Financialliabilities at fair value through profit or loss*

 

Financialliabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designatedupon initial recognition as at fair value through profit or loss.

 

Financialliabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. This categoryincludes derivative financial instruments entered into by Just Energy that are not designated as hedging instruments in hedge relationshipsas defined by IAS 39. Included in this class are primarily physically delivered energy contracts, for which the own-use exemptioncould not be applied, financially settled energy contracts and foreign currency forward contracts.

 

Gains orlosses on liabilities held for trading are recognized in the consolidated statements of income (loss).

 

*Otherfinancial liabilities*

 

Other financialliabilities are measured at amortized cost using the effective interest rate method. Financial liabilities include long-term debtissued and are initially measured at fair value. Fair value is the consideration received, net of transaction costs incurred, tradeand other payables and bank indebtedness. Transaction costs related to the long-term debt instruments are included in the valueof the instruments and amortized using the effective interest rate method. The effective interest expense is included in financecosts in the consolidated statements of income (loss).

 

*Derecognition*

 

A financialliability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financialliability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability aresubstantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognitionof a new liability, and the difference in the respective carrying amounts is recognized in the consolidated statements of income(loss).

 

**Derivativeinstruments**

 

Just Energyenters into fixed-term contracts with customers to provide electricity and gas at fixed prices. These customer contracts exposeJust Energy to changes in consumption as well as changes in the market prices of gas and electricity. To reduce its exposure tomovements in commodity prices, Just Energy enters into contracts with suppliers that expose the Company to changes in prices forthe purchase and sale of power and natural gas. These contracts are treated as derivatives as they do not meet the own-use criteriaunder IAS 32, *Financial Instruments: Presentation* (“IAS 32”). The primary factors affecting the fair value ofderivative instruments at any point in time are the volume of open derivative positions and the changes of commodity market prices.Prices for power and natural gas are volatile, which can result in material changes in the fair value measurements reported inJust Energy’s consolidated financial statements in the future.

 

Just Energyanalyzes all its contracts, of both a financial and non-financial nature, to identify the existence of any “embedded”derivatives. Embedded derivatives are accounted for separately from the underlying contract at the inception date when their economiccharacteristics are not closely related to those of the host contract and the host contract is not carried as held for tradingor designated as fair value through profit or loss. These embedded derivatives are measured at fair value with changes in fairvalue recognized in profit or loss.

|   |   | 14. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

All derivativesare recognized at fair value on the date on which the derivative is entered into and are remeasured to fair value at each reportingdate. Derivatives are carried in the consolidated statements of financial position as other financial assets when the fair valueis positive and as other financial liabilities when the fair value is negative. Just Energy does not utilize hedge accounting;therefore, changes in the fair value of these derivatives are recorded directly to the consolidated statements of income (loss)and are included within change in fair value of derivative instruments and other.

 

**Offsettingof financial instruments**

 

Financialassets and financial liabilities are offset and the net amount reported in the consolidated statements of financial position if,and only if, there is currently an enforceable legal right to offset the recognized amounts and there is an intention to settleon a net basis, or to realize the assets and settle the liabilities simultaneously.

 

**Fairvalue of financial instruments**

 

Fair valueis the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participantsat the measurement date (i.e., an exit price). The fair value of financial instruments that are traded in active markets at eachreporting date is determined by reference to quoted market prices, without any deduction for transaction costs.

 

For financialinstruments not traded in an active market, the fair value is determined using appropriate valuation techniques that are recognizedby market participants. Such techniques may include using recent arm’s-length market transactions, reference to the currentfair value of another instrument that is substantially the same, discounted cash flow analysis, or other valuation models. An analysisof fair values of financial instruments and further details as to how they are measured are provided in Note 14.

 

**Revenuerecognition**

 

For comparability purposes, theaccounting policy below discusses the previous revenue recognition treatment under IAS 18, Revenue (“IAS 18”). Thefiscal 2018 financial statements were prepared using IAS 18. For fiscal 2019, the Company adopted IFRS 15 as discussed in Note7, “Accounting Policies and New Standards Adopted”.

 

Revenue is recognized when significantrisks and rewards of ownership are transferred to the customer. In the case of gas and electricity, transfer of risks and rewardsis upon consumption of the commodity. Just Energy recognizes revenue from thermostat leases, based on rental rates over the termcommencing from the installation date.

 

Revenue is measured at the fair valueof the consideration received, excluding discounts, rebates and sales taxes.

 

The Company assumes credit risk forall customers in Alberta, Texas, Illinois, California, Michigan, Delaware, Ohio, Georgia and the U.K. On all value-added productssold on the market, Just Energy also assumes the credit risk. In these markets, the Company ensures that credit review processesare in place prior to the commodity flowing to the customer.

|   |   | 15. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

**Foreigncurrency translation**

 

*Functionaland presentation currency*

 

Items includedin the consolidated financial statements of each of the Company’s entities are measured using the currency of the primaryeconomic environment in which the entity operates (the “functional currency”). For U.S.-based subsidiaries, this isU.S. dollars (“USD”), for subsidiaries based in the U.K. it is British pounds, and for subsidiaries based in Germanyand Ireland it is euros. The consolidated financial statements are presented in Canadian dollars, which is the parent Company’spresentation and functional currency.

 

*Transactions*

 

Foreign currencytransactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchangerates of monetary assets and liabilities denominated in foreign currencies are recognized in the consolidated statements of income(loss).

 

*Translationof foreign operations*

 

The resultsand consolidated financial position of all the group entities that have a functional currency different from the presentation currencyare translated into the presentation currency as follows:

 
|  | · | assets and liabilities for each consolidatedstatement of financial position presented are translated at the closing rate as at the date of that consolidated statement of financialposition; and |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 
|  | · | income and expenses for each consolidatedstatement of income (loss) are translated at the exchange rates prevailing at the dates of the transactions. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

 

On consolidation,exchange differences arising from the translation of the net investment in foreign operations are recorded in other comprehensiveincome (“OCI”).

 

When a foreignoperation is partially disposed of or sold, exchange differences that were recorded in accumulated other comprehensive income arerecognized in the consolidated statements of income (loss) as part of the gain or loss on sale.

 

Goodwilland fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreignentity and translated at the closing rate.	

 

**Earnings(loss) per share amounts**

 

The computationof earnings (loss) per share is based on the weighted average number of shares outstanding during the year. Diluted earnings (loss)per share are computed in a similar way to basic earnings (loss) per share except that the weighted average number of shares outstandingis increased to include additional shares assuming the exercise of stock options, restricted share grants (“RSGs”),performance bonus incentive grants (“PBGs”), deferred share grants (“DSGs”) and convertible debentures,if dilutive.

|   |   | 16. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

**Share-basedcompensation plans**

 

*Equity-basedcompensation liability*

 

Share-based compensation plans are equity-settled transactions. The cost of share-based compensation ismeasured by reference to the fair value at the date on which it was granted. Awards are valued at the grant date and are not adjustedfor changes in the prices of the underlying shares and other measurement assumptions. The cost of equity-settled transactions isrecognized, together with the corresponding increase in equity, over the period in which the performance or service conditionsare fulfilled, ending on the date on which the relevant grantee becomes fully entitled to the award. The cumulative expense recognizedfor equity-settled transactions at each reporting date until the vesting period reflects the extent to which the vesting periodhas expired and Just Energy’s best estimate of the number of the shares that will ultimately vest. The expense or creditrecognized for a period represents the movement in cumulative expense recognized as at the beginning and end of that period.

 

When options,RSGs, PBGs and DSGs are exercised or exchanged, the amounts previously credited to contributed deficit are reversed and creditedto shareholders' capital.

 

**Employeefuture benefits**

 

In Canada,Just Energy offers a long-term wealth accumulation plan (the "Canadian Plan") for all permanent full-time and permanentpart-time employees (working more than 26 hours per week). The Canadian Plan consists of two components, a Deferred Profit SharingPlan ("DPSP") and an Employee Profit Sharing Plan ("EPSP"). For participants of the DPSP, Just Energy contributesan amount equal to a maximum of 2% per annum of an employee's base earnings. For the EPSP, Just Energy contributes an amount upto a maximum of 2% per annum of an employee's base earnings towards the purchase of shares of Just Energy, on a matching one-for-onebasis.

 

For U.S.employees, Just Energy has established a long-term savings plan (the "U.S. Plan") for all permanent full-time and part-timeemployees (working more than 30 hours per week) of its subsidiaries. The U.S. Plan consists of two components, a 401(k) and anEmployee Unit Purchase Plan ("EUPP"). For participants who are enrolled only in the EUPP, Just Energy contributes anamount up to a maximum of 3% per annum of an employee's base earnings towards the purchase of Just Energy shares, on a matchingone-for-one basis. For participants who are enrolled only in the 401(k), Just Energy contributes an amount up to a maximum of 4%per annum of an employee's base earnings, on a matching one-for-one basis. In the event an employee participates in both the EUPPand 401(k), the maximum Just Energy will contribute is 5% total, consisting of 3% to the EUPP and 2% to the 401(k).

 

Participationin the plans in Canada or the U.S. is voluntary. For the 401(k), there is a two-year vesting period beginning from the date ofhire, and for the EUPP, there is a six-month vesting period from the employee's enrolment date in the plan.

 

Obligationsfor contributions to the Canadian and U.S. Plans are recognized as an expense in the consolidated statements of income (loss) whenthe employee makes a contribution.

 

|   |   | 17. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

**Incometaxes**

 

Current incometax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from, or paidto, the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantivelyenacted at the reporting date in the countries where Just Energy operates and generates taxable income.

 

Current incometaxes relating to items recognized directly in OCI or equity are recognized in OCI or equity and not in profit or loss. Managementperiodically evaluates positions taken in the tax returns with respect to situations where applicable tax regulations are subjectto interpretation and establishes provisions where appropriate.

 

Just Energyfollows the liability method of accounting for deferred income taxes. Under this method, deferred income tax assets and liabilitiesare recognized for the estimated tax consequences attributable to the temporary differences between the carrying value of the assetsand liabilities in the consolidated financial statements and their respective tax bases.

 

Deferredincome tax liabilities are recognized for all taxable temporary differences except:

 
|  | · | where the deferred income tax liabilityarises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combinationand, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 
|  | · | in respect of taxable temporary differencesassociated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be controlled bythe parent and it is probable that the temporary differences will not reverse in the foreseeable future. |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

Deferredincome tax assets are recognized for all deductible temporary differences, the carryforward of unused tax credits and any unusedtax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences,and the carryforward of unused tax credits and unused tax losses, can be utilized except:

 
|  | · | where the deferred income tax asset relatingto the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is nota business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 
|  | · | in respect of deductible temporary differencesassociated with investments in subsidiaries, deferred income tax assets are recognized only to the extent that it is probable thatthe temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporarydifferences can be utilized. |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

The carryingamount of deferred income tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longerprobable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.Unrecognized deferred income tax assets are reassessed at the end of each reporting period and are recognized to the extent thatit has become probable that future taxable profits will allow the deferred income tax asset to be recovered.

 

Deferred income tax assets andliabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability issettled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

|   |   | 18. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

Deferredincome taxes relating to items recognized in cumulative translation adjustment or equity is recognized in cumulative translationadjustment or equity and not in profit or loss.

 

Deferred income tax assets anddeferred income tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets againstcurrent income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

 

**Provisionsand restructuring**

 

Provisions are recognized when Just Energy has a present obligation, legal or constructive, as a resultof a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligationand a reliable estimate can be made of the amount of the obligation. Where Just Energy expects some or all provisions to be reimbursed,the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relatingto any provision is presented in the consolidated statements of income (loss), net of any reimbursement. If the effect of the timevalue of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risksspecific to the liability.

 

Restructuringprovisions comprise activities including termination or relocation of a business, management structural reorganization and employee-relatedcosts. Incremental costs directly associated with the restructuring are included in the restructuring provision. Costs associatedwith ongoing activities, including training or relocating continuing staff, are excluded from the provision. Measurement of theprovision is at the best estimate of the anticipated costs to be incurred.

 

Where discountingis used, the increase in the provision due to the passage of time is recognized as a finance cost in the consolidated statementsof income (loss).

 

**Sellingand marketing expenses**

 

Commissionsand various other costs related to obtaining and renewing customer contracts are charged to income in the period incurred exceptas disclosed below:

 

Commissionsrelated to obtaining and renewing Commercial customer contracts are paid in one of the following ways: all or partially up frontor as a residual payment over the term of the contract. If the commission is paid all or partially up front, it is recorded asa customer acquisition cost in other current assets and expensed in selling and marketing expenses over the term for which theassociated revenue is earned. If the commission is paid as a residual payment, the amount is expensed as earned.

 

Just Energyrecognizes the incremental acquisition costs of obtaining a customer contract as an asset as these costs would not have been incurredif the contract had not been obtained and these costs are recovered through the consideration collected from the contract. Commissionsand incentives paid for commodity contracts and value-added products are capitalized and amortized over the term of the contract.When the term of the contract is one year or less, the incremental costs incurred to obtain the customer contracts are expensedwhen incurred.

 

|   |   | 19. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

**Greenprovision and certificates**

 

Just Energyis a retailer of green energy and records a provision to its regulators as green energy sales are recognized. A corresponding costis included in cost of sales. Just Energy measures its provision based on the extent of green certificates that it holds or hascommitted to purchase and has recorded this obligation net of its green certificates. Any provision balance in excess of the greencertificates held or that Just Energy has committed to purchase is measured at fair value. Green certificates are purchased byJust Energy to settle its obligation with the regulators. Any green energy-related derivatives are forward contracts and are recognizedin accordance with the accounting policy discussed under financial instruments above.

 

**Non-currentassets held for sale and discontinued operations**

 

Just Energyclassifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally througha sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measuredat the lower of their carrying amount and fair value less costs to sell. The criteria for the held for sale classification is regardedas met only when the sale is highly probable, and the asset or disposal group is available for immediate sale in its present condition.Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one yearfrom the date of classification. Discontinued operations are excluded from the results of continuing operations and are presentedas a single amount as profit or loss after tax from discontinued operations in the consolidated statements of income (loss). Propertyand equipment and intangible assets are not depreciated or amortized once classified as held for sale.

 

Subsequentto the release of the consolidated financial statements, in June 2019, Just Energy formally approved and commenced a process todispose of its business in the United Kingdom (“U.K.”) At June 30, 2019, these operations were classified as a disposalgroup held for sale and as a discontinued operation.

 

| **5.** |  | **RESTATEMENT AND REVISION OF FINANCIAL STATEMENTS** |
|--------|--|------------------------------------------------------|

 
| (**a)** |  | **Restatement of financial statements** |
|---------|--|-----------------------------------------|

 

Management identified operational issues in customer enrolment and non-payment in the Texas residentialmarket. Management revisited the allowance for doubtful accounts as at March 31, 2019 and determined that additional reserves of$53.7 million were required at March 31, 2019. Management also identified collection issues in the United Kingdom (“U.K.”)market and determined that additional reserves of $57.5 million were required at March 31, 2019. Management determined that theunderstatement was material, and as a result the financial statements for the year ended March 31, 2019 should be restated. Accordingly,in compliance with IAS 10, Events after the balance sheet date, the authorization date of these financial statements has been updatedto August 14, 2019, and the financial statements reflect all subsequent events up to this date.

 

|   |   | 20. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

The following tables summarizethe effects of the adjustment described above.

 

Line itemson the restated consolidated statement of financial position and restated consolidated statement of changes in shareholders’equity

 

|                                                     |   |   | As at March 31, 2019   |   |   |   |       |   | As at March 31, 2019 |   |
|----------------------------------------------------------|--------|--------|------------------------|--------|--------|--------|------------|--------|----------------------|--------|
|                                                     |   |   | (As revised Note 5(b)) |   |   |   | Adjustment |   |                 |   | (Restated) |   |
| Trade and other receivables                              |   | $      | 783,780                |   |   | $      | (111,165   | )      |                 | $      | 672,615 |   |
| Current assets                                           |   | $      | 1,133,423              |   |   | $      | (111,165   | )      |                 | $      | 1,022,258 |   |
| Deferred income tax assets                               |   |   | 9,492                  |   |   |   | (8,400     | )      |                 |   | 1,092 |   |
| Long term liabilities                                    |   |   | 603,674                |   |   |   | (8,400     | )      |                 |   | 595,274 |   |
| Total Assets                                             |   | $      | 1,746,068              |   |   | $      | (119,565   | )      |                 | $      | 1,626,503 |   |
|                                                     |   |   |                   |   |   |   |       |   |                 |   |   |   |
| Accumulated deficit                                      |   | $      | (1,271,136             | )      |   | $      | (119,565   | )      |                 | $      | (1,390,701 | ) |
| Total shareholders’ equity deficit                 |   | $      | 30,550                 |   |   | $      | (119,565   | )      |                 | $      | (89,015 | ) |
| Total liabilities and shareholders’ equity deficit |   | $      | 1,746,068              |   |   | $      | (119,565   | )      |                 | $      | 1,626,503 |   |

 

Lineitems on the restated consolidated statements of income (loss)

 

|                                                                                                         |   |   | As at March 31, 2019   |   |   |   |       |   | As at March 31, 2019 |   |
|--------------------------------------------------------------------------------------------------------------|--------|--------|------------------------|--------|--------|--------|------------|--------|----------------------|--------|
|                                                                                                         |   |   | (As revised Note 5(b)) |   |   |   | Adjustment |   |                 |   | (Restated) |   |
| Other operating expenses                                                                                     |   | $      | 115,016                |   |   | $      | 111,165    |   |                 | $      | 226,181 |   |
| Total expenses                                                                                               |   | $      | 569,944                |   |   | $      | 111,165    |   |                 | $      | 681,109 |   |
| Operating profit before: finance costs, change in fair value of derivative instruments and other income, net |   | $      | 142,271                |   |   | $      | (111,165   | )      |                 | $      | 31,106 |   |
| Profit (loss) before income taxes                                                                            |   | $      | (97,662                | )      |   | $      | (111,165   | )      |                 | $      | (208,827 | ) |
| Provision for (recovery of) income taxes                                                                     |   |   | 2,829                  |   |   |   | 8,400      |   |                 |   | 11,229 |   |
| Profit (loss) from continuing operations                                                                     |   | $      | (100,491               | )      |   | $      | (119,565   | )      |                 | $      | (220,056 | ) |
| Profit (loss) for the year                                                                                   |   | $      | (122,870               | )      |   | $      | (119,565   | )      |                 | $      | (242,435 | ) |
| Profit (loss) for the year attributable to:                                                                  |   |   |                   |   |   |   |       |   |                 |   |   |   |
| Shareholders of Just Energy                                                                                  |   | $      | (122, 678)             |   |   | $      | (119,565   | )      |                 | $      | (242,243 | ) |
| Non-controlling interest                                                                                     |   |   | (192)                  |   |   |   | -          |   |                 |   | (192 | ) |
| Earnings (loss) per share from continuing operations                                                         |   |   |                   |   |   |   |       |   |                 |   |   |   |
| Basic                                                                                                        |   | $      | (0.73                  | )      |   | $      | (0.80      | )      |                 | $      | (1.54 | ) |
| Diluted                                                                                                      |   | $      | (0.73                  | )      |   | $      | (0.80      | )      |                 | $      | (1.54 | ) |
| Earnings (loss) per share available to shareholders                                                          |   |   |                   |   |   |   |       |   |                 |   |   |   |
| Basic                                                                                                        |   | $      | (0.88                  | )      |   | $      | (0.80      | )      |                 | $      | (1.68 | ) |
| Diluted                                                                                                      |   | $      | (0.88                  | )      |   | $      | (0.80      | )      |                 | $      | (1.68 | ) |

 

21.

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

Lineitems on restated consolidated statements of comprehensive income (loss)

 

|                                                       |   |   | As at March 31, 2019   |   |   |   |       |   | As at March 31, 2019 |   |
|------------------------------------------------------------|--------|--------|------------------------|--------|--------|--------|------------|--------|----------------------|--------|
|                                                       |   |   | (As revised Note 5(b)) |   |   |   | Adjustment |   |                 |   | (Restated) |   |
| Profit (loss) for the year                                 |   | $      | (122,870               | )      |   | $      | (119,565   | )      |                 | $      | (242,435 | ) |
| Total comprehensive income (loss) for the year, net of tax |   | $      | (117,848               | )      |   | $      | (119,565   | )      |                 | $      | (237,413 | ) |
| Total comprehensive income (loss) attributable to:         |   |   |                   |   |   |   |       |   |                 |   |   |   |
| Shareholders of Just Energy                                |   | $      | (117,656               | )      |   | $      | (119,565   | )      |                 | $      | (237,221 | ) |

 

Lineitems on restated consolidated statement of cash flows

 

|                                                         |   |   | As at March 31, 2019   |   |   |   |       |   | As at March 31, 2019 |   |
|--------------------------------------------------------------|--------|--------|------------------------|--------|--------|--------|------------|--------|----------------------|--------|
|                                                         |   |   | (As revised Note 5(b)) |   |   |   | Adjustment |   |                 |   | (Restated) |   |
| Profit (loss) from continuing operations before income taxes |   | $      | (97,662                | )      |   | $      | (111,165   | )      |                 | $      | (208,827 | ) |
| Profit (loss) before income taxes                            |   | $      | (120,037               | )      |   | $      | (111,165   | )      |                 | $      | (231,202 | ) |
| Net change in working capital balances                       |   | $      | (124,138               | )      |   | $      | 111,165    |   |                 | $      | (12,973 | ) |

 
| **(b)** |  | **Revision of                                         financial statements** |
|---------|--|------------------------------------------------------------------------------|

 

During thefourth quarter ended March 31, 2019, management identified immaterial errors in certain balance sheet accounts related to flatdelivery gas markets. These errors relate to fiscal years ended March 31, 2017 and earlier.

 

In accordancewith accounting guidance in IAS 8, Accounting policies, accounting estimates and errors, as well as guidance found in Securitiesand Exchange Commission (“SEC”) Staff Accounting Bulletin No. 99, Materiality, and Staff Accounting Bulletin No. 108,Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in the Current Year Financial Statements, theCompany assessed the materiality of the errors and concluded that it was not material to any of the Company’s previouslyissued financial statements. The Company assessed that correcting these historical errors in the current period would be materialto the current period. The Company revised its opening retained earnings at the beginning of the earliest period presented to correctthe effect of the matters. The revision does not have an impact on the consolidated statements of income (loss) for fiscal 2018and 2019.

 

22.

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

The errors occurred beforethe earliest period presented in the financial statements, and as a result the net effect on opening balances of assets, liabilitiesand equity of $14.2 million was recorded as an adjustment to opening retained earnings. The following table presents the effectof the correction on the consolidated statement of financial position as at March 31, 2018.

 

|                        |   |   | As previously reported |   |   |   | Adjustment |   |   |   | As revised |   |
|-----------------------------|--------|--------|------------------------|--------|--------|--------|------------|--------|--------|--------|------------|--------|
| Trade and other receivables |   | $      | 664,528                |   |   | $      | (5,684     | )      |   | $      | 658,844    |   |
| Gas in storage              |   |   | 11,812                 |   |   |   | (9,470     | )      |   |   | 2,342      |   |
| Other current assets        |   |   | 109,697                |   |   |   | 2,517      |   |   |   | 112,214    |   |
| Trade and other payables    |   |   | (583,655               | )      |   |   | (6,363     | )      |   |   | (590,018   | )      |
| Deferred revenue            |   |   | (41,684                | )      |   |   | 2,974      |   |   |   | (38,710    | )      |
| Income tax payable          |   |   | (7,304                 | )      |   |   | 1,818      |   |   |   | (5,486     | )      |
| Deficit                     |   | $      | (1,066,931             | )      |   | $      | (14,208    | )      |   | $      | (1,081,139 | )      |

 

 

|  |
|--|

| 6. |  | SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS |
|----|--|-------------------------------------------------------------|

 

The preparation of the consolidated financial statements requires the use of estimates and assumptionsto be made in applying the accounting policies that affect the reported amounts of assets, liabilities, income and expenses. Theestimates and related assumptions are based on previous experience and other factors considered reasonable under the circumstances,the results of which form the basis for making the assumptions about carrying values of assets and liabilities that are not readilyapparent from other sources.

 

The estimatesand underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period inwhich the estimate is revised. Judgments made by management in the application of IFRS that have a significant impact on the consolidatedfinancial statements relate to the following:

 

**Allowancefor doubtful accounts**

 

The measurement of the expected credit loss allowance for accounts receivable requires the use of managementjudgment in estimation techniques, building models, selecting key inputs and making significant assumptions about future economicconditions and credit behaviour of the customers, including the likelihood of customers defaulting and the resulting losses. Ateach reporting period, Just Energy is required to evaluate the change in credit quality since initial recognition, which also requiressignificant judgment.

 

**Businesscombinations**

 

In accounting for business combinations, judgment is required in estimating the acquisition date fairvalues of the identifiable assets acquired (including intangible assets) and liabilities assumed (including contingent liabilities).The necessary measurements are based on information available on the acquisition date and expectations and assumptions that havebeen deemed reasonable by management. During the measurement period (which is within one year from the acquisition date), JustEnergy must adjust the amounts recognized at the acquisition date to reflect new information obtained about facts and circumstancesthat existed as of the acquisition date.

 

|   |   | 23. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

** **

**Deferred income taxes**

 

Significantmanagement judgment is required to determine the amount of deferred income tax assets and liabilities that can be recognized, basedupon the likely timing and the level of future taxable income realized, including the usage of tax-planning strategies. Determiningthe tax treatment on certain transactions also involves management’s judgment.

 

**Discontinued operations**

 

Managementused judgment in concluding on the discontinued operations classification as a major separate geographical area of operations,as part of a single coordinated disposal plan to resell the business in the new fiscal year. There is also a high level of judgmentinvolved in estimating the fair value less cost to sell of the disposal group and the significant carrying amounts of the assetsand liabilities related to assets held for sale. Refer to Note 18 for further details.

 

**Fairvalue of financial instruments**

 

Where thefair values of financial assets and financial liabilities recorded in the consolidated statements of financial position cannotbe derived from active markets, they are determined using valuation techniques including discounted cash flow models or transacted/quotedprices of identical assets that are not active. The inputs to these models are taken from observable markets where possible, butwhere this is not feasible, a degree of judgment is required in establishing fair values. The judgment includes consideration ofinputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reportedfair value of financial instruments. Refer to Note 14 for further details about the assumptions as well as a sensitivity analysis.

 

**Impairmentof non-financial assets**

 

Just Energy’simpairment test is based on the fair value less cost to sell calculation and uses an EBITDA multiple approach model. Managementis required to exercise judgment in identifying the CGUs in which to allocate goodwill, working capital and related assets andliabilities. The EBITDA is derived from actual figures and the EBITDA-multiple is sourced from external sources of information,including analyst reports and competitor benchmarks. Judgment is further applied to determine which transactions or companies areconsidered comparable for use. Refer to Note 26 for further information.

 

| **** |
|------|

| **** |
|------|

| **7.** |  | **ACCOUNTING POLICIES AND NEW STANDARDS ADOPTED** |
|--------|--|---------------------------------------------------|

** **

**IFRS 15**

 

Just Energy has adopted IFRS 15, as issued by the IASBin July 2014, effective January 1, 2018. The new accounting policies have been applied from April 1, 2018 and, in accordance withthe transitional provisions in IFRS 15, comparative figures have not been restated. Just Energy adopted IFRS 15 using the modifiedretrospective method, applying the practical expedient in paragraph C5(c) under which the aggregate effect of all modificationson the date of initial application is reflected. Accordingly, transition adjustments have been recognized through equity as atApril 1, 2018.

 

IFRS 15 replaces the provisionsof IAS 18, that relate to all revenue from contracts from customers, unless those contracts are in the scope of other standards.The new standard establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenueis recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferringgoods or services to a customer.

 

 

|   |   | 24. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

**Accountingpolicies**

** **

The following accounting policiesare applicable to the accounting for all revenue arising from contracts with customers, unless those contracts are in the scopeof other standards in the quarter ended April 1, 2018 and onwards.

 

**Gas and electricity**

 

***Sales***

 

Just Energy historically recognizedrevenue based on consumption of the commodity by the customer. Often-times, the billing cycles for customers do not coincide withthe accounting periods used for financial reporting purposes. Gas and electricity that have been consumed by a customer, but notyet billed to that customer, are estimated on an accrual basis and included in revenue during the period in which they were consumed.These accrual amounts result in contract assets and are presented as unbilled revenue under IFRS 15. Unbilled revenue is assessedfor impairment in accordance with IFRS 9.

 

Upon the adoption of IFRS 15,there is no change in the revenue recognition for gas and electricity sales. Just Energy has identified that the material performanceobligation is the provision of gas and electricity to customers, which is satisfied over time throughout the contract term. JustEnergy utilizes the output method to recognize revenue based on the units of gas and electricity delivered and billed to the customereach month. Just Energy has elected to adopt the practical expedient to recognize revenue in the amount to which the entity hasa right to invoice, as the entity has a right to consideration from a customer in an amount that corresponds directly with thevalue to the customer of the entity’s performance to date.

 

***Expenses***

 

Historically, North American residentialsales commissions and incentives paid to brokers, employees or third parties for acquiring new contracts with customers were recognizedas selling expenses as they were incurred.

 

Upon the adoption of IFRS 15, incremental costs to obtaina contract with a customer are capitalized if expected to be recovered. As such, Just Energy commenced capitalizing all upfrontsales commissions, incentives and third party verification costs that meet the criteria for capitalization. These expenses aredeferred and amortized over the average customer relationship period, which varies from two to five years depending on the marketwhere the customer resides. Just Energy has elected under the practical expedient to recognize incremental costs of obtaining acontract as an expense when incurred if the contract length is one year or less.

 

**Impact on consolidatedfinancial statements**

 

The cumulative effect of changesmade to the April 1, 2018 consolidated statement of financial position for the adoption of IFRS 15 was as follows, and had a deferredincome tax liability effect of $7,493:

 

|                         |   | ** **

**Original IAS 18** |   |   | **Carrying amount**

**New IFRS 15** |   |
|------------------------------|--------|---------------------------------|--------|--------|--------------------------------------|--------|
| Current assets               |   |                            |   |   |                                 |   |   |   |
| Customer acquisition costs   |   | $                               | 31,852 |   |                                 | $      | 43,152 |   |
| Non-current financial assets |   |                            |   |   |                                 |   |   |   |
| Customer acquisition costs   |   | $                               | 17,101 |   |                                 | $      | 34,162 |   |

 

|   |   | 25. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

The following table shows theeffect of IFRS 15 adoption on the consolidated statement of financial position as at March 31, 2019:

 

|                         |   | **As at**

**March 31, 2019 (reported)** |   |   | Balances without adoption of IFRS 15 |   |   | Effect of change higher |   |
|------------------------------|--------|------------------------------------------|--------|--------|--------------------------------------|--------|--------|-------------------------|--------|
| Current assets               |   |                                     |   |   |                                 |   |   |                    |   |   |   |   |
| Customer acquisition costs   |   | $                                        | 75,707 |   |                                 | $      | 31,865 |                    |   | $ | 43,842 |   |
| Non-current financial assets |   |                                     |   |   |                                 |   |   |                    |   |   |   |   |
| Customer acquisition costs   |   | $                                        | 46,416 |   |                                 | $      | 17,830 |                    |   | $ | 28,586 |   |

 

The following table shows themovement of customer acquisition costs after the implementation of IFRS 15:

 

 

|            |   | ** **

**Current assets** |    |   | ** **

**Non-current assets** |   |
|-----------------|--------|--------------------------------|---------|--------|------------------------------------|--------|
| Opening balance |   | $                              | 41,704  |   |                               | $      | 34,106 |   |
| Capitalization  |   |                           | 98,483  |   |                               |   | 39,552 |   |
| Amortization    |   |                           | (64,480 | )      |                               |   | (27,242 | ) |
| Closing balance |   | $                              | 75,707  |   |                               | $      | 46,416 |   |

 

 

 

 

 

 

 

 

 

 

|   |   | 26. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

The following table shows theeffect of the adoption of IFRS 15 on the consolidated statement of comprehensive income (loss) for the year ended March 31, 2019:

 

|                                                     |   | For the year ended Mar. 31, 2019 (reported) |      |   | Balances without adoption of IFRS 15 |   |      | Effect of change higher (lower) |   |
|----------------------------------------------------------|--------|---------------------------------------------|-----------|--------|--------------------------------------|--------|-----------|---------------------------------|--------|
| Sales                                                    |   | $                                           | 3,812,470 |   |                                 | $      | 3,812,470 |                            |   | $ | - |   |
| Cost of sales                                            |   |                                        | 3,100,255 |   |                                 |   | 3,100,255 |                            |   |   | - |   |
| Gross margin                                             |   |                                        | 712,215   |   |                                 |   | 712,215   |                            |   |   | - |   |
| Expenses                                                 |   |                                        |      |   |                                 |   |      |                            |   |   |   |   |
| Administrative                                           |   |                                        | 206,820   |   |                                 |   | 206,820   |                            |   |   | - |   |
| Selling and marketing                                    |   |                                        | 232,030   |   |                                 |   | 264,558   |                            |   |   | (32,528 | ) |
| Other operating expenses                                 |   |                                        | 226,181   |   |                                 |   | 115,016   |                            |   |   | - |   |
| Restructuring costs                                      |   |                                        | 16,078    |   |                                 |   | 16,078    |                            |   |   | - |   |
|                                                     |   |                                        | 681,109   |   |                                 |   | 725,827   |                            |   |   | (32,528 | ) |
| Operating profit before the following                    |   |                                        | 31,106    |   |                                 |   | (1,422    | )                               |   |   | 32,528 |   |
| Finance costs                                            |   |                                        | (88,072   | )      |                                 |   | (88,072   | )                               |   |   | - |   |
| Change in fair value of derivative instruments and other |   |                                        | (153,226  | )      |                                 |   | (153,226  | )                               |   |   | - |   |
| Other income -net                                        |   |                                        | 1,365     |   |                                 |   | 1,365     |                            |   |   | - |   |
| Loss before income taxes                                 |   |                                        | (208,827  | )      |                                 |   | (241,355  | )                               |   |   | 32,528 |   |
| Provision for income taxes                               |   |                                        | 11,229    |   |                                 |   | 11,229    |                            |   |   | - |   |
| Profit (loss) from continuing operations                 |   |                                        | (220,056  | )      |                                 |   | (252,584  | )                               |   |   | 32,528 |   |
| Loss from discontinued operations                        |   |                                        | (22,379   | )      |                                 |   | (22,379   | )                               |   |   | - |   |
| Loss for the period                                      |   | $                                           | (242,435  | )      |                                 | $      | (274,963  | )                               |   | $ | 32,528 |   |
| Attributable to:                                         |   |                                        |      |   |                                 |   |      |                            |   |   |   |   |
| Shareholders of Just Energy                              |   | $                                           | (242,243  | )      |                                 | $      | (274,771  | )                               |   | $ | 32,528 |   |
| Non-controlling interest                                 |   |                                        | (192      | )      |                                 |   | (192      | )                               |   |   | - |   |
| Loss for the period                                      |   | $                                           | (242,435  | )      |                                 | $      | (274,963  | )                               |   | $ | 32,528 |   |
| Loss per share available to shareholders                 |   |                                        |      |   |                                 |   |      |                            |   |   |   |   |
| Basic                                                    |   | $                                           | (1.68     | )      |                                 | $      | (2.20     | )                               |   | $ | 0.53 |   |
| Diluted                                                  |   | $                                           | (1.68     | )      |                                 | $      | (2.20     | )                               |   | $ | 0.53 |   |

 

IFRS 15 did not impact any revenueamounts related to historical or current revenue recognition. The key factors driving revenue segmentation are related to differentiationbetween the business divisions, which are disclosed in Note 25.

 

The majority of Just Energy’s customer contractsmeet IFRS 15’s B16 practical expedient where Just Energy has the right to consideration from a customer in an amount thatcorresponds directly with the value to the customer of the performance completed to date. While there is no change in revenue recognitionupon the adoption of IFRS 15 for flat-bill customer contracts, they do not meet the B16 practical expedient and therefore requirethe following disclosure for contracts that have a duration of one year or more.

 

|   |   | 27. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

The aggregate of contractual amountsallocated to performance obligations related to flat-bill contracts that are unsatisfied as at March 31, 2019 is $75,636.

 

Just Energy expects to recognizerevenue on these flat-bill contracts in the amounts of:

 

|                                    |   | April 1, 2019 to March 31, 2020 |   |   | April 1, 2020 to March 31, 2021 |   |   | April 1, 2021 to March 31, 2022 |   |   | Years thereafter |   |   | Total |   |
|-----------------------------------------|--------|---------------------------------|--------|--------|---------------------------------|--------|--------|---------------------------------|--------|--------|------------------|--------|--------|-------|--------|
| Gas and electricity flat-bill contracts |   | $                               | 29,122 |   |                            | $      | 22,564 |                            |   | $      | 12,998           |   |   | $     | 10,952 |   |   | $ | 75,636 |   |

 

**IFRS 9**

*** ***

Just Energy has adopted IFRS 9as issued by the IASB in July 2014, effective April 1, 2018. The new accounting policies have been applied from April 1, 2018 and,in accordance with the transitional provisions in IFRS 9, comparative figures have not been restated. Just Energy has adopted IFRS9 retrospectively, and accordingly, transition adjustments have been recognized through equity as at April 1, 2018.

 

IFRS 9 replaces IAS 39 with respectto the recognition, classification and measurement of financial assets and financial liabilities; derecognition of financial instruments;impairment of financial assets and hedge accounting. IFRS 9 also significantly amends other standards dealing with financial instrumentssuch as IFRS 7, *Financial Instruments: Disclosures*.

 
| *(a)* |  | *Accounting policy for financial instruments under IFRS 9* |
|-------|--|------------------------------------------------------------|

* *

The following accounting policy is applicable to the accountingfor financial instruments in the quarter ended April 1, 2018 and onwards.

 

Financial assets

 
|  | (i) | Recognition and derecognition |
|--|-----|-------------------------------|

 

Regular purchases and sales offinancial assets are recognized on the trade date, being the date on which Just Energy commits to purchase or sell the asset. Financialassets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred andJust Energy has transferred substantially all the risks and rewards of ownership.

 
|  | (ii) | Classification |
|--|------|----------------|

 

From April 1, 2018, Just Energyclassified its financial assets in the following measurement categories:

 
|  | · | Those to be measured subsequently at fairvalue (either through OCI or through profit or loss); and |
|--|--------|----------------------------------------------------------------------------------------------------|
|  | · | Those to be measured at amortized cost. |
|--|--------|-----------------------------------------|

 

|   |   | 28. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

The measurement category classificationof financial assets depends on Just Energy’s business objectives for managing the financial assets and whether contractualterms of the cash flows are considered solely payments of principal and interest. For assets measured at fair value, gains andlosses will be recorded either in profit or loss or in OCI depending upon the business objective.

 

Just Energy reclassified debt instruments when and onlywhen its business objective for managing those assets changes.

 
|  | (iii) | Measurement |
|--|-------|-------------|

 

At initial recognition, Just Energymeasures a financial asset at its fair value. In the case of a financial asset not categorized as fair value through profit orloss (“FVTPL”), transaction costs that are directly attributable to the acquisition of the financial asset are includedin measurement at initial recognition. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss.

 

Subsequent measurement of debtinstruments depends on Just Energy’s business objective for managing the asset and the cash flow characteristics of the asset.There are three measurement categories into which Just Energy classifies its debt instruments:

 

*Amortized cost*: Assetsheld for collection of contractual cash flows that represent solely payments of principal and interest are measured at amortizedcost. A gain or loss on a debt instrument is recognized in profit or loss when the asset is derecognized or impaired. Interestincome from these financial assets is included in “finance income” using the effective interest rate method. Cash andcash equivalents, restricted cash, trade and other receivables are included in this category.

 

*Fair value through other comprehensiveincome (“FVOCI”)*: Assets held to achieve a particular business objective, by collecting contractual cash flowsand selling financial assets, where the contractual terms of the financial asset give rise on specified dates to cash flows thatare solely payments of principal and interest on the principal outstanding are measured at FVOCI. Movements in the carrying amountare taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains andlosses, which are recognized in profit or loss. When the financial asset is derecognized, the cumulative gain or loss previouslyrecognized in OCI is reclassified from equity to profit or loss. Interest income from these financial assets is included in “financeincome” using the effective interest rate method. Just Energy has not classified any investments in this category.

 

*FVTPL*: Assets that do notmeet the criteria for amortized cost or FVOCI are measured at FVTPL. A gain or loss on a debt investment that is subsequently measuredat FVTPL and is not part of a hedging relationship is recognized in profit or loss. Just Energy classifies its derivatives andits investments in equity securities at FVTPL due to the fact that they do not meet the criteria for classification at amortizedcost as the contractual cash flows are not solely payments of principal and interest.

 

Just Energy’s equity instrumentsare carried at FVTPL, and gains and losses are recorded in profit or loss.

 
|  | (iv) | Impairment |
|--|------|------------|

 

Just Energy assesses on a forward-lookingbasis the expected credit losses (“ECL”) associated with its assets carried at amortized cost, including other receivables.For trade and other receivables only, Just Energy applies the simplified approach permitted by IFRS 9, which requires expectedlifetime losses to be recognized from initial recognition of the receivables.

 

|   |   | 29. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

Trade receivables are reviewedqualitatively on a case-by-case basis to determine if they need to be written off.

 

ECL are measured as the differencein the present value of the contractual cash flows that are due to Just Energy under the contract, and the cash flows that JustEnergy expects to receive. Just Energy assesses all information available, including past due status, credit ratings, the existenceof third party insurance and forward-looking macroeconomic factors in the measurement of the ECL associated with its assets carriedat amortized cost. Just Energy measures ECL by considering the risk of default over the contract period and incorporates forward-lookinginformation into its measurement.

 

**

**
| *(b)* |  | *New Classification categories of financial instruments on adoption of IFRS 9* |
|-------|--|--------------------------------------------------------------------------------|

**

 

As at April 1, 2018, the date of initial application, Just Energy’sfinancial instruments and new classification categories under IFRS 9 were as follows:

 

|                                  |                        | **Classification category** |
|---------------------------------------|-----------------------------|-----------------------------|
|                                  | **Original IAS 39**         | **New IFRS 9**              |
| **Current financial assets**          |                        |                        |
| Cash and cash equivalents             | Loans and receivables       | Amortized cost              |
| Restricted cash                       | Loans and receivables       | Amortized cost              |
| Trade and other receivables           | Loans and receivables       | Amortized cost              |
| Derivative assets                     | FVTPL                       | FVTPL                       |
| **Non-current financial assets**      |                        |                        |
| Investments                           | FVOCI and FVTPL             | FVTPL                       |
| Derivative assets                     | FVTPL                       | FVTPL                       |
| **Current financial liabilities**     |                        |                        |
| Trade and other payables              | Other financial liabilities | Amortized cost              |
| Derivative liabilities                | FVTPL                       | FVTPL                       |
| Current portion of long-term debt     | Other financial liabilities | Amortized cost              |
| **Non-current financial liabilities** |                        |                        |
| Long-term debt                        | Other financial liabilities | Amortized cost              |
| Derivative liabilities                | FVTPL                       | FVTPL                       |

 

Upon adoption of IFRS 9, the investment in ecobee is classifiedas FVTPL instead of available for sale, resulting in a movement of $17,863 relating to the unrealized gain on revaluation of investments,net of income taxes from OCI to accumulated earnings on April 1, 2018.

 

 

|   |   | 30. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 
| *(c)* |  | *Reconciliation of lifetimeECL balance from IAS 39 to IFRS 9* |
|-------|--|---------------------------------------------------------------|

* *

The following table reconcilesthe closing lifetime ECL for financial assets and contract assets in accordance with IAS 39 as at March 31, 2018 to the openingallowance for credit losses as at April 1, 2018.

 

|                        |   | Impairment allowance under IAS 39 as at March 31, 2018 |   |   | Remeasurement |   |   | Lifetime expected credit loss under IFRS 9 as at April 1, 2018 |   |
|-----------------------------|--------|--------------------------------------------------------|--------|--------|---------------|--------|--------|----------------------------------------------------------------|--------|
| Trade and other receivables |   | $                                                      | 60,121 |   |          | $      | 11,237 |                                                           |   | $ | 71,358 |   |
| Unbilled revenue            |   | $                                                      | -      |   |          | $      | 12,399 |                                                           |   | $ | 12,399 |   |

 
| *(d)* |  | *Impairment of financial assets* |
|-------|--|----------------------------------|

 

Just Energy has two types of financialassets subject to IFRS 9’s new ECL model: (i) trade and other receivables and (ii) unbilled revenue. Just Energy was requiredto revise its impairment methodology under IFRS 9 for each of these classes of assets. For trade and other receivables, Just Energyapplies the simplified approach to providing for ECL prescribed by IFRS 9, which requires the use of the lifetime expected lossprovision for all trade receivables and unbilled revenue. Measurement of ECL resulted in an increase to the provision for tradereceivables and unbilled revenue of $23,636, which was recorded as at April 1, 2018. This was before the income tax impact of $5,616,which reduced the deferred income tax liability, as at April 1, 2018.

 
| *(e)* |  | *Derivatives and hedging activities* |
|-------|--|--------------------------------------|

 

Just Energy did not apply hedgeaccounting under IAS 39, nor under IFRS 9.

 

| **** |
|------|

| **8.** |  | **ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE** |
|--------|--|-------------------------------------------------------|

** **

**IFRS 16, *Leases***(“IFRS 16”), was issued by the IASB in January 2016. This guidance brings most leases onto the balance sheet for lesseesunder a single model, eliminating the distinction between operating and finance leases. Lessor accounting remains largely unchangedand the distinction between operating and finance leases is retained. Furthermore, per the standard, a lessee recognizes a right-of-useasset and a lease liability. The right-of-use asset is treated similarly to other non-financial assets and depreciated accordingly,and the liability accrues interest. The lease liability is initially measured at the present value of the lease payments payableover the lease term, discounted at the rate implicit in the lease. IFRS 16 supersedes IAS 17, *Leases* (“IAS 17”),and its related interpretations, and is effective for periods beginning on or after January 1, 2019. The standard is required tobe adopted either retrospectively or using a modified retrospective approach.

 

Just Energy will adopt IFRS 16beginning April 1, 2019, and has elected to apply the modified retrospective approach. On initial adoption, Just Energy will usethe following practical expedients permitted by the standard, where applicable:

 
|  | · | Exemption for short-term leases with aremaining  term of 12 months or less as at April 1, 2019 and low value leases, which will be accounted for as operating leases; |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | · | Using a single discount rate on a portfolioof leases with reasonably similar characteristics; |
|--|--------|-----------------------------------------------------------------------------------------------|
|  | · | Excluding initial direct costs for themeasurement of the right-of-use asset at the date of initial application; |
|--|--------|-----------------------------------------------------------------------------------------------------------------|
|  | · | Using historical information in determiningthe lease term where contracts contain options to extend or terminate the lease; |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------|

|   |   | 31. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 
|  | · | Adjusting the right-of-use asset amountsfor any onerous contract provisions immediately before the date of initial application; and |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------|
|  | · | Measuring the right-of-use assets at anamount equal to the lease liability, adjusted for any prepaid or accrued lease payments relating to that lease immediately beforethe date of initial application. |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

As at April 1, 2019, the financialstatement impact of IFRS 16 is as follows:

 
|  | · | Right-of-use assets of $18.5 million havebeen recognized in relation to former operating leases and have been included in property and equipment caption on the interimunaudited condensed consolidated statements of financial position. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 
|  | · | Additional lease liabilities of $18.5million have been recognized in relation to former operating leases and have been included in other current and non-current liabilitieson the unaudited interim condensed consolidated statements of financial position, depending on the maturity of the lease. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

  

**IFRS Interpretations Committee (“IFRIC”)23, *Uncertainty over Income Tax Treatments* (“IFRIC 23”)**, provides guidance to be applied in the determinationof taxable profit or loss, tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over incometax treatments under IAS 12, *Income Taxes* (“IAS 12”). IFRIC 23 was issued by the IASB in June 2017 and is effectivefor annual periods beginning on or after January 1, 2019. Just Energy does not expect the interpretation to have a material impacton the consolidated financial statements when it implements IFRIC 23 beginning April 1, 2019.

 

**IFRIC Agenda Paper 11, Physical Settlement of Contractsto Buy or Sell a Non-Financial Item (“Agenda Paper 11),**the IFRS Interpretations Committee (“IFRIC”) reacheda decision on Agenda Paper 11 during its meeting on March 5 - 6, 2019. The decision was in respect to a request about how an entityapplies IFRS 9 to particular contracts to buy or sell a non-financial item at a fixed price.

 

The Company has reviewed the agenda decision and determinedthat a change is required in its accounting policy related to contracts to buy or sell a non-financial item that can be settlednet in cash or another financial instrument, or by exchanging financial instruments. These are contracts the Company enters intowhich are accounted for as derivatives at fair value through profit or loss but physically settled by the underlying non-financialitem. The IFRIC concluded that IFRS 9 neither permits or requires an entity to reverse the accumulated gain or loss previouslyrecognized on the derivative and recognize a corresponding adjustment to cost of goods sold or inventory when the contract is physicallysettled.

 

In its December 2018 meeting,the International Accounting Standards Board (IASB) confirmed its view that it expects companies to be entitled to sufficienttime to implement changes in accounting policy that result from agenda decisions of the IFRIC. The Company is currently evaluatingthe impact of implementing the agenda decision on its financial statements, systems and processes. Given the nature of its currentsystems and processes and the volume of transactions affected, the Company determined it was not possible to affect the accountingchange in time for its March 31, 2019 reporting. The Company expects to implement the change retrospectively in fiscal 2020 year.While the impact has not been quantified, the Company expects there will be material movements between cost of sales and changein fair value of derivative instruments and other in Just Energy’s consolidated statement of operations and the value ofgas in storage on the statement of financial position. There is no impact on the net income of the Company.

 

 

 

|   |   | 32. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

| **** |
|------|

| **9.** |  | **TRADE AND OTHER RECEIVABLES** |
|--------|--|---------------------------------|

** **

|                           |   | As at                     |    |   |                |   |
|--------------------------------|--------|---------------------------|---------|--------|----------------|--------|
|                           |   | March 31, 2019            |    |   | As at          |   |
|                           |   | (Restated – Note 5) |    |   | March 31, 2018 |   |
| Trade account receivables, net |   | $                         | 365,008 |   |           | $      | 326,399 |   |
| Accrued gas receivable         |   |                      | 13,637  |   |           |   | 15,893 |   |
| Unbilled revenue               |   |                      | 277,556 |   |           |   | 301,577 |   |
| Other                          |   |                      | 16,414  |   |           |   | 14,975 |   |
|                           |   | $                         | 672,615 |   |           | $      | 658,844 |   |

 

| **** |
|------|

| **10.** |  | **OTHER CURRENT AND NON-CURRENT ASSETS** |
|---------|--|------------------------------------------|

 
| **(a)** |  | **Othercurrent assets** |
|---------|--|-------------------------|

 

|                                   |   | As at March 31, 2019 |    |   | As at March 31, 2018 |   |
|----------------------------------------|--------|----------------------|---------|--------|----------------------|--------|
| Prepaid expenses and deposits          |   | $                    | 45,709  |   |                 | $      | 35,078 |   |
| Customer acquisition costs             |   |                 | 75,707  |   |                 |   | 31,852 |   |
| Green certificates                     |   |                 | 39,749  |   |                 |   | 42,230 |   |
| Gas delivered in excess of consumption |   |                 | 3,121   |   |                 |   | 2,715 |   |
| Inventory                              |   |                 | 4,954   |   |                 |   | 339 |   |
|                                   |   | $                    | 169,240 |   |                 | $      | 112,214 |   |

 
| **(b)** |  | **Othernon-current assets** |
|---------|--|-----------------------------|

 

|                       |   | As at March 31, 2019 |   |   | As at March 31, 2018 |   |
|----------------------------|--------|----------------------|--------|--------|----------------------|--------|
| Customer acquisition costs |   | $                    | 46,416 |   |                 | $      | 17,101 |   |
| Income taxes recoverable   |   |                 | 3,096  |   |                 |   | 2,336 |   |
| Other long-term assets     |   |                 | -      |   |                 |   | 550 |   |
|                       |   | $                    | 49,512 |   |                 | $      | 19,987 |   |

 

|  |
|--|

|  |
|--|

| 11. |  | INVESTMENTS |
|-----|--|-------------|

 

On August 10, 2012, Just Energy, through a subsidiary,acquired an interest in ecobee, a private company that designs, manufactures and distributes smart thermostats, for an amount of$6.4 million. During the fiscal year 2017 and 2018, Just Energy further increased its investment in the company by $5.4 millionand $0.4 million, respectively. Company markets these smart thermostats in all its core markets, bundling the thermostats withcommodity and home service products. As at March 31, 2019, Just Energy owns approximately 8% of ecobee. This investment is measuredat and classified as fair value through profit or loss. The fair value of the investment has been determined directly from transacted/quotedprices of identical assets that are not active (Level 3 measurement). As at March 31, 2019, the fair value of the investment is$32.9 million (2018 – $32.4 million).

 

 

 

 

 

|   |   | 33. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

|  |
|--|

|  |
|--|

| 12. |  | PROPERTY AND EQUIPMENT |
|-----|--|------------------------|

 

| As at March 31, 2019                 |   |               |    |   |                   |   |   |             |   |   |             |   |   |         |    |   |                    |   |    |   |   |
|--------------------------------------|--------|--------------------|---------|--------|------------------------|--------|--------|------------------|--------|--------|------------------|--------|--------|--------------|---------|--------|-------------------------|--------|---------|--------|--------|
|                                 |   | Computer equipment |    |   | Furniture and fixtures |   |   | Installed assets |   |   | Office equipment |   |   | Thermo-stats |    |   | Leasehold improve-ments |   |    | Total  |   |
| Cost:                                |   |               |    |   |                   |   |   |             |   |   |             |   |   |         |    |   |                    |   |    |   |   |   |   |   |   |   |   |   |
| Opening balance - April 1, 2018      |   | $                  | 22,173  |   |                   | $      | 6,861  |             |   | $      | -                |   |   | $            | 15,209  |   |                    | $      | 13,238  |   |   | $ | 4,894 |   |   | $ | 62,375 |   |
| Additions                            |   |               | 7,468   |   |                   |   | 58     |             |   |   | 707              |   |   |         | 311     |   |                    |   | -       |   |   |   | 114 |   |   |   | 8,658 |   |
| Acquisition                          |   |               | -       |   |                   |   | -      |             |   |   | 4,827            |   |   |         | 773     |   |                    |   | -       |   |   |   | 554 |   |   |   | 6,154 |   |
| Assets held for sale                 |   |               | (5      | )      |                   |   | (4     | )                |   |   | -                |   |   |         | (60     | )      |                    |   | -       |   |   |   | - |   |   |   | (69 | ) |
| Retirements                          |   |               | -       |   |                   |   | (309   | )                |   |   | -                |   |   |         | -       |   |                    |   | (192    | )      |   |   | (1,078 | ) |   |   | (1,579 | ) |
| Exchange differences                 |   |               | 340     |   |                   |   | 95     |             |   |   | 15               |   |   |         | 32      |   |                    |   | 131     |   |   |   | 312 |   |   |   | 925 |   |
| Ending balance, March 31, 2019       |   |               | 29,976  |   |                   |   | 6,701  |             |   |   | 5,549            |   |   |         | 16,265  |   |                    |   | 13,177  |   |   |   | 4,796 |   |   |   | 76,464 |   |
|                                 |   |               |    |   |                   |   |   |             |   |   |             |   |   |         |    |   |                    |   |    |   |   |   |   |   |   |   |   |   |
| Accumulated depreciation:            |   |               |    |   |                   |   |   |             |   |   |             |   |   |         |    |   |                    |   |    |   |   |   |   |   |   |   |   |   |
| Opening balance - April 1, 2018      |   |               | (13,984 | )      |                   |   | (4,995 | )                |   |   | -                |   |   |         | (10,776 | )      |                    |   | (10,555 | )      |   |   | (3,172 | ) |   |   | (43,482 | ) |
| Depreciation charge to cost of sales |   |               | -       |   |                   |   | -      |             |   |   | -                |   |   |         | -       |   |                    |   | (2,666  | )      |   |   | - |   |   |   | (2,666 | ) |
| Depreciation charge for the year     |   |               | (2,835  | )      |                   |   | (178   | )                |   |   | (707             | )      |   |         | (623    | )      |                    |   | -       |   |   |   | (428 | ) |   |   | (4,771 | ) |
| Assets held for sale                 |   |               | 2       |   |                   |   | -      |             |   |   | -                |   |   |         | (4      | )      |                    |   | -       |   |   |   | (49 | ) |   |   | (51 | ) |
| Retirements                          |   |               | -       |   |                   |   | 127    |             |   |   | -                |   |   |         | -       |   |                    |   | 202     |   |   |   | 322 |   |   |   | 651 |   |
| Exchange differences                 |   |               | (138    | )      |                   |   | (61    | )                |   |   | -                |   |   |         | (61     | )      |                    |   | (64     | )      |   |   | 41 |   |   |   | (283 | ) |
| Ending balance, March 31, 2019       |   |               | (16,955 | )      |                   |   | (5,107 | )                |   |   | (707             | )      |   |         | (11,464 | )      |                    |   | (13,083 | )      |   |   | (3,286 | ) |   |   | (50,602 | ) |
| Net book value, March 31, 2019       |   | $                  | 13,021  |   |                   | $      | 1,594  |             |   | $      | 4,842            |   |   | $            | 4,801   |   |                    | $      | 94      |   |   | $ | 1,510 |   |   | $ | 25,862 |   |

 

| As at March 31, 2018                 |   |               |    |   |                   |   |   |             |   |   |         |   |   |                    |    |   |   |   |
|--------------------------------------|--------|--------------------|---------|--------|------------------------|--------|--------|------------------|--------|--------|--------------|--------|--------|-------------------------|---------|--------|--------|--------|
|                                 |   | Computer equipment |    |   | Furniture and fixtures |   |   | Office equipment |   |   | Thermo-stats |   |   | Leasehold improve-ments |    |   | Total  |   |
| Cost:                                |   |               |    |   |                   |   |   |             |   |   |         |   |   |                    |    |   |   |   |   |   |   |   |   |   |
| Opening balance - April 1, 2017      |   | $                  | 18,672  |   |                   | $      | 6,774  |             |   | $      | 14,947       |   |   | $                       | 13,471  |   |   | $      | 4,517 |   |   | $ | 58,381 |   |
| Additions                            |   |               | 3,561   |   |                   |   | 147    |             |   |   | 352          |   |   |                    | 387     |   |   |   | 391 |   |   |   | 4,838 |   |
| Retirements                          |   |               | -       |   |                   |   | -      |             |   |   | -            |   |   |                    | (517    | )      |   |   | - |   |   |   | (517 | ) |
| Exchange differences                 |   |               | (60     | )      |                   |   | (60    | )                |   |   | (90          | )      |   |                    | (103    | )      |   |   | (14 | ) |   |   | (327 | ) |
| Ending balance, March 31, 2018       |   |               | 22,173  |   |                   |   | 6,861  |             |   |   | 15,209       |   |   |                    | 13,238  |   |   |   | 4,894 |   |   |   | 62,375 |   |
|                                 |   |               |    |   |                   |   |   |             |   |   |         |   |   |                    |    |   |   |   |   |   |   |   |   |   |
| Accumulated depreciation:            |   |               |    |   |                   |   |   |             |   |   |         |   |   |                    |    |   |   |   |   |   |   |   |   |   |
| Opening balance - April 1, 2017      |   |               | (11,600 | )      |                   |   | (4,776 | )                |   |   | (10,095      | )      |   |                    | (7,713  | )      |   |   | (2,515 | ) |   |   | (36,699 | ) |
| Depreciation charge to cost of sales |   |               | -       |   |                   |   | -      |             |   |   | -            |   |   |                    | (3,116  | )      |   |   | - |   |   |   | (3,116 | ) |
| Depreciation charge for the year     |   |               | (2,431  | )      |                   |   | (262   | )                |   |   | (745         | )      |   |                    | -       |   |   |   | (677 | ) |   |   | (4,115 | ) |
| Retirements                          |   |               | -       |   |                   |   | -      |             |   |   | -            |   |   |                    | 208     |   |   |   | - |   |   |   | 208 |   |
| Exchange differences                 |   |               | 47      |   |                   |   | 43     |             |   |   | 64           |   |   |                    | 66      |   |   |   | 20 |   |   |   | 240 |   |
| Ending balance, March 31, 2018       |   |               | (13,984 | )      |                   |   | (4,995 | )                |   |   | (10,776      | )      |   |                    | (10,555 | )      |   |   | (3,172 | ) |   |   | (43,482 | ) |
|                                 |   |               |    |   |                   |   |   |             |   |   |         |   |   |                    |    |   |   |   |   |   |   |   |   |   |
| Net book value, March 31, 2018       |   | $                  | 8,189   |   |                   | $      | 1,866  |             |   | $      | 4,433        |   |   | $                       | 2,683   |   |   | $      | 1,722 |   |   | $ | 18,893 |   |

 

|   |   | 34. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

| 13. |  | INTANGIBLE ASSETS |
|-----|--|-------------------|

 

 

| As at March 31, 2019             |   |     |    |   |   |   |   |            |   |   |                   |   |   |                                      |   |   |   |   |    |   |   |
|----------------------------------|--------|----------|---------|--------|--------|--------|--------|-----------------|--------|--------|------------------------|--------|--------|-------------------------------------------|--------|--------|--------|--------|---------|--------|--------|
|                             |   | Goodwill |    |   | Brand  |   |   | **Technology1** |   |   | Customer relationships |   |   | Sales networks and affinity relationships |   |   | Other  |   |    | Total  |   |
| Cost:                            |   |     |    |   |   |   |   |            |   |   |                   |   |   |                                      |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Opening balance - April 1, 2018  |   | $        | 300,673 |   |   | $      | 30,205 |            |   | $      | 80,401                 |   |   | $                                         | 18,027 |   |   | $      | 51,963  |   |   | $ | 495 |   |   | $ | 481,764 |   |
| Acquisition                      |   |     | 40,630  |   |   |   | 3,000  |            |   |   | -                      |   |   |                                      | 12,600 |   |   |   | -       |   |   |   | - |   |   |   | 56,230 |   |
| Assets held for sale             |   |     | -       |   |   |   | -      |            |   |   | (2,453                 | )      |   |                                      | -      |   |   |   | -       |   |   |   | (3 | ) |   |   | (2,456 | ) |
| Additions                        |   |     | -       |   |   |   | -      |            |   |   | 38,383                 |   |   |                                      | -      |   |   |   | -       |   |   |   | - |   |   |   | 38,383 |   |
| Exchange differences             |   |     | (1,382  | )      |   |   | 1,100  |            |   |   | 1,332                  |   |   |                                      | 623    |   |   |   | 1,890   |   |   |   | (439 | ) |   |   | 3,124 |   |
| Ending balance, March 31, 2019   |   |     | 339,921 |   |   |   | 34,305 |            |   |   | 117,663                |   |   |                                      | 31,250 |   |   |   | 53,853  |   |   |   | 53 |   |   |   | 577,045 |   |
|                             |   |     |    |   |   |   |   |            |   |   |                   |   |   |                                      |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Accumulated amortization:        |   |     |    |   |   |   |   |            |   |   |                   |   |   |                                      |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Opening balance - April 1, 2018  |   |     | -       |   |   |   | -      |            |   |   | (36,309                | )      |   |                                      | (1,309 | )      |   |   | (42,220 | )      |   |   | - |   |   |   | (79,838 | ) |
| Assets held for sale             |   |     | -       |   |   |   | -      |            |   |   | 18                     |   |   |                                      | -      |   |   |   | -       |   |   |   | 2 |   |   |   | 20 |   |
| Amortization charge for the year |   |     | -       |   |   |   | (100   | )               |   |   | (14,927                | )      |   |                                      | (1,018 | )      |   |   | (6,610  | )      |   |   | - |   |   |   | (22,655 | ) |
| Exchange differences             |   |     | -       |   |   |   | -      |            |   |   | 1,883                  |   |   |                                      | (2,142 | )      |   |   | (1,657  | )      |   |   | - |   |   |   | (1,916 | ) |
| Ending balance, March 31, 2019   |   |     | -       |   |   |   | (100   | )               |   |   | (49,335                | )      |   |                                      | (4,469 | )      |   |   | (50,487 | )      |   |   | 2 |   |   |   | (104,389 | ) |
|                             |   |     |    |   |   |   |   |            |   |   |                   |   |   |                                      |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Net book value, March 31, 2019   |   | $        | 339,921 |   |   | $      | 34,205 |            |   | $      | 68,328                 |   |   | $                                         | 26,781 |   |   | $      | 3,366   |   |   | $ | 55 |   |   | $ | 472,656 |   |

1Technology includes work in progress IT projects of $27.3 million

 

 

| As at March 31, 2018             |   |     |    |   |   |   |   |       |   |   |                   |   |   |                                     |   |   |   |   |    |   |   |
|----------------------------------|--------|----------|---------|--------|--------|--------|--------|------------|--------|--------|------------------------|--------|--------|------------------------------------------|--------|--------|--------|--------|---------|--------|--------|
|                             |   | Goodwill |    |   | Brand  |   |   | Technology |   |   | Customer relationships |   |   | Sales network and affinity relationships |   |   | Other  |   |    | Total  |   |
| Cost:                            |   |     |    |   |   |   |   |       |   |   |                   |   |   |                                     |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Opening balance - April 1, 2017  |   | $        | 289,201 |   |   | $      | 31,154 |       |   | $      | 48,525                 |   |   | $                                        | -      |   |   | $      | 53,595  |   |   | $ | - |   |   | $ | 422,475 |   |
| Acquisition of a subsidiary      |   |     | 14,699  |   |   |   | -      |       |   |   | 1,409                  |   |   |                                     | 17,387 |   |   |   | -       |   |   |   | 347 |   |   |   | 33,842 |   |
| Additions                        |   |     | -       |   |   |   | -      |       |   |   | 30,938                 |   |   |                                     | -      |   |   |   | -       |   |   |   | - |   |   |   | 30,938 |   |
| Exchange differences             |   |     | (3,227  | )      |   |   | (949   | )          |   |   | (471                   | )      |   |                                     | 640    |   |   |   | (1,632  | )      |   |   | 148 |   |   |   | (5,491 | ) |
| Ending balance, March 31, 2018   |   |     | 300,673 |   |   |   | 30,205 |       |   |   | 80,401                 |   |   |                                     | 18,027 |   |   |   | 51,963  |   |   |   | 495 |   |   |   | 481,764 |   |
|                             |   |     |    |   |   |   |   |       |   |   |                   |   |   |                                     |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Accumulated amortization:        |   |     |    |   |   |   |   |       |   |   |                   |   |   |                                     |   |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Opening balance - April 1, 2017  |   |     | -       |   |   |   | -      |       |   |   | (27,641                | )      |   |                                     | -      |   |   |   | (36,847 | )      |   |   | - |   |   |   | (64,488 | ) |
| Amortization charge for the year |   |     | -       |   |   |   | -      |       |   |   | (8,924                 | )      |   |                                     | (1,309 | )      |   |   | (6,466  | )      |   |   | - |   |   |   | (16,699 | ) |
| Exchange differences             |   |     | -       |   |   |   | -      |       |   |   | 256                    |   |   |                                     | -      |   |   |   | 1,093   |   |   |   | - |   |   |   | 1,349 |   |
| Ending balance, March 31, 2018   |   |     | -       |   |   |   | -      |       |   |   | (36,309                | )      |   |                                     | (1,309 | )      |   |   | (42,220 | )      |   |   | - |   |   |   | (79,838 | ) |
| Net book value, March 31, 2018   |   | $        | 300,673 |   |   | $      | 30,205 |       |   | $      | 44,092                 |   |   | $                                        | 16,718 |   |   | $      | 9,743   |   |   | $ | 495 |   |   | $ | 401,926 |   |

 

|   |   | 35. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

The capitalized internally developedcosts relate to the development of new customer billing and analysis software solutions for the different energy markets of JustEnergy. All research costs and development costs, not eligible for capitalization, have been expensed and are recognized in administrativeexpenses.

 

| **** |
|------|

| **** |
|------|

| **14.** |  | **FINANCIAL INSTRUMENTS** |
|---------|--|---------------------------|

 
| **(a)** |  | **Fair value of derivative financial instruments and other** |
|---------|--|--------------------------------------------------------------|

 

The fair value of financial instruments is the price thatwould be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at themeasurement date (i.e., an exit price). Management has estimated the value of financial swaps, physical forwards and option contractsfor electricity, natural gas, carbon and renewable energy certificates, and generation and transmission capacity contracts usinga discounted cash flow method, which employs market forward curves that are either directly sourced from third parties or developedinternally based on third party market data. These curves can be volatile, thus leading to volatility in the mark to market withno immediate impact to cash flows. Gas options have been valued using the Black option pricing model using the applicable marketforward curves and the implied volatility from other market traded options. Management periodically uses non-exchange traded swapagreements based on cooling degree days and heating degree days measured in its utility service territories to reduce the impactof weather volatility on Just Energy’s electricity volumes, commonly referred to as “weather derivatives”. Thefair value of these swaps on a given measurement station indicated in the derivative contract are determined by calculating thedifference between the agreed strike and expected variable observed at the same station.

 

The following table illustratesgains (losses) related to Just Energy’s derivative financial instruments classified as FVTPL and recorded on the consolidatedstatements of financial position as fair value of derivative financial assets and fair value of derivative financial liabilities,with their offsetting values recorded in change in fair value of derivative instruments and other on the consolidated statementsof income (loss).

 

|                                                     |   | For the year ended March 31, 2019 |     |   | For the year ended March 31, 2018 |   |
|----------------------------------------------------------|--------|-----------------------------------|----------|--------|-----------------------------------|--------|
| Change in fair value of derivative instruments and other |   |                              |     |   |                              |   |   |   |
|                                                     |   |                              |     |   |                              |   |   |   |
| Physical forward contracts and options (i)               |   | $                                 | (182,117 | )      |                              | $      | 400,583 |   |
| Financial swap contracts and options (ii)                |   |                              | 39,832   |   |                              |   | 59,710 |   |
| Foreign exchange forward contracts                       |   |                              | 72       |   |                              |   | (1,842 | ) |
| Share swap (iii)                                         |   |                              | (3,507   | )      |                              |   | (4,484 | ) |
| 6.5% convertible bond conversion feature                 |   |                              | 247      |   |                              |   | 7,764 |   |
| Unrealized foreign exchange on 6.5% convertible bond     |   |                              | (8,061   | )      |                              |   | 6,101 |   |
| Weather derivatives                                      |   |                              | 7,796    |   |                              |   | - |   |
| Other derivative options                                 |   |                              | (7,488   | )      |                              |   | 6,561 |   |
| Change in fair value of derivative instruments and other |   | $                                 | (153,226 | )      |                              | $      | 474,393 |   |

 

|   |   | 36. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

Thefollowing table summarizes certain aspects of the fair value of derivative financial assets and liabilities recorded in the consolidatedstatement of financial position as at March 31, 2019:

 

|                                       |   | Financial assets (current) |    |   | Financial assets (non-current) |   |   | Financial liabilities (current) |   |   | Financial liabilities (non-current) |   |
|--------------------------------------------|--------|----------------------------|---------|--------|--------------------------------|--------|--------|---------------------------------|--------|--------|-------------------------------------|--------|
|                                       |   |                       |    |   |                           |   |   |                            |   |   |                                |   |
| Physical forward contracts and options (i) |   | $                          | 115,483 |   |                           | $      | 7,237  |                            |   | $      | 49,601                              |   |   | $ | 50,174 |   |
| Financial swap contracts and options (ii)  |   |                       | 18,212  |   |                           |   | 1,876  |                            |   |   | 16,142                              |   |   |   | 8,583 |   |
| Foreign exchange forward contracts         |   |                       | -       |   |                           |   | 56     |                            |   |   | 1,555                               |   |   |   | - |   |
| Share swap (iii)                           |   |                       | -       |   |                           |   | -      |                            |   |   | 11,907                              |   |   |   | - |   |
| Other derivative options                   |   |                       | 10,817  |   |                           |   | 86     |                            |   |   | 182                                 |   |   |   | 4,901 |   |
| As at March 31, 2019                       |   | $                          | 144,512 |   |                           | $      | 9,255  |                            |   | $      | 79,387                              |   |   | $ | 63,658 |   |

 

Thefollowing table summarizes certain aspects of the fair value of derivative financial assets and liabilities recorded in theconsolidated statement of financial position as at March 31, 2018:

 

|                                     |   | Financial assets (current) |    |   | Financial assets (non-current) |   |   | Financial liabilities (current) |   |   | Financial liabilities (non-current) |   |
|------------------------------------------|--------|----------------------------|---------|--------|--------------------------------|--------|--------|---------------------------------|--------|--------|-------------------------------------|--------|
|                                     |   |                       |    |   |                           |   |   |                            |   |   |                                |   |
| Physical forward contracts and options   |   | $                          | 198,891 |   |                           | $      | 60,550 |                            |   | $      | 32,451                              |   |   | $ | 29,003 |   |
| Financial swap contracts and options     |   |                       | 8,133   |   |                           |   | 1,342  |                            |   |   | 34,369                              |   |   |   | 22,117 |   |
| Foreign exchange forward contracts       |   |                       | -       |   |                           |   | -      |                            |   |   | 1,068                               |   |   |   | 505 |   |
| Share swap                               |   |                       | -       |   |                           |   | -      |                            |   |   | 18,400                              |   |   |   | - |   |
| 6.5% convertible bond conversion feature |   |                       | -       |   |                           |   | -      |                            |   |   | -                                   |   |   |   | 246 |   |
| Other derivative options                 |   |                       | 11,745  |   |                           |   | 2,770  |                            |   |   | -                                   |   |   |   | - |   |
| As at March 31, 2018                     |   | $                          | 218,769 |   |                           | $      | 64,662 |                            |   | $      | 86,288                              |   |   | $ | 51,871 |   |

 

Below is a summary of the financial instruments classifiedthrough profit or loss as at March 31, 2019, to which Just Energy has committed:

 
|  | (i) | Physical forward contracts and options consist of: |
|--|-----|----------------------------------------------------|

 
|  | · | Electricity contracts with a total remainingvolume of 38,759,196 MWh, a weighted average price of $51.29/MWh and expiry dates up to March 31, 2029. |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

 
|  | · | Natural gas contracts with a total remainingvolume of 92,885,570 GJs, a weighted average price of $3.67/GJ and expiry dates up to December 31, 2024. |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|

 
|  | · | Renewable energy certificates (“RECs”)and emission-reduction credit contracts with a total remaining volume of 4,184,687 MWh and 177,000 tonnes, respectively, a weightedaverage price of $32.50/REC and $2.68/tonne, respectively, and expiry dates up to December 31, 2028 and December 31, 2021. |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 
|  | · | Electricity generation capacity contractswith a total remaining volume of 4,362 MWCap, a weighted average price of $5,226.42/MWCap and expiry dates up to May 31, 2023. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   |   | 37. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 
|  | · | Ancillary contracts with a total remainingvolume of 738,532 MWh, a weighted average price of $23.06/MWh and expiry dates up to December 31, 2020. |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|

 
|  | (ii) | Financial swap contracts and options consist of: |
|--|------|--------------------------------------------------|

 
|  | · | Electricity contracts with a total remainingvolume of 10,333,347 MWh, an average price of $45.19/MWh and expiry dates up to November 30, 2024. |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

 
|  | · | Natural gas contracts with a total remainingvolume of 134,711,738 GJs, an average price of $3.53/GJ and expiry dates up to December 31, 2024. |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

 
|  | · | Electricity generation capacity contractswith a total remaining volume of 69 MWCap, a weighted average price of $304,787.72/MWCap and expiry dates up to October 31, 2020. |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 
|  | · | Ancillary contracts with a total remainingvolume of 1,220,145 MWh, a weighted average price of $21.52/MWh and expiry dates up to December 31, 2020. |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

 
|  | (iii) | Share swap agreement |
|--|-------|----------------------|

 

Just Energy has entered intoa share swap agreement to manage the consolidated statements of income (loss) volatility associated with the Company’s RSGand DSG Plans. The value, on inception, of the 2,500,000 shares under this share swap agreement was approximately $33,803. On August22, 2018, Just Energy reduced the notional value of the share swap to $23,803 through a payment of $10,000 and renewed the shareswap agreement for an additional year. Net monthly settlements received under the share swap agreement are recorded in other income.Just Energy records the fair value of the share swap agreement in the non-current derivative financial liabilities on the consolidatedstatements of financial position. Changes in the fair value of the share swap agreement are recorded through the consolidated statementsof income (loss) as a change in fair value of derivative instruments and other.

 

These derivative financial instrumentscreate a credit risk for Just Energy since they have been transacted with a limited number of counterparties. Should any counterpartybe unable to fulfill its obligations under the contracts, Just Energy may not be able to realize the financial assets’ balancerecognized in the consolidated financial statements.

** **

**Fair value(“FV”) hierarchy of derivatives**

 

Level 1

 

The fair value measurements areclassified as Level 1 in the FV hierarchy if the fair value is determined using quoted unadjusted market prices.

 

Level 2

** **

Fair value measurements that requireobservable inputs other than quoted prices in Level 1, either directly or indirectly, are classified as Level 2 in the FV hierarchy.This could include the use of statistical techniques to derive the FV curve from observable market prices. However, in order tobe classified under Level 2, significant inputs must be directly or indirectly observable in the market. Just Energy values itsNew York Mercantile Exchange (“NYMEX”) financial gas fixed-for-floating swaps under Level 2.

** **

|   |   | 38. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

****

 

Level 3

 

Fair value measurements that require unobservable marketdata or use statistical techniques to derive forward curves from observable market data and unobservable inputs are classifiedas Level 3 in the FV hierarchy. For the power supply contracts, Just Energy uses quoted market prices as per available market forwarddata and applies a price-shaping profile to calculate the monthly prices from annual strips and hourly prices from block stripsfor the purposes of mark to market calculations. The profile is based on historical settlements with counterparties or with thesystem operator and is considered an unobservable input for the purposes of establishing the level in the FV hierarchy. For thenatural gas supply contracts, Just Energy uses three different market observable curves: (i) Commodity (predominately NYMEX), (ii)Basis and (iii) Foreign exchange. NYMEX curves extend for over five years (thereby covering the length of Just Energy’s contracts);however, most basis curves extend only 12 to 15 months into the future. In order to calculate basis curves for the remaining years,Just Energy uses extrapolation, which leads natural gas supply contracts to be classified under Level 3.

 

Weather derivatives are non-exchange traded financial instrumentsused as part of a risk management strategy to mitigate the impact adverse weather conditions have on gross margin. The fair valuesof the derivatives are determined using an internally developed model that relies upon both observable inputs and significant unobservableinputs. Accordingly, the fair values of these derivatives are classified as Level 3. Market and contractual inputs to these modelsvary by contract type and would typically include notional amounts, reference weather stations, strike prices, temperature strikevalues, terms to expiration, historical weather data and historical commodity prices. The historical weather data and commodityprices were utilized to value the expected payouts with respect to weather derivatives and, as a result, are the most significantassumptions contributing to the determination of fair value estimates, and changes in these inputs can result in a significantlyhigher or lower fair value measurement. There were no weather derivatives held as at March 31, 2019.

 

For the share swap, Just Energy uses a forward interestrate curve along with a volume weighted average share price to model out its value. As the inputs have no observable market, itis classified as Level 3.

 

Just Energy’s accounting policy is to recognize transfersbetween levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. The fairvalue inputs into the investment of ecobee transferred from Level 2 to Level 3 in fiscal 2019.

 

*Fair valuemeasurement input sensitivity*

* *

The main cause of changes in thefair value of derivative instruments is changes in the forward curve prices used for the fair value calculations. Just Energy providesa sensitivity analysis of these forward curves under the “Market risk” section of this note. Other inputs, includingvolatility and correlations, are driven off historical settlements.

 

The following table illustrates the classification of derivative financial assets (liabilities) in the FV hierarchy as at March 31, 2019:

 

|                                      |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Total    |   |
|-------------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|----------|--------|
| Derivative financial assets               |   | $       | -      |   |    | $      | -      |    |   | $      | 153,766  |   |   | $ | 153,766 |   |
| Derivative financial liabilities          |   |    | -      |   |    |   | (6,588 | )       |   |   | (136,456 | )      |   |   | (143,044 | ) |
| Total net derivative assets (liabilities) |   | $       | -      |   |    | $      | (6,588 | )       |   | $      | 17,310   |   |   | $ | 10,722 |   |

 

|   |   | 39. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

The following table illustrates the classification of derivative financial assets (liabilities) in the FV hierarchy as at March 31, 2018:

 

|                                      |   | Level 1 |   |   | Level 2 |   |    | Level 3 |   |   | Total    |   |
|-------------------------------------------|--------|---------|--------|--------|---------|--------|---------|---------|--------|--------|----------|--------|
| Derivative financial assets               |   | $       | -      |   |    | $      | -       |    |   | $      | 283,431  |   |   | $ | 283,431 |   |
| Derivative financial liabilities          |   |    | -      |   |    |   | (21,092 | )       |   |   | (117,067 | )      |   |   | (138,159 | ) |
| Total net derivative assets (liabilities) |   | $       | -      |   |    | $      | (21,092 | )       |   | $      | 166,364  |   |   | $ | 145,272 |   |

 

***Commodity price sensitivity– Level 3 derivative financial instruments***

 

If the energy prices associated with only Level 3 derivativefinancial instruments including natural gas, electricity, verified emission-reduction credits and RECs had risen (fallen) by 10%,assuming that all of the other variables had remained constant, profit (loss) before income taxes for the year ended March 31,2019 would have increased (decreased) by $241,661 ($239,419), primarily as a result of the change in fair value of Just Energy’sderivative financial instruments.

 

Key assumptions used when determining the significant unobservable inputs for all commodity supply contracts included in Level 3 of the FV hierarchy consist of up to 5% price extrapolation to calculate monthly prices that extend beyond the market observable 12- to 15-month forward curve.

 

Thefollowing table illustrates the changes in net fair value of financial assets (liabilities) classified as Level 3 in the FV hierarchyfor the following periods:

 

|                       |   | Year ended March 31, 2019 |     |   | Year ended March 31, 2018 |   |
|----------------------------|--------|---------------------------|----------|--------|---------------------------|--------|
| Balance, beginning of year |   | $                         | 166,364  |   |                      | $      | (315,110 | ) |
| Total gains                |   |                      | 19,644   |   |                      |   | 105,709 |   |
| Purchases                  |   |                      | 11,502   |   |                      |   | 207,531 |   |
| Sales                      |   |                      | (25,575  | )      |                      |   | (64,464 | ) |
| Settlements                |   |                      | (154,625 | )      |                      |   | 232,698 |   |
| Balance, end of year       |   | $                         | 17,310   |   |                      | $      | 166,364 |   |

 
|  | **(b)** | **Classification of non-derivative financial assets and liabilities** |
|--|---------|-----------------------------------------------------------------------|

 

As at March 31, 2019 and March31, 2018, the carrying value of cash and cash equivalents, restricted cash, current trade and other receivables, and trade andother payables approximates their fair value due to their short-term nature.

 

Long-term debt recorded at amortized cost has a fairvalue as at March 31, 2019 of $740.6 million (March 31, 2018 - $570.1 million) and the interest payable on outstanding amountsis at rates that vary with Bankers’ Acceptances, LIBOR, Canadian bank prime rate or U.S. prime rate, with the exceptionsof the 8.75% loan, 6.75% $100M convertible debentures, 6.75% $160M convertible debentures, 6.5% convertible bonds and 5.75% convertibledebentures, which are fair valued based on market value. The 6.75% $100M convertible debentures, 6.75% $160M convertible debentures,6.5% convertible bonds and 5.75% convertible debentures are classified as Level 1 in the FV hierarchy.

 

Investments in equity instruments have a fair valueas at March 31, 2019 of $36.9 million (March 31, 2018 - $36.3 million) and are measured based on Level 2 of the fair value hierarchyfor the investment in Energy Earth and Level 3 of the fair value hierarchy for the investment in ecobee.

 

No adjustments were made inthe year in valuing the investment in ecobee or Energy Earth. Movements are related to foreign exchange revaluations.

 

 

|   |   | 40. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

The following table illustrates the classification of investments in the FV hierarchy as at March 31, 2019:

 

|                       |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Total  |   |
|----------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|--------|--------|
| Investment in ecobee       |   | $       | -      |   |    | $      | -      |    |   | $      | 32,888 |   |   | $ | 32,888 |   |
| Investment in Energy Earth |   |    | -      |   |    |   | 4,009  |    |   |   | -      |   |   |   | 4,009 |   |
| Total investments          |   | $       | -      |   |    | $      | 4,009  |    |   | $      | 32,888 |   |   | $ | 36,897 |   |

 

The risks associated with JustEnergy’s financial instruments are as follows:

 
|  | **(i)** | **Market risk** |
|--|---------|-----------------|

 

Market risk is the potentialloss that may be incurred as a result of changes in the market or fair value of a particular instrument or commodity. Componentsof market risk to which Just Energy is exposed are discussed below.

 

*Foreigncurrency risk*

 

Foreign currency risk is createdby fluctuations in the fair value or cash flows of financial instruments due to changes in foreign exchange rates and exposureas a result of investments in U.S. and international operations.

 

The performance of the Canadiandollar relative to the U.S. dollar could positively or negatively affect Just Energy’s income, as a portion of Just Energy’sincome is generated in USD and is subject to currency fluctuations upon translation to Canadian dollars. Due to its growing operationsin the U.S. and Europe, Just Energy expects to have a greater exposure to foreign currency fluctuations in the future than in prioryears. Just Energy has economically hedged between 50% and 90% of forecasted cross border cash flows that are expected to occurwithin the next 12 months and between 0% and 50% of certain forecasted cross border cash flows that are expected to occur withinthe following 13 to 24 months. The level of economic hedging is dependent on the source of the cash flows and the time remaininguntil the cash repatriation occurs.

 

Just Energy may, from timeto time, experience losses resulting from fluctuations in the values of its foreign currency transactions, which could adverselyaffect its operating results. Translation risk is not hedged.

 

With respect to translation exposure, if the Canadiandollar had been 5% stronger or weaker against the U.S. dollar for the year ended March 31, 2019, assuming that all the other variableshad remained constant, loss for the year would have been $3.8 million lower/higher and OCI would have been $14.2 million lower/higher.

 

*Interestrate risk*

 

Just Energy is only exposed tointerest rate fluctuations associated with its floating rate credit facility. Just Energy’s current exposure to interestrates does not economically warrant the use of derivative instruments. Just Energy’s exposure to interest rate risk is relativelyimmaterial and temporary in nature. Just Energy does not currently believe that its long-term debt exposes the Company to materialinterest rate risks but has set out parameters to actively manage this risk within its Risk Management Policy.

 

A 1% increase (decrease) in interestrates would have resulted in a decrease (increase) of approximately $1,939 in profit before income taxes for the year ended March31, 2019 (2018 - $758).

|   |   | 41. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

*Commodityprice risk*

 

Just Energy is exposed to marketrisks associated with commodity prices and market volatility where estimated customer requirements do not match actual customerrequirements. Management actively monitors these positions on a daily basis in accordance with its Risk Management Policy. Thispolicy sets out a variety of limits, most importantly thresholds for open positions in the gas and electricity portfolios, whichalso feed a value at risk limit. Should any of the limits be exceeded, they are closed expeditiously or express approval to continueto hold is obtained. Just Energy’s exposure to market risk is affected by a number of factors, including accuracy of estimationof customer commodity requirements, commodity prices, volatility and liquidity of markets. Just Energy enters into derivative instrumentsin order to manage exposures to changes in commodity prices. The derivative instruments that are used are designed to fix the priceof supply for estimated customer commodity demand and thereby fix margins such that shareholder dividends can be appropriatelyestablished. Derivative instruments are generally transacted over the counter. The inability or failure of Just Energy to manageand monitor the above market risks could have a material adverse effect on the operations and cash flows of Just Energy. Just Energymitigates the exposure to variances in customer requirements that are driven by changes in expected weather conditions throughactive management of the underlying portfolio, which involves, but is not limited to, the purchase of options including weatherderivatives. Just Energy’s ability to mitigate weather effects is limited by the degree to which weather conditions deviatefrom normal.

 

*Commodityprice sensitivity – all derivative financial instruments*

 

If all the energy prices associatedwith derivative financial instruments including natural gas, electricity, verified emission-reduction credits and RECs had risen(fallen) by 10%, assuming that all of the other variables had remained constant, profit before income taxes for the year endedMarch 31, 2019 would have increased (decreased) by $240,332 ($238,089), primarily as a result of the change in fair value of JustEnergy’s derivative financial instruments.

 

**(ii)Credit risk**

 

Credit risk is the risk that oneparty to a financial instrument fails to discharge an obligation and causes financial loss to another party. Just Energy is exposedto credit risk in two specific areas: customer credit risk and counterparty credit risk.

 

*Customercredit risk*

 

In Alberta, Texas, Illinois, California, Delaware, Ohio,Georgia and the U.K., Just Energy has customer credit risk and, therefore, credit review processes have been implemented to performcredit evaluations of customers and manage customer default. If a significant number of customers were to default on their payments,it could have a material adverse effect on the operations and cash flows of Just Energy. Management factors default from creditrisk in its margin expectations for all the above markets.

 

|   |   | 42. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

The aging of the accounts receivable from the above markets was as follows:

 

|             |   | March 31, 2019 |    |   | March 31, 2018 |   |
|------------------|--------|----------------|---------|--------|----------------|--------|
|             |   |           |    |   |           |   |
| Current          |   | $              | 116,892 |   |           | $      | 113,786 |   |
| 1–30 days  |   |           | 42,562  |   |           |   | 44,374 |   |
| 31–60 days |   |           | 22,317  |   |           |   | 21,241 |   |
| 61–90 days |   |           | 16,352  |   |           |   | 12,686 |   |
| Over 90 days     |   |           | 100,580 |   |           |   | 69,207 |   |
|             |   | $              | 298,703 |   |           | $      | 261,294 |   |

 

Changes in the expected lifetime credit loss were as follows:

 

|                            |   | March 31, 2019            |    |   |                |   |
|---------------------------------|--------|---------------------------|---------|--------|----------------|--------|
|                            |   | (Restated – Note 5) |    |   | March 31, 2018 |   |
|                            |   |                      |    |   |           |   |
| Balance, beginning of year      |   | $                         | 60,121  |   |           | $      | 49,431 |   |
| Provision for doubtful accounts |   |                      | 192,202 |   |           |   | 56,300 |   |
| Bad debts written off           |   |                      | (90,231 | )      |           |   | (41,802 | ) |
| Adjustment from IFRS 9 adoption |   |                      | 23,636  |   |           |   | - |   |
| Foreign exchange                |   |                      | (3,363  | )      |           |   | (3,808 | ) |
| Balance, end of year            |   | $                         | 182,375 |   |           | $      | 60,121 |   |

 

In the remaining markets, theLDCs, provide collection services and assume the risk of any bad debts owing from Just Energy’s customers for a fee. Managementbelieves that the risk of the LDCs failing to deliver payment to Just Energy is minimal. There is no assurance that the LDCs providingthese services will continue to do so in the future.

 

*Counterpartycredit risk*

 

Counterpartycredit risk represents the loss that Just Energy would incur if a counterparty fails to perform under its contractual obligations.This risk would manifest itself in Just Energy replacing contracted supply at prevailing market rates, thus impacting the relatedcustomer margin. Counterparty limits are established within the Risk Management Policy. Any exceptions to these limits requireapproval from the Board of Directors of Just Energy. The Risk Department and Risk Committee monitor current and potential creditexposure to individual counterparties and also monitor overall aggregate counterparty exposure. However, the failure of a counterpartyto meet its contractual obligations could have a material adverse effect on the operations and cash flows of Just Energy.

 

As at March 31, 2019, the estimated counterparty creditrisk exposure amounted to $153,767 (2018 - $283,431), representing the risk relating to Just Energy’s exposure to derivativesthat are in an asset position.

 

**(iii) Liquidityrisk**

 

Liquidity risk is the potentialinability to meet financial obligations as they fall due. Just Energy manages this risk by monitoring detailed daily cash flowforecasts covering a rolling 13-week period, cash forecasts for the next 12 months, and quarterly forecasts for the following two-yearperiod to ensure adequate and efficient use of cash resources and credit facilities.

 

|   |   | 43. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

The followingare the contractual maturities, excluding interest payments, reflecting undiscounted disbursements of Just Energy’s financialliabilities:

 

As at March 31, 2019:

 

|                                         |   | Carrying amount |      |   | Contractual cash    flows |   |      | Less than 1 year |   |   | 1–3 years |   |   | 4–5 years |      |   | More than 5 years |   |
|----------------------------------------------|--------|-----------------|-----------|--------|---------------------------|--------|-----------|------------------|--------|--------|-----------------|--------|--------|-----------------|-----------|--------|-------------------|--------|
| Trade and other payables                     |   | $               | 714,110   |   |                      | $      | 714,110   |             |   | $      | 714,110         |   |   | $               | -         |   |              | $      | - |   |   | $ | - |   |
| Long-term debt1                              |   |            | 725,372   |   |                      |   | 781,701   |             |   |   | 39,150          |   |   |            | 210,564   |   |              |   | 531,987 |   |   |   | - |   |
| Gas, electricity and non-commodity contracts |   |            | 143,045   |   |                      |   | 3,500,493 |             |   |   | 1,899,713       |   |   |            | 1,439,479 |   |              |   | 119,212 |   |   |   | 42,089 |   |
|                                         |   | $               | 1,582,527 |   |                      | $      | 4,996,304 |             |   | $      | 2,652,973       |   |   | $               | 1,650,043 |   |              | $      | 651,199 |   |   | $ | 42,089 |   |

 

As at March 31, 2018:

 

|                                         |   | Carrying amount |      |   | Contractual cash flows |   |      | Less than 1 year |   |   | 1–3 years |   |   | 4–5 years |      |   | More than 5 years |   |
|----------------------------------------------|--------|-----------------|-----------|--------|------------------------|--------|-----------|------------------|--------|--------|-----------------|--------|--------|-----------------|-----------|--------|-------------------|--------|
| Trade and other payables                     |   | $               | 622,797   |   |                   | $      | 622,797   |             |   | $      | 622,797         |   |   | $               | -         |   |              | $      | - |   |   | $ | - |   |
| Long-term debt1                              |   |            | 543,504   |   |                   |   | 575,525   |             |   |   | 122,115         |   |   |            | 193,410   |   |              |   | 260,000 |   |   |   | - |   |
| Gas, electricity and non-commodity contracts |   |            | 138,159   |   |                   |   | 3,171,037 |             |   |   | 1,867,389       |   |   |            | 1,202,949 |   |              |   | 69,658 |   |   |   | 31,041 |   |
|                                         |   | $               | 1,304,460 |   |                   | $      | 4,369,359 |             |   | $      | 2,612,301       |   |   | $               | 1,396,359 |   |              | $      | 329,658 |   |   | $ | 31,041 |   |

1 Includedin long-term debt are the 6.75% $100M convertible debentures, 6.75% $160M convertible debentures, 6.5% convertible bonds and 5.75%convertible debentures, which may be settled through the issuance of shares at the option of the holder or Just Energy upon maturity.

 

In addition to the amounts noted above, as at March31, 2019, the contractual net interest payments over the term of the long-term debt with scheduled repayment terms are as follows:

 

|              |   | Less than 1 year |   |   | 1–3 years |   |   | 4–5 years |   |   | More than 5 years |   |
|-------------------|--------|------------------|--------|--------|-----------------|--------|--------|-----------------|--------|--------|-------------------|--------|
| Interest payments |   | $                | 40,765 |   |            | $      | 80,234 |            |   | $      | 40,600            |   |   | $ | - |   |

 

**(iv)****Supplier risk**

 

Just Energy purchases the majorityof the gas and electricity delivered to its customers through long-term contracts entered into with various suppliers. JustEnergy has an exposure to supplier risk as the ability to continue to deliver gas and electricity to its customers is reliant uponthe ongoing operations of these suppliers and their ability to fulfil their contractual obligations. As at March 31, 2019,Just Energy has applied an adjustment factor to determine the fair value of its financial instruments in the amount of $8,307 (2018- $4,737) to accommodate for its counterparties’ risk of default.

 

|   |   | 44. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

| **15.** |  | **TRADE AND OTHER PAYABLES** |
|---------|--|------------------------------|

 

|                          |   | As at March 31, 2019 |    |   | As at March 31, 2018 |   |
|-------------------------------|--------|----------------------|---------|--------|----------------------|--------|
| Commodity suppliers' payables |   | $                    | 189,554 |   |                 | $      | 176,831 |   |
| Accrued liabilities           |   |                 | 112,039 |   |                 |   | 135,733 |   |
| Green provisions              |   |                 | 151,992 |   |                 |   | 152,542 |   |
| Sales tax payable             |   |                 | 22,969  |   |                 |   | 15,794 |   |
| Trade accounts payable        |   |                 | 184,257 |   |                 |   | 45,887 |   |
| Payable for former JV partner |   |                 | 22,625  |   |                 |   | 26,375 |   |
| Accrued gas payable           |   |                 | 12,937  |   |                 |   | 18,624 |   |
| Other payables                |   |                 | 17,737  |   |                 |   | 18,232 |   |
|                          |   | $                    | 714,110 |   |                 | $      | 590,018 |   |

 

| **** |
|------|

| **16.** |  | **DEFERRED REVENUE** |
|---------|--|----------------------|

 

|                               |   | Fiscal 2019 |     |   | Fiscal 2018 |   |
|------------------------------------|--------|-------------|----------|--------|-------------|--------|
| Balance, beginning of year         |   | $           | 38,710   |   |        | $      | 17,546 |   |
| Additions to deferred revenue      |   |        | 569,880  |   |        |   | 553,050 |   |
| Revenue recognized during the year |   |        | (563,922 | )      |        |   | (534,265 | ) |
| Foreign exchange impact            |   |        | (1,440   | )      |        |   | 2,379 |   |
| Balance, end of year               |   | $           | 43,228   |   |        | $      | 38,710 |   |

 

| **** |
|------|

| **** |
|------|

| **17.** |  | **ACQUISITION OF BUSINESSES** |
|---------|--|-------------------------------|

 
| **(a)** |  | **Acquisition of EdgePower, Inc.** |
|---------|--|------------------------------------|

 

On February28, 2018, Just Energy completed the acquisition of the issued and outstanding shares of EdgePower, Inc. (“EdgePower”),a privately held energy monitoring and management company operating out of Aspen, Colorado. EdgePower provides lighting and HVACcontrols, as well as enterprise monitoring, in hundreds of commercial buildings in North America. Just Energy acquired 100% ofthe equity interests of EdgePower for the purposes of integrating their lighting and HVAC controls with the commercial business.The fair value of the total consideration transferred is US$14.9 million, of which US$7.5 million was paid in cash and US$7.4 millionwas settled through the issuance of 1,415,285 Just Energy common shares. The goodwill that was acquired as part of this acquisitionrelates primarily to the EdgePower workforce and synergies between Just Energy and EdgePower.

 

In addition,the former shareholders of EdgePower are entitled to a payment of up to a maximum of US$6.0 million, payable in cash, subject tocontinuing employment and the achievement of certain annual and cumulative performance thresholds of the EdgePower business. Thepayment is calculated as 20% of EBITDA for the EdgePower business for the years of 2019–2021 with minimum thresholds thatmust be met. As at the acquisition date, the amount recognized for management remuneration was $nil. As at March 2019, the acquisitionaccounting for EdgePower has been finalized and closed.

 

 

|   |   | 45. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

The followingis the final purchase price allocation for EdgePower:

 

| NET ASSETS ACQUIRED                          |   |   |   |   |
|----------------------------------------------|--------|--------|--------|--------|
|                                         |   |   |   |   |
| Working capital                              |   | $      | 993    |   |
| Intangible assets                            |   |   | 14,198 |   |
| Goodwill                                     |   |   | 7,673  |   |
| Deferred tax liabilities                     |   |   | (3,820 | )      |
| Total consideration                          |   | $      | 19,044 |   |
|                                         |   |   |   |   |
| Cash paid, net of working capital adjustment |   | $      | 10,078 |   |
| Common shares issued                         |   |   | 8,966  |   |
| Total consideration                          |   | $      | 19,044 |   |

 
| **(b)** |  | **Acquisition of Filter Group Inc. (“Filter Group”)** |
|---------|--|-------------------------------------------------------------------|

 

On October 1, 2018, Just Energy acquired Filter Group,a leading provider of subscription-based home water filtration systems to residential customers in Canada and the U.S. Headquarteredin Toronto, Ontario, Filter Group currently provides under-counter and whole-home water filtration solutions to residential marketsin the provinces of Ontario and Manitoba and the states of Nevada, California, Arizona, Michigan and Illinois.

 

Just Energy acquired all of the issued and outstandingshares of Filter Group and the shareholder loan owing by Filter Group. In addition, Filter Group had approximately $22 millionof third party Filter Group debt. The aggregate consideration payable by Just Energy under the Purchase Agreement is composed of:(i) $14.3 million in cash, fully payable within 180 days of closing; and (ii) earn-out payments of up to 9.5 million Just Energycommon shares (with up to an additional 2.4 million Just Energy common shares being issuable to satisfy dividends that otherwisewould have been paid in cash on the Just Energy shares issuable pursuant to the earn-out payments (the “DRIP Shares”)),subject to customary closing adjustments. The earn-out payments are contingent on the achievement by Filter Group of certain performance-basedmilestones specified in the Purchase Agreement in each of the first three years following the closing of the acquisition. In addition,the earn-out payments may be paid 50% in cash and the DRIP Shares 100% in cash, at the option of Just Energy.

|   |   | 46. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

The CEO of Filter Group is the son of the Executive Chairof Just Energy. As such, this is a related party transaction. The transaction was reviewed by the Strategic Initiatives Committeeand it received a fairness opinion from National Bank Financial on the transaction.

 

Of the $14.3 million cash consideration for the acquisitionof Filter Group, $1.3 million relates to the purchase of the shares of Filter Group. The remaining $13.0 million is for the assumptionof a shareholder debt owed to a related party, of which $3.0 million was already paid on the closing date of October 1, 2018. Therefore,as at March 31, 2019, $11.3 million of the overall cash consideration payable is included in current trade and other payables ofthe consolidated statements of financial position, of which $11.1 million is for a related party. The outstanding balance accruedinterest at a rate of 1% per month, beginning October 1, 2018, which resulted in $0.7 million of interest accrued as at March 31,2019, of which $0.6 million is for a related party.

 

The contingent consideration relating to the potentialearn-out payments over the next three years was valued at approximately $24.9 million on October 1, 2018, which is the mid-pointof the calculated range of $23.1 million to $26.8 million. As it does not meet the definition of equity, it is carried at fairvalue through profit or loss and is revalued at each reporting period. Significant assumptions affecting the measurement of contingentconsideration each quarter include the Just Energy share price and the performance of Filter Group.

 

Each quarter the contingent consideration related to theFilter Group acquisition is revalued. To estimate the number of Just Energy common shares that are exchanged in each period, aMonte Carlo simulation model was used where the trailing 12-month adjusted EBITDA for each period is forecasted based on a GeometricBrownian Motion process. Inputs used in the Monte Carlo simulation model are as follows:

 
|  | · | Adjusted trailing 12-months EBITDA asat each quarter-end date; |
|--|--------|----------------------------------------------------------------|
|  | · | Average EBITDA forecasts for new periods; |
|--|--------|-------------------------------------------|
|  | · | Implied asset volatility; |
|--|--------|---------------------------|
|  | · | Equity volatility of Just Energy; |
|--|--------|-----------------------------------|
|  | · | Underlying asset price of Just Energycommon shares; |
|--|--------|-----------------------------------------------------|
|  | · | Dividend yield; and |
|--|--------|---------------------|
|  | · | Risk-free rate. |
|--|--------|-----------------|

 

Based on the foregoing, the value of the contingent considerationas at March 31, 2019 is in the range of $27.1 million to $31.2 million, with a mid-point of $29.1 million. The change in fair valueof the contingent consideration at October 1, 2018 of $24.9 million to the fair value at March 31, 2019 of $29.1 million resultsin a change of $4.2 million reported in other income (net), in the consolidated statements of income (loss).

 

|   |   | 47. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

The following is the purchase price allocation for FilterGroup:

 

| NET ASSETS ACQUIRED      |   |   |    |   |
|--------------------------|--------|--------|---------|--------|
|                     |   |   |    |   |
| Working capital          |   | $      | 898     |   |
| Property and equipment   |   |   | 6,154   |   |
| Intangible assets        |   |   | 15,600  |   |
| Goodwill                 |   |   | 38,217  |   |
| Long-term debt           |   |   | (21,611 | )      |
| Total consideration      |   | $      | 39,258  |   |
|                     |   |   |    |   |
| Cash consideration       |   | $      | 3,000   |   |
| Payable to shareholders  |   |   | 11,314  |   |
| Contingent consideration |   |   | 24,944  |   |
| Total consideration      |   | $      | 39,258  |   |

 

The goodwill was calculated as the difference between thefair value of consideration transferred and the fair value of the assets acquired and liabilities assumed. The goodwill acquiredas part of the acquisition primarily represents Filter Group’s workforce, operational and strategic management processesand synergies between Just Energy and Filter Group. Goodwill is not amortized for accounting.

 

For the year ended March 31, 2019, Just Energy recorded$1.2 million of administration expenses associated with the Filter Group acquisition, primarily related to due diligence and professionalfee expenditures.

 

As at March 31, 2019, Filter Group revenues of $6.3 millionand profit of $0.3 million were included in the consolidated statements of profit (loss) since October 1, 2018. On a pro formabasis, Just Energy’s consolidated revenue and earnings for the year ended March 31, 2019 would have been higher by approximately$11.3 million and lower by $4.8 million, respectively, had the Filter Group acquisition occurred on April 1, 2018.

 

As of March 31, 2019, the acquisition accounting for FilterGroup has been finalized and closed.

 

| **** |
|------|

| **18.** |  | **DISCONTINUED OPERATIONS** |
|---------|--|-----------------------------|

 

In March 2019, Just Energy formally approved and commenceda process to dispose of its businesses in Germany, Ireland and Japan. The decision was part of a strategic transition to focuson the core business in North America and the U.K. The disposal of the operations is expected to be completed within the next 12months. At March 31, 2019 these operations were classified as a disposal group held for sale and as a discontinued operation. Previously,these operations were reported within the Consumer segment. The tax impact on the discontinued operations is minimal.

 

The results of the discontinuedoperations are presented below:

 

|                                                                                      |   | 2019   |    |   | 2018   |   |
|-------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Sales                                                                                     |   | $      | 19,729  |   |   | $      | 3,012 |   |
| Cost of sales                                                                             |   |   | 19,347  |   |   |   | 2,596 |   |
| Gross margin                                                                              |   |   | 382     |   |   |   | 416 |   |
| Expenses                                                                                  |   |   |    |   |   |   |   |   |
| Administrative, selling and operating expenses                                            |   |   | 12,079  |   |   |   | 8,455 |   |
| Operating loss                                                                            |   |   | (11,697 | )      |   |   | (8,039 | ) |
| Change in fair value of derivative instruments and other                                  |   |   | -       |   |   |   | (37 | ) |
| Other income (loss)                                                                       |   |   | (199    | )      |   |   | 2,134 |   |
| Loss from discontinued operations before the undernoted                                   |   |   | (11,896 | )      |   |   | (5,942 | ) |
| Provision for income tax expense                                                          |   |   | 4       |   |   |   | 3 |   |
| Impairment loss recognized on the remeasurement to estimate fair value less costs to sell |   |   | 10,479  |   |   |   | - |   |
| LOSS FROM DISCONTINUED OPERATIONS                                                         |   | $      | (22,379 | )      |   | $      | (5,945 | ) |
|                                                                                      |   |   |    |   |   |   |   |   |
|                                                                                      |   |   |    |   |   |   |   |   |
|                                                                                      |   |   |    |   |   |   |   |   |
| Cash flows used in operating activities                                                   |   | $      | (13,194 | )      |   |   | (9,259 | ) |
| Cash flows used in investing activities                                                   |   | $      | (1,316  | )      |   | $      | (2,252 | ) |
| Cash flows from financing activities                                                      |   | $      | 13,856  |   |   | $      | 12,236 |   |

 

|   |   | 48. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

Assetsand liabilities of the discontinued operations classified as held for sale as at March 31, 2019 were:

 

| ASSETS                                                        |   |   |   |
|---------------------------------------------------------------|--------|--------|--------|
| Current assets                                                |   |   |   |   |
| Cash and cash equivalents                                     |   | $      | 628    |   |
| Current trade and other receivables                           |   |   | 3,007  |   |
| Income taxes recoverable                                      |   |   | 50     |   |
| Other current assets                                          |   |   | 3,087  |   |
|                                                          |   |   |   |   |
| Non-current assets                                            |   |   |   |   |
| Property and equipment                                        |   |   | 42     |   |
| Intangible assets                                             |   |   | 2,157  |   |
| ASSETS CLASSIFIED AS HELD FOR SALE                            |   | $      | 8,971  |   |
|                                                          |   |   |   |   |
| Liabilities                                                   |   |   |   |   |
| Trade and other payables                                      |   | $      | 4,902  |   |
| Deferred revenue                                              |   |   | 298    |   |
| LIABILITIES RELATING TO ASSETS CLASSIFIED    AS HELD FOR SALE |   | $      | 5,200  |   |

 
| The $5.1 million goodwill associated with German operations was fully impaired in fiscal 2019 following the formal decision to commence the disposal of the business. |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|  |
|--|

| 19. |  | LONG-TERM DEBT AND FINANCING |
|-----|--|------------------------------|

 

|                                   |   | Maturity           |   | March 31, 2019 |    |   | March 31, 2018 |   |
|----------------------------------------|--------|--------------------|--------|----------------|---------|--------|----------------|--------|
| Credit facility (a)                    |   | September 1, 2020  |   | $              | 201,577 |   |           | $      | 122,115 |   |
| Less: Debt issue costs (a)             |   |               |   |           | (1,824  | )      |           |   | (664 | ) |
| Filter Group financing (b)             |   |               |   |           | 17,577  |   |           |   | - |   |
| 8.75% loan (c)                         |   | September 12, 2023 |   |           | 240,094 |   |           |   | - |   |
| 6.75% $100M convertible debentures (d) |   | March 31, 2023     |   |           | 87,520  |   |           |   | 85,760 |   |
| 6.75% $160M convertible debentures (e) |   | December 31, 2021  |   |           | 150,945 |   |           |   | 148,146 |   |
| 6.5% convertible bonds (f)             |   | July 29, 2019      |   |           | 29,483  |   |           |   | 188,147 |   |
|                                   |   |               |   |           | 725,372 |   |           |   | 543,504 |   |
| Less: Current portion                  |   |               |   |           | (37,429 | )      |           |   | (121,451 | ) |
|                                   |   |               |   | $              | 687,943 |   |           | $      | 422,053 |   |

 

 

|   |   | 49. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

Future annual minimum repayments are as follows:

 

|                                   |   | Less than 1 year |   |   | 1–3 years |   |    | 4–5 years |   |   | More than 5 years |   |   | Total  |   |
|----------------------------------------|--------|------------------|--------|--------|-----------------|--------|---------|-----------------|--------|--------|-------------------|--------|--------|--------|--------|
|                                   |   |             |   |   |            |   |    |            |   |   |              |   |   |   |   |
| Credit facility (a)                    |   | $                | -      |   |            | $      | 201,577 |            |   | $      | -                 |   |   | $      | -      |   |   | $ | 201,577 |   |
| Filter Group financing (b)             |   |             | 9,217  |   |            |   | 8,987   |            |   |   | 1,186             |   |   |   | -      |   |   |   | 19,390 |   |
| 8.75% loan (c)                         |   |             | -      |   |            |   | -       |            |   |   | 270,801           |   |   |   | -      |   |   |   | 270,801 |   |
| 6.75% $100M convertible debentures (d) |   |             | -      |   |            |   | -       |            |   |   | 100,000           |   |   |   | -      |   |   |   | 100,000 |   |
| 6.75% $160M convertible debentures (e) |   |             | -      |   |            |   | -       |            |   |   | 160,000           |   |   |   | -      |   |   |   | 160,000 |   |
| 6.5% convertible bonds (f)             |   |             | 29,933 |   |            |   | -       |            |   |   | -                 |   |   |   | -      |   |   |   | 29,933 |   |
|                                   |   | $                | 39,150 |   |            | $      | 210,564 |            |   | $      | 531,987           |   |   | $      | -      |   |   | $ | 781,701 |   |

 

The details for long-term debt are as follows:

 

|                                   |   | As at April 1, 2018 |     |   | Cash inflows/ (outflows) |   |     | Foreign exchange |   |   | Non-cash changes |   |   | As at March 31, 2019 |   |
|----------------------------------------|--------|---------------------|----------|--------|--------------------------|--------|----------|------------------|--------|--------|------------------|--------|--------|----------------------|--------|
|                                   |   |                |     |   |                     |   |     |             |   |   |             |   |   |                 |   |
| Credit facility (a)                    |   | $                   | 121,451  |   |                     | $      | 77,638   |             |   | $      | -                |   |   | $                    | 664    |   |   | $ | 199,753 |   |
| Filter Group financing (b)             |   |                | -        |   |                     |   | 17,577   |             |   |   | -                |   |   |                 | -      |   |   |   | 17,577 |   |
| 8.75% loan (c)                         |   |                | -        |   |                     |   | 236,934  |             |   |   | 4,553            |   |   |                 | (1,393 | ) |   |   | 240,094 |   |
| 6.75% $100M convertible debentures (d) |   |                | 85,760   |   |                     |   | -        |             |   |   | -                |   |   |                 | 1,760  |   |   |   | 87,520 |   |
| 6.75% $160M convertible debentures (e) |   |                | 148,146  |   |                     |   | -        |             |   |   | -                |   |   |                 | 2,799  |   |   |   | 150,945 |   |
| 6.5% convertible bonds (f)             |   |                | 188,147  |   |                     |   | (169,333 | )                |   |   | 3,508            |   |   |                 | 7,161  |   |   |   | 29,483 |   |
|                                   |   | $                   | 543,504  |   |                     | $      | 162,816  |             |   | $      | 8,061            |   |   | $                    | 10,991 |   |   | $ | 725,372 |   |
| Less: Current portion                  |   |                | (121,451 | )      |                     |   | -        |             |   |   | -                |   |   |                 | -      |   |   |   | (37,429 | ) |
|                                   |   | $                   | 422,053  |   |                     | $      | 162,816  |             |   | $      | 8,061            |   |   | $                    | 10,991 |   |   | $ | 687,943 |   |

 

|                                   |   | As at April 1, 2017 |    |   | Cash inflows/ (outflows) |   |     | Foreign exchange |   |   | Non-cash changes |   |   | As at March 31, 2018 |    |
|----------------------------------------|--------|---------------------|---------|--------|--------------------------|--------|----------|------------------|--------|--------|------------------|--------|--------|----------------------|---------|
|                                   |   |                |    |   |                     |   |     |             |   |   |             |   |   |                 |    |
| Credit facility (a)                    |   | $                   | 66,001  |   |                     | $      | 53,857   |             |   | $      | -                |   |   | $                    | 1,593   |   |   | $ | 121,451 |   |
| 6.75% $100M convertible debentures (d) |   |                | -       |   |                     |   | 95,869   |             |   |   | -                |   |   |                 | (10,109 | ) |   |   | 85,760 |   |
| 6.75% $160M convertible debentures (e) |   |                | 145,579 |   |                     |   | -        |             |   |   | -                |   |   |                 | 2,567   |   |   |   | 148,146 |   |
| 6.5% convertible bonds (f)             |   |                | 190,486 |   |                     |   | -        |             |   |   | (6,101           | )      |   |                 | 3,762   |   |   |   | 188,147 |   |
| 5.75% convertible debentures (g)       |   |                | 96,022  |   |                     |   | (100,000 | )                |   |   | -                |   |   |                 | 3,978   |   |   |   | - |   |
|                                   |   | $                   | 498,088 |   |                     | $      | 49,726   |             |   | $      | (6,101           | )      |   | $                    | 1,791   |   |   | $ | 543,504 |   |
| Less: Current portion                  |   |                | -       |   |                     |   | -        |             |   |   | -                |   |   |                 | -       |   |   |   | (121,451 | ) |
|                                   |   | $                   | 498,088 |   |                     | $      | 49,726   |             |   | $      | (6,101           | )      |   | $                    | 1,791   |   |   | $ | 422,053 |   |

 

|   |   | 50. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

The following table details the finance costs for the year ended March 31. Interest is expensed based on the effective interest rate.

 

|                                   |   | 2019   |   |   | 2018   |   |
|----------------------------------------|--------|--------|--------|--------|--------|--------|
| Credit facility (a)                    |   | $      | 20,715 |   |   | $      | 12,883 |   |
| Filter Group financing (b)             |   |   | 875    |   |   |   | - |   |
| 8.75% loan (c)                         |   |   | 8,999  |   |   |   | - |   |
| 6.75% $100M convertible debentures (d) |   |   | 8,819  |   |   |   | 497 |   |
| 6.75% $160M convertible debentures (e) |   |   | 13,598 |   |   |   | 12,773 |   |
| 6.5% convertible bonds (f)             |   |   | 18,387 |   |   |   | 15,753 |   |
| 5.75% convertible debentures (g)       |   |   | -      |   |   |   | 9,173 |   |
| Collateral management and others (h)   |   |   | 16,679 |   |   |   | 4,893 |   |
|                                   |   | $      | 88,072 |   |   | $      | 55,972 |   |

 
| (a) |  | As of April 18, 2018, the Company has renegotiated an agreement with a syndicate oflenders that includes Canadian Imperial Bank of Commerce, National Bank of Canada, HSBC Bank Canada, JPMorgan Chase Bank N.A.,Alberta Treasury Branches, Canadian Western Bank and Morgan Stanley Senior Funding, Inc., a subsidiary of Morgan Stanley BankN.A. The agreement extends Just Energy’s credit facility for an additional two years to September 1, 2020. The facilitysize was increased to $352.5 million from $342.5 million, with an accordion for Just Energy to draw up to $370 million. A certainprincipal amount outstanding under the credit facility is guaranteed by Export Development Canada under its Account PerformanceSecurity Guarantee Program. |
|-----|--|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

Interest is payable on outstandingloans at rates that vary with Bankers’ Acceptance rates, LIBOR, Canadian bank prime rate or U.S. prime rate. Under the termsof the operating credit facility, Just Energy is able to make use of Bankers’ Acceptances and LIBOR advances at stampingfees 3.750%. Prime rate advances are at a rate of bank prime (Canadian bank prime rate or U.S. prime rate) plus 2.750% and lettersof credit are at a rate of 3.750%. Interest rates are adjusted quarterly based on certain financial performance indicators.

 

As at March 31, 2019, theCanadian prime rate was 3.95% and the U.S. prime rate was 5.5%. As at March 31, 2019, $201.6 million has been drawn against thefacility and total letters of credit outstanding as at March 31, 2019 amounted to $94.0 million (March 31, 2018 - $113.4 million).As at March 31, 2019, Just Energy has $56.9 million of the facility remaining for future working capital and/or security requirements.Just Energy’s obligations under the credit facility are supported by guarantees of certain subsidiaries and affiliates andsecured by a general security agreement and a pledge of the assets and securities of Just Energy and the majority of its operatingsubsidiaries and affiliates excluding, primarily, the U.K. and other international operations. Just Energy is required to meeta number of financial covenants under the credit facility agreement. As at March 31, 2019, the Company was compliant with all ofthese covenants.

 
| (b) |  | Filter Group, which was acquired on October 1, 2018, has an outstanding loan payableto Home Trust Company (“HTC”). The loan is a result of factoring receivables to finance the cost of rental equipmentover a period of three to five years with HTC and bears interest at 8.99% per annum. Principal and interest are repayable on amonthly basis. |
|-----|--|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   |   | 51. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 
| (c) |  | On September 12, 2018, Just Energy entered into a US$250 million non-revolving multi-draw senior unsecuredterm loan facility (the “8.75% loan”) with Sagard Credit Partners, LP and certain funds managed by a leading U.S.-basedglobal fixed income asset manager. The 8.75% loan bears interest at 8.75% per annum payable semi-annually in arrears on June 30and December 31 in each year plus fees, and will mature on September 12, 2023. Counterparties were issued 7.5 million warrantsat a strike price of $8.56 each, convertible to one Just Energy common stock. The value of these warrants has been assessed asnominal. The 8.75% loan has three tranches. The first tranche of US$50 million is earmarked for general corporate purposes, includingto pay down Just Energy's credit facility. The second tranche of US$150 million is earmarked towards the settlement of Just Energy's6.5% convertible bonds. The third tranche of US$50 million is earmarked for investments and future acquisitions. As at March 31,2019, US$193.0 million was drawn from the 8.75% loan. |
|-----|--|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

On July 29, 2019, the Company drewUS$7.0 million from Tranche 2 and US$7 million from Tranche 3. These draws were secured by a personal guarantee of a director ofthe Company. 

 
| (d) |  | On February 22, 2018, Just Energy issued $100 million of convertible unsecured seniorsubordinated debentures (the “6.75% $100 million convertible debentures”). The 6.75% $100 million convertible debenturesbear interest at an annual rate of 6.75%, payable semi-annually in arrears on March 31 and September 30 in each year, and havea maturity date of March 31, 2023. Each $1,000 principal amount of the 6.75% $100 million convertible debentures is convertibleat the option of the holder at any time prior to the close of business on the earlier of the maturity date and the last businessday immediately preceding the date fixed for redemption into 112.3596 common shares of Just Energy, representing a conversionprice of $8.90, subject to certain anti-dilution provisions. Holders who convert their debentures will receive accrued and unpaidinterest for the period from and including the date of the latest interest payment up to, but excluding, the date of conversion. |
|-----|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

The 6.75% $100 million convertibledebentures will not be redeemable at the option of the Company on or before March 31, 2021. After March 31, 2021 and prior to March31, 2022, the 6.75% $100 million convertible debentures may be redeemed in whole or in part from time to time at the option ofthe Company on not more than 60 days’ and not less than 30 days’ prior notice, at a price equal to their principalamount plus accrued and unpaid interest, provided that the weighted average trading price of the common shares of Just Energy onthe Toronto Stock Exchange (the “TSX”) for the 20 consecutive trading days ending five trading days preceding the dateon which the notice of redemption is given is at least 125% of the conversion price. On or after March 31, 2022, the 6.75% $100million convertible debentures may be redeemed in whole or in part from time to time at the option of the Company on not more than60 days’ and not less than 30 days’ prior notice, at a price equal to their principal amount plus accrued and unpaidinterest.

 

The conversion feature of the 6.75% $100 million convertible debentures has been accounted for as a separatecomponent of shareholders’ equity deficit in the amount of $9.7 million. Upon initial recognition of the convertible debentures,Just Energy recorded a deferred income tax liability of $2.6 million and reduced the equity component of the convertible debenturesby this amount. The remainder of the net proceeds of the 6.75% $100 million convertible debentures has been recorded as long-termdebt, which is being accreted up to the face value of $100 million over the term of the 6.75% $100 million convertible debenturesusing an effective interest rate of 10.7%. If the 6.75% $100 million convertible debentures are converted into common shares, thevalue of the conversion will be reclassified to share capital along with the principal amount converted. No amounts of the 6.75%$100 million convertible debentures have been converted or redeemed as at March 31, 2019.

 
| (e) |  | On October 5, 2016, Just Energy issued $160 million of convertible unsecured seniorsubordinated debentures (the “6.75% $160 million convertible debentures”). The 6.75% $160 million convertible debenturesbear interest at an annual rate of 6.75%, payable semi-annually in arrears on June 30 and December 31 in each year, and have amaturity date of December 31, 2021. Each $1,000 principal amount of the 6.75% $160 million convertible debentures is convertibleat the option of the holder at any time prior to the close of business on the earlier of the maturity date and the last businessday immediately preceding the date fixed for redemption into 107.5269 common shares of Just Energy, representing a conversionprice of $9.30, subject to certain anti-dilution provisions. Holders who convert their debentures will receive accrued and unpaidinterest for the period from and including the date of the latest interest payment up to, but excluding, the date of conversion. |
|-----|--|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   |   | 52. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

The 6.75% $160 million convertibledebentures will not be redeemable at the option of the Company on or before December 31, 2019. After December 31, 2019 and priorto December 31, 2020, the 6.75% $160 million convertible debentures may be redeemed in whole or in part from time to time at theoption of the Company on not more than 60 days’ and not less than 30 days’ prior notice, at a price equal to theirprincipal amount plus accrued and unpaid interest, provided that the weighted average trading price of the common shares of JustEnergy on the TSX for the 20 consecutive trading days ending five trading days preceding the date on which the notice of redemptionis given is at least 125% of the conversion price. On or after December 31, 2020, the 6.75% $160 million convertible debenturesmay be redeemed in whole or in part from time to time at the option of the Company on not more than 60 days’ and not lessthan 30 days’ prior notice, at a price equal to their principal amount plus accrued and unpaid interest.

 

The conversion feature of the 6.75% $160 million convertibledebentures has been accounted for as a separate component of shareholders’ equity in the amount of $8.0 million. Upon initialrecognition of the convertible debentures, Just Energy recorded a deferred income tax liability of $2.1 million and reduced theequity component of the convertible debentures by this amount. The remainder of the net proceeds of the 6.75% $160 million convertibledebentures has been recorded as long-term debt, which is being accreted up to the face value of $160 million over the term of the6.75% $160 million convertible debentures using an effective interest rate of 9.1%. If the 6.75% $160 million convertible debenturesare converted into common shares, the value of the conversion will be reclassified to share capital along with the principal amountconverted. No amounts of the 6.75% $160 million convertible debentures have been converted or redeemed as at March 31, 2019.

 
| (f) |  | On January 29, 2014, Just Energy issued US$150 million of European-focused seniorconvertible unsecured convertible bonds (the “6.5% convertible bonds”). The 6.5% convertible bonds bear interest atan annual rate of 6.5%, payable semi-annually in arrears in equal installments on January 29 and July 29 in each year, and havea maturity date of July 29, 2019. |
|-----|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

A conversion right in respect of a bond may be exercised,at the option of the holder thereof, at any time from May 30, 2014 to July 7, 2019. The initial conversion price is US$9.3762 percommon share (being C$10.2819) but is subject to adjustments. In the event of the exercise of a conversion right, the Company may,at its option, subject to applicable regulatory approval and provided no event of default has occurred and is continuing, electto satisfy its obligation in cash equal to the market value of the underlying shares to be received.

 

As a result of the debt beingdenominated in a different functional currency than that of Just Energy, the conversion feature is recorded as a financial liabilityinstead of a component of equity. Therefore, the conversion feature of the 6.5% convertible bonds has been accounted for as a separatefinancial liability with an initial value of US$8,517. The remainder of the net proceeds of the 6.5% convertible bonds has beenrecorded as long-term debt, which is being accreted up to the face value of $150.0 million over the term of the 6.5% convertiblebonds using an effective interest rate of 8.8%. At each reporting period, the conversion feature is recorded at fair value withchanges in fair value recorded through profit or loss. As at March 31, 2019, the fair value of this conversion feature is US$0.2million and is included in other non-current financial liabilities. During the year, Just Energy redeemed US$127.6 million of theoutstanding balance.

 

On July 29, 2019, the Companyredeemed US$13.2 million of the 6.5% convertible bonds. The remaining lenders of $9.2 million of the 6.5% convertible bonds electedto extend the maturity date of the bonds from July 29, 2019 to December 31, 2020, pursuant to an option offered by the Companyannounced on July 17, 2019.

 

|   |   | 53. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 
| (g) |  | In September 2011, Just Energy issued $100 million of convertible unsecured subordinateddebentures (the “5.75% convertible debentures”), which was used to fund an acquisition. The 5.75% convertible debenturesbear interest at an annual rate of 5.75%, payable semi-annually on March 31 and September 30 in each year, and have a maturitydate of September 30, 2018. Each $1,000 principal amount of the 5.75% convertible debentures is convertible at the option of theholder at any time prior to the close of business on the earlier of the maturity date and the last business day immediately precedingthe date fixed for redemption into 56.0 common shares of Just Energy, representing a conversion price of $17.85. On or after September30, 2016, the 5.75% convertible debentures may be redeemed in whole or in part from time to time at the option of the Companyon not more than 60 days’ and not less than 30 days’ prior notice, at a price equal to their principal amount plusaccrued and unpaid interest. |
|-----|--|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

The Companymay, at its option, on not more than 60 days' and not less than 30 days' prior notice, subject to applicable regulatory approvaland provided no event of default has occurred and is continuing, elect to satisfy its obligation to repay all or any portion ofthe principal amount of the 5.75% convertible debentures that are to be redeemed or that are to mature, by issuing and deliveringto the holders thereof that number of freely tradable common shares determined by dividing the principal amount of the 5.75% convertibledebentures being repaid by 95% of the current market price on the date of redemption or maturity, as applicable.

 

On March 27, 2018, Just Energyredeemed the 5.75% convertible debentures. Of the amount paid, $99.5 million was recorded as a reduction in the liability componentof the 5.75% convertible debentures, a non-cash loss on early redemption of $0.5 million was classified as finance costs, and $7.1million was recorded as an increase in contributed deficit.

 
| (h) |  | The collateral management and others include primarily collateral management costs of $5.1 million, a supplier credit term extensioncharge of $4.8 million and accretion costs relating to the acquisition of RV of $5.1 million. High electricity prices in theforward markets along with fundamental change in the Electric Reliability Council of Texas’s credit exposure calculationsin February 2018 led to an increase in collateral requirements for market participants during fiscal 2019. |
|-----|--|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

 

 

 

|   |   | 54. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

| **** |
|------|

| **** |
|------|

| **20.** |  | **PROVISIONS** |
|---------|--|----------------|

 

**Restructuring**

** **

Duringfiscal 2019, Just Energy’s management team approved several restructuring actions including targeted workforce reductions.These actions include the elimination of over 200 positions. The actions are in direct alignment with Just Energy’s ongoingtransition to a consumer-focused company and are expected to generate future cost savings.

 

Amountsrelated to restructuring during fiscal 2019 are as follows:

 

| Employee-related             |   | $      | 8,706  |   |
|------------------------------|--------|--------|--------|--------|
| Facilities                   |   |   | 1,987  |   |
| Transition agreements        |   |   | 3,187  |   |
| Other non-headcount related  |   |   | 2,198  |   |
| Total restructuring costs    |   |   | 16,078 |   |
|                         |   |   |   |   |
| Expended in the year         |   |   | 9,462  |   |
| Provision at end of the year |   |   | 6,616  |   |
| Total restructuring costs    |   | $      | 16,078 |   |

 

Theremaining provision balance relate to other contingent liabilities.

 

|  | **** |
|--|------|

| **** |
|------|

| **21.** | **INCOME TAXES** |
|---------|------------------|

 
| **(a)** |  | **Tax expense** |
|---------|--|-----------------|

 

|                                                                          |   | 2019   |    |   | 2018   |   |
|-------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Current tax expense                                                           |   | $      | 6,329   |   |   | $      | 2,552 |   |
| Deferred tax expense (benefit)                                                |   |   |    |   |   |   |   |   |
| Origination and reversal of temporary differences                             |   | $      | (54,608 | )      |   | $      | 129,177 |   |
| Benefit arising from previously unrecognized tax loss or temporary difference |   |   | 59,508  |   |   |   | (111,058 | ) |
| Deferred tax  expense                                                         |   |   | 4,900   |        |   |   | 18,119 |   |
| Provision for income taxes                                                    |   | $      | 11,229  |   |   | $      | 20,671 |   |

 

|   |   | 55. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 
|  | **(b)** | **Reconciliation of the effective tax rate** |
|--|---------|----------------------------------------------|

 

The provision for income taxes represents an effectiverate different than the Canadian corporate statutory rate of 26.50% (2018 – 26.50%).

 

|                                                                                        |   | 2019                      |     |   |        |   |
|---------------------------------------------------------------------------------------------|--------|---------------------------|----------|--------|--------|--------|
|                                                                                        |   | (Restated – Note 5) |     |   | 2018   |   |
| Income before income taxes                                                                  |   | $                         | (231,200 | )      |   | $      | 539,248 |   |
| Combined statutory Canadian federal and provincial income tax rate                          |   |                      | 26.50    | %      |   |   | 26.50 | % |
| Income tax expense based on statutory rate                                                  |   | $                         | (61,268  | )      |   | $      | 142,901 |   |
| Increase (decrease) in income taxes resulting from:                                         |   |                      |     |   |   |   |   |   |
| Expense (benefit) of mark to market loss and other temporary differences not    recognized  |   | $                         | 59,508   |   |   | $      | (111,058 | ) |
| Variance between combined Canadian tax rate and the tax rate applicable to foreign earnings |   |                      | 6,857    |   |   |   | 1,000 |   |
| Other permanent items                                                                       |   |                      | 6,132    |   |   |   | (12,172 | ) |
| Total provision for income taxes                                                            |   | $                         | 11,229   |   |   | $      | 20,671 |   |

 
| **(c)** |  | **Recognized deferred income tax assets and liabilities** |
|---------|--|-----------------------------------------------------------|

 

Recognized deferred income tax assets and liabilitiesare attributed to the following:

 

|                                               |   | 2019   |     |   | 2018   |   |
|----------------------------------------------------|--------|--------|----------|--------|--------|--------|
| Mark to market losses on derivative instruments    |   | $      | 3,097    |   |   | $      | 17,580 |   |
| Tax losses and excess of tax basis over book basis |   |   | 98,042   |   |   |   | 78,825 |   |
| Total deferred income tax assets                   |   |   | 101,140  |   |   |   | 96,405 |   |
| Offset of deferred income taxes                    |   |   | (101,140 | )      |   |   | (93,873 | ) |
| Net deferred tax assets                            |   | $      | -        |   |   | $      | 2,532 |   |
|                                               |   |   |     |   |   |   |   |   |
| Partnership income deferred for tax purposes       |   | $      | (3,542   | )      |   | $      | (6,249 | ) |
| Mark to market gains on derivative instruments     |   |   | (20,683  | )      |   |   | (54,158 | ) |
| Book to tax differences on other assets            |   |   | (73,889  | )      |   |   | (30,480 | ) |
| Convertible debentures                             |   |   | (6,073   | )      |   |   | (2,986 | ) |
| Total deferred income tax liabilities              |   |   | (104,187 | )      |   |   | (93,873 | ) |
| Offset of deferred income taxes                    |   |   | 101,140  |   |   |   | 93,873 |   |
| Net deferred income tax liabilities                |   | $      | (3,047   | )      |   | $      | - |   |

 

|   |   | 56. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 
|  | **(d)** | **Movement in deferred income tax balances** |
|--|---------|----------------------------------------------|

 

|                                                    |   | Balance April 1, 2018 |    |   | Recognized in profit or loss |   |    | Recognized in OCI |   |   | Other |   |   | Balance March 31, 2019 |   |
|---------------------------------------------------------|--------|-----------------------|---------|--------|------------------------------|--------|---------|-------------------|--------|--------|-------|--------|--------|------------------------|--------|
| Partnership income deferred for tax                     |   | $                     | (6,249  | )      |                         | $      | 2,707   |              |   | $      | -     |   |   | $                      | -      |   |   | $ | (3,542 | ) |
| Book to tax differences                                 |   |                  | 48,345  |   |                         |   | (23,528 | )                 |   |   | (638  | )      |   |                   | (25    | ) |   |   | 24,154 |   |
| Mark to market (gains) losses on derivative instruments |   |                  | (36,578 | )      |                         |   | 18,992  |              |   |   | -     |   |   |                   | -      |   |   |   | (17,586 | ) |
| Convertible debentures                                  |   |                  | (2,986  | )      |                         |   | (3,087  | )                 |   |   | -     |   |   |                   | -      |   |   |   | (6,073 | ) |
|                                                    |   | $                     | 2,532   |   |                         | $      | (4,916  | )                 |   | $      | (638  | )      |   | $                      | (25    | ) |   | $ | (3,047 | ) |

 

|                                                    |   | Balance April 1, 2017 |   |   | Recognized in profit or loss |   |    | Recognized in OCI |   |   | Other  |   |   | Balance March 31, 2018 |   |
|---------------------------------------------------------|--------|-----------------------|--------|--------|------------------------------|--------|---------|-------------------|--------|--------|--------|--------|--------|------------------------|--------|
| Partnership income deferred for tax                     |   | $                     | (8,281 | )      |                         | $      | 2,032   |              |   | $      | -      |   |   | $                      | -      |   |   | $ | (6,249 | ) |
| Book to tax differences                                 |   |                  | 4,269  |   |                         |   | 51,864  |              |   |   | (7,788 | )      |   |                   | -      |   |   |   | 48,345 |   |
| Mark to market (gains) losses on derivative instruments |   |                  | 29,424 |   |                         |   | (66,002 | )                 |   |   | -      |   |   |                   | -      |   |   |   | (36,578 | ) |
| Convertible debentures                                  |   |                  | (4,144 | )      |                         |   | 1,158   |              |   |   | -      |   |   |                   | -      |   |   |   | (2,986 | ) |
|                                                    |   | $                     | 21,268 |   |                         | $      | (10,948 | )                 |   | $      | (7,788 | )      |   | $                      | -      |   |   | $ | 2,532 |   |

 
| **(e)** |  | **Unrecognized deferred income tax assets** |
|---------|--|---------------------------------------------|

 

Deferred income tax assets not reflected as at March31 are as follows:

 

|                                            |   | 2019   |   |   | 2018   |   |
|-------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Mark to market losses on derivative instruments |   |   | 7,239  |   |   |   | - |   |
| Excess of tax over book basis                   |   |   | 32,911 |   |   |   | 15,824 |   |

 

Losses available for carryforward (recognized and unrecognized) are set to expire as follows:

 

|   |   | 2019   |    |
|--------|--------|--------|---------|
| 2030   |   | $      | 136,763 |   |
| 2031   |   |   | 56,769  |   |
| Total  |   | $      | 193,532 |   |

 

|   |   | 57. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

| **** |
|------|

| **22.** |  | **SHAREHOLDERS’ CAPITAL** |
|---------|--|---------------------------------|

** **

Just Energy is authorized to issuean unlimited number of common shares and 50,000,000 preference shares issuable in series, both with no par value. Shares outstandinghave no preferences, rights or restrictions attached to them.

 

Details of issued and outstandingshareholders’ capital are as follows:

 

|                                  |   | Year ended March 31, 2019 |        |   | Year ended March 31, 2018 |   |
|---------------------------------------|--------|---------------------------|-------------|--------|---------------------------|--------|
|                                  |   | Shares                    |        |   | Amount                    |   |   | Shares |   |   | Amount |   |
| Common shares:                        |   |                      |        |   |                      |   |   |   |   |   |   |   |
|                                  |   |                      |        |   |                      |   |   |   |   |   |   |   |
| Issued and outstanding                |   |                      |        |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Balance, beginning of year            |   |                      | 148,394,152 |   |                      | $      | 1,079,055 |   |   |   | 147,013,538 |   |   | $ | 1,070,076 |   |
| Share-based awards exercised          |   |                      | 1,201,800   |   |                      |   | 9,483 |   |   |   | 1,643,156 |   |   |   | 11,954 |   |
| Acquisition                           |   |                      | -           |   |                      |   | - |   |   |   | 1,415,285 |   |   |   | 8,966 |   |
| Repurchase and cancellation of shares |   |                      | -           |   |                      |   | - |   |   |   | (1,677,827 | ) |   |   | (11,941 | ) |
| Balance, end of year                  |   |                      | 149,595,952 |   |                      | $      | 1,088,538 |   |   |   | 148,394,152 |   |   | $ | 1,079,055 |   |
|                                  |   |                      |        |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Preferred shares:                     |   |                      |        |   |                      |   |   |   |   |   |   |   |   |   |   |   |
|                                  |   |                      |        |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Issued and outstanding                |   |                      |        |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Balance, beginning of year            |   |                      | 4,323,300   |   |                      | $      | 136,771 |   |   |   | 4,040,000 |   |   | $ | 128,363 |   |
| Shares issued for cash                |   |                      | 338,865     |   |                      |   | 10,447 |   |   |   | 283,300 |   |   |   | 9,260 |   |
| Preferred shares issuance cost        |   |                      | -           |   |                      |   | (253 | ) |   |   | - |   |   |   | (852 | ) |
| Balance, end of year                  |   |                      | 4,662,165   |   |                      | $      | 146,965 |   |   |   | 4,323,300 |   |   | $ | 136,771 |   |
|                                  |   |                      |        |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Shareholders' capital                 |   |                      | 154,258,117 |   |                      | $      | 1,235,503 |   |   |   | 152,717,452 |   |   | $ | 1,215,826 |   |

 

| **** |
|------|

| **23.** |  | **SHARE-BASED COMPENSATION PLANS** |
|---------|--|------------------------------------|

 
| **(a)** |  | **Stock option plan** |
|---------|--|-----------------------|

 

Just Energy may grant awards under its 2010 share optionplan (formerly the 2001 Unit Option Plan) to directors, officers, full-time employees and service providers (non-employees) ofJust Energy and its subsidiaries and affiliates. In accordance with the share option plan, Just Energy may grant options to a maximumof 11,300,000 shares. As at March 31, 2019, there were 814,166 options still available for grant under the plan. Of the optionsissued, 500,000 options remain outstanding as at March 31, 2019 with an exercise price of $7.88. The exercise price of the shareoptions equals the closing market price of the Company’s shares on the last business day preceding the grant date. The shareoptions vest over periods ranging from three to five years from the grant date and expire after five or ten years from the grantdate. There were no new grants during fiscal 2019.

 
| **(b)** |  | **Restricted share grants** |
|---------|--|-----------------------------|

 

Just Energy grants awards under the 2010 RSGs Plan (formerlythe 2004 unit appreciation rights) in the form of fully paid RSGs to senior officers, employees and service providers of its subsidiariesand affiliates. As at March 31, 2019, there were 2,717,774 RSGs (2018 - 3,004,624) still available for grant under the plan. Ofthe RSGs issued, 1,473,989 remain outstanding as at March 31, 2019 (2018 - 1,635,882). Except as otherwise provided, (i) the RSGsvest from one to five years from the grant date providing, in most cases, on the applicable vesting date the RSG grantee continuesas a senior officer, employee or service provider of Just Energy or any affiliate thereof; (ii) the RSGs expire no later than tenyears from the grant date; (iii) a holder of RSGs is entitled to payments at the same rate as dividends paid to JEGI shareholders;and (iv) when vested, the holder of an RSG may exchange one RSG for one common share.

 

|   |   | 58. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

There are 40,000 RSGs grantedto senior management that do not receive dividend payments. In addition to a continued employment condition for vesting, thereare certain share price targets that must be met.

** **

***RSGs available for grant***

*** ***

|                       |   | 2019   |      |   | 2018   |   |
|----------------------------|--------|--------|-----------|--------|--------|--------|
| Balance, beginning of year |   |   | 3,004,624 |   |   |   | 4,107,830 |   |
| Less: Granted              |   |   | (788,211  | )      |   |   | (1,716,743 | ) |
| Add: Cancelled/forfeited   |   |   | 501,361   |   |   |   | 613,537 |   |
| Balance, end of year       |   |   | 2,717,774 |   |   |   | 3,004,624 |   |

 

The average grant date fair value of RSGsgranted in the year was $5.00 (2018 - $6.94).

 
| **(c)** |  | **Performance bonus grants** |
|---------|--|------------------------------|

 

Just Energy grants awards under the 2013 performance bonusincentive plan (the “PBG Plan”) in the form of fully paid PBGs to senior officers, employees, consultants and serviceproviders of its subsidiaries and affiliates. As at March 31, 2019, there were 2,182,302 (2018 - 2,270,480) PBGs still availablefor grant under the PBG Plan. Of the PBGs issued, 385,214 remain outstanding as at March 31, 2019 (2018 -1,050,094). Except asotherwise provided, (i) the PBGs will entitle the holder to be paid in three equal installments as one-third on each of the first,second and third anniversaries of the grant date providing, in most cases, on the applicable vesting date the PBG grantee continuesas a senior officer, employee, consultant or service provider of Just Energy or any affiliate thereof; (ii) the PBGs expire nolater than three years from the grant date; (iii) a holder of PBGs is entitled to payments at the same rate as dividends paid toJEGI shareholders; and (iv) when vested, Just Energy, at its sole discretion, shall have the option of settling payment for thePBGs, to which the holder is entitled in the form of either cash or in common shares.

 

***PBGsavailable for grant***

|                       |   | 2019   |      |   | 2018   |   |
|----------------------------|--------|--------|-----------|--------|--------|--------|
| Balance, beginning of year |   |   | 2,270,480 |   |   |   | 2,650,513 |   |
| Less: Granted              |   |   | (331,196  | )      |   |   | (812,787 | ) |
| Add: Cancelled/forfeited   |   |   | 243,018   |   |   |   | 432,754 |   |
| Balance, end of year       |   |   | 2,182,302 |   |   |   | 2,270,480 |   |

 

The averagegrant date fair value of PBGs granted in the year was $5.01 (2018 - $7.08).

 
| **(d)** |  | **Deferred share grants** |
|---------|--|---------------------------|

 

Just Energy grants awards under its 2010 Directors’Compensation Plan (formerly the 2004 Directors’ deferred unit grants, “DUGs”) to all independent directors onthe basis that each director is required to annually receive 15% of their compensation entitlement in DSGs and may elect to receiveall or any portion of the balance of their annual compensation in DSGs. The holders of DSGs and/or common shares are also grantedadditional DSGs on a quarterly basis equal to the monthly dividends paid to the shareholders of Just Energy. The DSGs vest on theearlier of the date of the director's resignation or three years following the date of grant and expire ten years following thedate of grant. As at March 31, 2019, there were nil DSGs (2018 - 69,481) available for grant under the plan. In fiscal 2019, withthe consent of the TSX 37,123 DSGs have been granted to directors, subject to shareholder approval. The Company will be requestingshareholder approval at its Annual and Special meeting on June 26, 2019. Of the DSGs issued, 184,430 DSGs (2018 - 114,949) remainoutstanding as at March 31, 2019.

|   |   | 59. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

***DSGsavailable for grant***

 

|                       |   | 2019   |    |   | 2018   |   |
|----------------------------|--------|--------|---------|--------|--------|--------|
| Balance, beginning of year |   |   | 69,481  |   |   |   | 110,012 |   |
| Less: Granted              |   |   | (69,481 | )      |   |   | (40,531 | ) |
| Balance, end of year       |   |   | -       |   |   |   | 69,481 |   |

 

The weighted average grant date fair value of DSGs granted in the year was $4.48 (2018 - $6.32).

 

|  |
|--|

|  |
|--|

| 24. |  | REPORTABLE BUSINESS SEGMENTS |
|-----|--|------------------------------|

 

JustEnergy’s reportable segments are Consumer Energy and Commercial Energy. Just Energy has aggregated the operating segmentsinto these reportable segments on the basis that the operating segments share economic characteristics. These characteristics includethe nature of the product and services sold, the distribution methods, and the type of customer class and regulatory environment.

 

Transactionsbetween segments are in the normal course of operations and are recorded at the exchange amount. Allocations made between segmentsfor shared assets or allocated expenses are based on the number of residential customer equivalents in the respective segments.

 

Managementmonitors the operating results of its business units separately for the purpose of making decisions about resource allocation andperformance assessment. Segment performance is evaluated based on operating profit or loss and is measured consistently with operatingprofit or loss in the consolidated financial statements. Just Energy does not have any key customers.

 

Corporateand shared services report the costs related to management oversight of the business units, public reporting and filings, corporategovernance and other shared services functions.

 

|   |   | 60. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

For the year ended March 31, 2019:

 

| ** **                                               | ** ** | **Consumer segment**                                                  | ** ** | ** ** | **Commercial segment** | ** ** | ** ** | **Corporate and**

**shared services  ** | ** ** | ** ** | **Consolidated**                                                      | ** ** |
|----------------------------------------------------------|------------|-----------------------------------------------------------------------|------------|------------|------------------------|------------|------------|-----------------------------------------------|------------|------------|-----------------------------------------------------------------------|------------|
|                                                     |       | **(Restated                                         – Note 5)** |       |       |                   |       |       |                                          |       |       | **(Restated                                         – Note 5)** |       |
|                                                     |       |                                                                  |       |       |                   |       |       |                                          |       |       |                                                                  |       |
| Sales                                                    |       | $                                                                     | 2,395,624  |       |                   | $          | 1,416,846  |                                          |       | $          | -                                                                     |       |   | $ | 3,812,470 |   |
| Gross margin                                             |       |                                                                  | 535,711    |       |                   |       | 176,504    |                                          |       |       | -                                                                     |       |   |   | 712,215 |   |
| Depreciation of property, plant and equipment            |       |                                                                  | 4,567      |       |                   |       | 204        |                                          |       |       | -                                                                     |       |   |   | 4,771 |   |
| Amortization of intangible assets                        |       |                                                                  | 20,440     |       |                   |       | 2,215      |                                          |       |       | -                                                                     |       |   |   | 22,655 |   |
| Administrative expenses                                  |       |                                                                  | 76,709     |       |                   |       | 40,693     |                                          |       |       | 89,418                                                                |       |   |   | 206,820 |   |
| Selling and marketing expenses                           |       |                                                                  | 158,770    |       |                   |       | 73,260     |                                          |       |       | -                                                                     |       |   |   | 232,030 |   |
| Restructuring costs                                      |       |                                                                  | 3,173      |       |                   |       | 4,069      |                                          |       |       | 8,836                                                                 |       |   |   | 16,078 |   |
| Other operating expenses                                 |       |                                                                  | 189,625    |       |                   |       | 9,130      |                                          |       |       | -                                                                     |       |   |   | 198,755 |   |
| Operating profit (loss) for the period                   |       | $                                                                     | 282,427    |       |                   | $          | 46,933     |                                          |       | $          | (98,254                                                               | )          |   | $ | 31,106 |   |
| Finance costs                                            |       |                                                                  |       |       |                   |       |       |                                          |       |       |                                                                  |       |   |   | (88,072 | ) |
| Change in fair value of derivative instruments and other |       |                                                                  |       |       |                   |       |       |                                          |       |       |                                                                  |       |   |   | (153,226 | ) |
| Other income, net                                        |       |                                                                  |       |       |                   |       |       |                                          |       |       |                                                                  |       |   |   | 1,365 |   |
| Provision for income taxes                               |       |                                                                  |       |       |                   |       |       |                                          |       |       |                                                                  |       |   |   | 11,229 |  |
| Loss for the year from continued operations              |       |                                                                  |       |       |                   |       |       |                                          |       |       |                                                                  |       |   |   | (220,056 | ) |
| Loss from discontinued operations                        |       |                                                                  |       |       |                   |       |       |                                          |       |       |                                                                  |       |   |   | (22,379 | ) |
| Loss for the year                                        |       |                                                                  |       |       |                   |       |       |                                          |       |       |                                                                  |       |   | $ | (242,435 | ) |
|                                                     |       |                                                                  |       |       |                   |       |       |                                          |       |       |                                                                  |       |   |   |   |   |
| Capital expenditures                                     |       | $                                                                     | 39,475     |       |                   | $          | 4,068      |                                          |       | $          | -                                                                     |       |   | $ | 43,543 |   |
|                                                     |       |                                                                  |       |       |                   |       |       |                                          |       |       |                                                                  |       |   |   |   |   |
| As at March 31, 2019                                     |       |                                                                  |       |       |                   |       |       |                                          |       |       |                                                                  |       |   |   |   |   |
| Total goodwill                                           |       | $                                                                     | 181,358    |       |                   | $          | 158,563    |                                          |       | $          | -                                                                     |       |   | $ | 339,921 |   |
| Total assets                                             |       | $                                                                     | 1,154,490  |       |                   | $          | 461,633    |                                          |       | $          | -                                                                     |       |   | $ | 1,626,503 |   |
| Total liabilities                                        |       | $                                                                     | 1,513,583  |       |                   | $          | 201,935    |                                          |       | $          | -                                                                     |       |   | $ | 1,715,518 |   |

 

 

|   |   | 61. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

For the year ended March 31, 2018:

 

|                                                     |   | Consumer segment |      |   | Commercial segment |   |      | Corporate and

shared services |   |   | Consolidated |   |
|----------------------------------------------------------|--------|------------------|-----------|--------|--------------------|--------|-----------|--------------------------------|--------|--------|--------------|--------|
|                                                     |   |             |      |   |               |   |      |                           |   |   |         |   |
| Sales                                                    |   | $                | 2,232,081 |   |               | $      | 1,391,477 |                           |   | $      | -            |   |   | $ | 3,623,558 |   |
| Gross margin                                             |   |             | 487,175   |   |               |   | 153,336   |                           |   |   | -            |   |   |   | 640,511 |   |
| Depreciation of property and equipment                   |   |             | 3,775     |   |               |   | 340       |                           |   |   | -            |   |   |   | 4,115 |   |
| Amortization of intangible assets                        |   |             | 12,707    |   |               |   | 3,992     |                           |   |   | -            |   |   |   | 16,699 |   |
| Administrative expenses                                  |   |             | 64,282    |   |               |   | 29,153    |                           |   |   | 93,815       |   |   |   | 187,250 |   |
| Selling and marketing expenses                           |   |             | 161,246   |   |               |   | 70,982    |                           |   |   | -            |   |   |   | 232,228 |   |
| Other operating expenses                                 |   |             | 69,690    |   |               |   | 4,800     |                           |   |   | -            |   |   |   | 74,490 |   |
| Operating profit (loss) for the period                   |   | $                | 175,475   |   |               | $      | 44,069    |                           |   | $      | (93,815      | )      |   | $ | 125,729 |   |
| Finance costs                                            |   |             |      |   |               |   |      |                           |   |   |         |   |   |   | (55,972 | ) |
| Change in fair value of derivative instruments and other |   |             |      |   |               |   |      |                           |   |   |         |   |   |   | 474,393 |   |
| Other income, net                                        |   |             |      |   |               |   |      |                           |   |   |         |   |   |   | 1,040 |   |
| Provision for income taxes                               |   |             |      |   |               |   |      |                           |   |   |         |   |   |   | (20,671 | ) |
| Profit for the year from continued operations            |   |             |      |   |               |   |      |                           |   |   |         |   |   | $ | 524,519 |   |
| Loss from discontinued operations                        |   |             |      |   |               |   |      |                           |   |   |         |   |   |   | (5,945 | ) |
| Profit for the year                                      |   |             |      |   |               |   |      |                           |   |   |         |   |   |   | 518,574 |   |
|                                                     |   |             |      |   |               |   |      |                           |   |   |         |   |   |   |   |   |
| Capital expenditures                                     |   | $                | 32,252    |   |               | $      | 3,524     |                           |   | $      | -            |   |   | $ | 35,776 |   |
|                                                     |   |             |      |   |               |   |      |                           |   |   |         |   |   |   |   |   |
| As at March 31, 2018                                     |   |             |      |   |               |   |      |                           |   |   |         |   |   |   |   |   |
| Total goodwill                                           |   | $                | 147,252   |   |               | $      | 153,421   |                           |   | $      | -            |   |   | $ | 300,673 |   |
| Total assets                                             |   | $                | 1,135,325 |   |               | $      | 466,068   |                           |   | $      | -            |   |   | $ | 1,601,393 |   |
| Total liabilities                                        |   | $                | 844,379   |   |               | $      | 540,479   |                           |   | $      | -            |   |   | $ | 1,384,858 |   |

 

**Salesfrom external customers**

 

The revenue is based on the location of the customer.

 

|   |   | For the year ended March 31, 2019 |      |   | For the year ended March 31, 2018 |   |
|--------|--------|-----------------------------------|-----------|--------|-----------------------------------|--------|
| Canada |   | $                                 | 413,836   |   |                              | $      | 414,183 |   |
| U.S.   |   |                              | 2,624,602 |   |                              |   | 2,465,794 |   |
| U.K.   |   |                              | 774,032   |   |                              |   | 743,581 |   |
| Total  |   | $                                 | 3,812,470 |   |                              | $      | 3,623,558 |   |

 

 

|   |   | 62. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

**Non-current assets**

 

Non-current assets by geographic segment consist of property and equipment and intangible assets and are summarized as follows:

 

|          |   | As at March 31, 2019 |    |   | As at March 31, 2018 |   |
|---------------|--------|----------------------|---------|--------|----------------------|--------|
| Canada        |   | $                    | 266,775 |   |                 | $      | 201,985 |   |
| U.S.          |   |                 | 223,802 |   |                 |   | 207,147 |   |
| International |   |                 | 7,941   |   |                 |   | 11,687 |   |
| Total         |   | $                    | 498,518 |   |                 | $      | 420,819 |   |

 

|  |
|--|

| 25. |  | OTHER EXPENSES |
|-----|--|----------------|

 
|  | **(a)** | **Other operating expenses** |
|--|---------|------------------------------|

 

|                              |    | For the year ended March 31, 2019(Restated – Note 5) |    |    | For the year ended March 31, 2018

  |    |
|----------------------------------------|--------------|------------------------------------------------------------|--------------|--------------|-------------------------------------------|--------------|
| Amortization of intangible assets      |         | $                                                          | 22,655       |         |                                      | $            | 16,547 |   |
| Depreciation of property and equipment |         |                                                       | 4,771        |         |                                      |         | 4,073 |   |
| Bad debt expense                       |         |                                                       | 192,202      |         |                                      |         | 56,331 |   |
| Share-based compensation               |         |                                                       | 6,133        |         |                                      |         | 18,353 |   |
| Other                                  |         |                                                       | 420          |         |                                      |         | - |   |
|                                   |         | $                                                          | 226,181      |         |                                      | $            | 95,304 |   |

 
|  | **(b)** | **Amortization and energy costs included in cost of sales in the consolidated statements of income(loss)** |
|--|---------|------------------------------------------------------------------------------------------------------------|

 

|                          |   | For the year ended March 31, 2019 |      |   | For the year ended March 31, 2018 |   |
|-------------------------------|--------|-----------------------------------|-----------|--------|-----------------------------------|--------|
| Amortization                  |   | $                                 | 2,666     |   |                              | $      | 3,116 |   |
| Direct energy costs and other |   |                              | 3,097,589 |   |                              |   | 2,983,047 |   |
|                          |   | $                                 | 3,100,255 |   |                              | $      | 2,986,163 |   |

 
| **(c)** |  | **Employee benefits expense** |
|---------|--|-------------------------------|

** **

|                            |   | For the year ended March 31, 2019 |    |   | For the year ended March 31, 2018 |   |
|---------------------------------|--------|-----------------------------------|---------|--------|-----------------------------------|--------|
| Wages, salaries and commissions |   | $                                 | 264,566 |   |                              | $      | 237,867 |   |
| Benefits                        |   |                              | 24,239  |   |                              |   | 24,100 |   |
|                            |   | $                                 | 288,805 |   |                              | $      | 261,967 |   |

 

|   |   | 63. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

| **26.** |  | **IMPAIRMENT TESTING OF GOODWILL AND INTANGIBLE ASSETSWITH INDEFINITE LIVES** |
|---------|--|-------------------------------------------------------------------------------|

** **

Goodwill acquired through businesscombinations and intangible assets with indefinite lives have been allocated to one of four operating segments. These segmentsare the U.K. Consumer, North America Consumer, U.K. Commercial, and North America Commercial. The goodwill associated with theFilter Group acquisition was not allocated to an operating segment for the purposes of impairment testing as at March 31, 2019.

 

For impairment testing, goodwilland brand have been allocated as follows as at March 31, 2019:

 

|     |   | Consumer segment |    |   | Commercial segment |   |
|----------|--------|------------------|---------|--------|--------------------|--------|
|     |   | North America    |    |   | U.K.               |   |   | North America |   |
| Goodwill |   | $                | 168,003 |   |               | $      | 13,355 |   |   | $ | 158,563 |   |
| Brand    |   |             | 19,570  |   |               |   | - |   |   |   | 14,734 |   |
|     |   | $                | 187,573 |   |               | $      | 13,355 |   |   | $ | 173,297 |   |

 

The goodwill of $38.2 millionassociated with the acquisition of Filter Group has been allocated to the Consumer segment for the purposes of goodwill impairmenttesting.

 

Just Energy considers therelationship between its market capitalization and its book value, among other factors, when reviewing for indicators of impairment.As at March 31, 2019, the market capitalization of Just Energy was above the book value of its equity.

 

The recoverable amount ofeach of the operating segments has been determined based on a fair value less costs of disposal model using fiscal 2019’sEBITDA of the operating segment multiplied by the entity’s EBITDA multiple. The EBITDA multiple and the EBITDA of the segmentthat has been utilized in the fair value less costs to disposal model are consistent with external sources of information and areconsidered a Level 2 input within the fair value hierarchy.

 

|  |
|--|

|  |
|--|

| 27. |  | EARNINGS (LOSS) PER SHARE |
|-----|--|---------------------------|

 

|                                                                                   |   | For the year ended March 31, 2019 |        |    | For the year ended March 31, 2018 |   |
|----------------------------------------------------------------------------------------|--------|-----------------------------------|-------------|---------|-----------------------------------|--------|
| BASIC EARNINGS (LOSS) PER SHARE                                                        |   |                              |        |    |                              |   |
| Earnings (loss) from continuing operations available to shareholders                   |   | $                                 | (219,864    | )       |                              | $      | 515,221 |   |
| Dividend to preferred shareholders - net of tax                                        |   |                              | 8,959       |    |                              |   | 8,364 |   |
| Earnings (loss) from continuing operations available to shareholders - net             |   |                              | (228,823    | )       |                              |   | 506,857 |   |
| Basic weighted average shares outstanding                                              |   |                              | 149,138,797 |    |                              |   | 147,039,737 |   |
| Basic earnings (loss) per share from continuing operations available to shareholders   |   | $                                 | (1.54       | )       |                              | $      | 3.45 |   |
| Basic earnings (loss) per share available to shareholders                              |   | $                                 | (1.68       | )       |                              | $      | 3.42 |   |
|                                                                                   |   |                              |        |    |                              |   |   |   |
|                                                                                   |   |                              |        |    |                              |   |   |   |
|                                                                                   |   |                              |        |    |                              |   |   |   |
| DILUTED EARNINGS (LOSS) PER SHARE                                                      |   |                              |        |    |                              |   |   |   |
| Earnings (loss) from continuing operations available to shareholders                   |   | $                                 | (228,823    | )       |                              |   | 506,857 |   |
| Adjustment for dilutive impact of convertible debentures                               |   |                              | -           |    |                              |   | 22,407 |   |
| Adjusted earnings (loss) from continuing operations available to shareholders          |   | $                                 | (228,823    | )       |                              | $      | 529,264 |   |
| Basic weighted average shares outstanding                                              |   |                              | 149,138,797 |    |                              |   | 147,039,737 |   |
| Dilutive effect of:                                                                    |   |                              |        |    |                              |   |   |   |
| Restricted share and performance bonus grants                                          |   |                              | 2,409,990   |  1 |                              |   | 2,924,587 |   |
| Deferred share grants                                                                  |   |                              | 142,928     |  1 |                              |   | 95,536 |   |
| Convertible debentures                                                                 |   |                              | 39,574,831  |  1 |                              |   | 49,979,055 |   |
| Shares outstanding on a diluted basis                                                  |   |                              | 191,266,546 |    |                              |   | 200,038,915 |   |
| Diluted earnings (loss) from continuing operations per share available to shareholders |   | $                                 | (1.54       | )       |                              | $      | 2.65 |   |
| Diluted earnings (loss) per share available to shareholders                            |   | $                                 | (1.68       | )       |                              | $      | 2.62 |   |

 
|  |  1 | The assumed conversion into shares results in an anti-dilutiveposition; therefore, these items have not been included in the computation of diluted earnings (loss) per share. |
|--|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

The potentially dilutive instruments are the convertible features on the 6.5% convertible bonds, 6.75% $160M convertible debenturesand 6.75% $100M convertible debentures as well as the stock options and share grants.

|   |   | 64. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

| **28.** |  | **CAPITAL DISCLOSURE** |
|---------|--|------------------------|

 

Just Energy defines capital as shareholders’ equity deficit (excluding accumulated other comprehensive income)and long-term debt. Just Energy’s objectives when managing capital are to maintain flexibility by:

 
|  | (i) | enabling it to operate efficiently; |
|--|-----|-------------------------------------|

 
|  | (ii) | providing liquidity and access to capital for growth opportunities; and |
|--|------|-------------------------------------------------------------------------|

 
|  | (iii) | providing returns and generating predictable cash flows for dividend payments to shareholders. |
|--|-------|------------------------------------------------------------------------------------------------|

 

Just Energy manages the capitalstructure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlyingassets. The Board of Directors does not establish quantitative return on capital criteria for management, but rather promotes year-over-yearsustainable and profitable growth. Just Energy’s capital management objectives have remained unchanged from the prior year.Just Energy is not subject to any externally imposed capital requirements other than financial covenants in its long-term debts,and as at March 31, 2019 and 2018, all of these covenants have been met.

 

| **** |
|------|

| **29.** |  | **RELATED PARTY TRANSACTIONS AND KEY MANAGEMENT PERSONNEL REMUNERATION** |
|---------|--|--------------------------------------------------------------------------|

** **

Parties are considered to be relatedif one party has the ability to control the other party or exercise influence over the other party in making financial or operatingdecisions. The definition includes subsidiaries and other persons.

 

*Subsidiaries*

 

Transactions between Just Energyand its subsidiaries meet the definition of related party transactions. These transactions are eliminated on consolidation andare not disclosed in these consolidated financial statements.

 

|   |   | 65. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 

*Key managementpersonnel*

 

Just Energy’s key managementpersonnel and persons connected with them are also considered to be related parties for disclosure purposes. Key management personnelare defined as those individuals having authority and responsibility for planning, directing and controlling the activities ofJust Energy and consist of the Executive Chair, the Chief Executive Officer and the Chief Financial Officer.

 

During the years ended March 31,2019 and 2018, Just Energy recorded the following as expenses related to these individuals:

 

|                          |   | March 31, 2019 |   |   | March 31, 2018 |   |
|-------------------------------|--------|----------------|--------|--------|----------------|--------|
| Salaries and benefits         |   | $              | 2,493  |   |           | $      | 8,939 |   |
| Share-based compensation, net |   |           | 1,163  |   |           |   | 3,738 |   |
|                          |   | $              | 3,656  |   |           | $      | 12,677 |   |

 

 

In fiscal 2018, the key management personnel consistedof the Executive Chair, two Chief Executive Officers and the Chief Financial Officer. The key management personnel expenses forthe prior year also include severance and executive bonuses not included in fiscal 2019.

 

As at March 31, 2019, key management personnel held approximately669,688 RSGs/PBGs (2018 – 1,774,094).

 

| **** |
|------|

| **30.** |  | **DIVIDENDS PAID** |
|---------|--|--------------------|

 

For the year ended March 31, 2019,dividends of $0.50 (2018 - $0.50) per common share were declared by Just Energy. These dividends amounted to $74,557 (2018 - $73,624)and were approved by the Board of Directors and were paid out during the year.

 

For the year ended March 31, 2019,distributions of $0.50 (2018 - $0.50) per common share for share grants was declared by Just Energy. This distribution amountedto $1,284 (2018 - $1,302) which was paid in accordance with the terms of the Canadian and U.S. Plans during the year.

 

For the year ended March 31, 2019,dividends of US$2.125 (2018 - $2.125) per preferred share were declared by Just Energy. These dividends amounted to $12,189 (2018- $11,380) and were approved by the Board of Directors and were paid out during the year.

 

| 31. |  | COMMITMENTS AND GUARANTEES |
|-----|--|----------------------------|

 

Commitmentsfor each of the next five years and thereafter are as follows:

 

As at March 31, 2019

 

|                                         |   | Less than 1 year |      |   | 1–3 years |   |      | 4–5 years |   |   | More than 5 years |   |   | Total  |   |
|----------------------------------------------|--------|------------------|-----------|--------|-----------------|--------|-----------|-----------------|--------|--------|-------------------|--------|--------|--------|--------|
| Premises and equipment leasing               |   | $                | 5,035     |   |            | $      | 9,902     |            |   | $      | 6,306             |   |   | $      | -      |   |   | $ | 21,243 |   |
| Gas, electricity and non-commodity contracts |   |             | 1,899,713 |   |            |   | 1,439,479 |            |   |   | 119,212           |   |   |   | 42,089 |   |   |   | 3,500,493 |   |
|                                         |   | $                | 1,904,748 |   |            | $      | 1,449,381 |            |   | $      | 125,518           |   |   | $      | 42,089 |   |   | $ | 3,521,736 |   |

 

Just Energy has entered into leasingcontracts for office buildings and administrative equipment. These leases have a leasing period of between one and eight years.No purchase options are included in any major leasing contracts. Just Energy is also committed under long-term contracts with customersto supply gas and electricity. These contracts have various expiry dates and renewal options.

 

|   |   | 66. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 
|  | **(a)** | **Surety bonds and letters of credit** |
|--|---------|----------------------------------------|

 

Pursuant toseparate arrangements with Westchester Fire Insurance Company, Travelers Casualty and Surety Company of America, Berkley InsuranceCompany and Charter Brokerage LLC, Just Energy has issued surety bonds to various counterparties including states, regulatory bodies,utilities and various other surety bond holders in return for a fee and/or meeting certain collateral posting requirements. Suchsurety bond postings are required in order to operate in certain states or markets. Total surety bonds issued as at March 31, 2019amounted to $70.3 million.  

 

As at March 31, 2019, Just Energy had total lettersof credit outstanding in the amount of $94.0 million (Note 20(a)).

 
|  | **(b)** | **Officers and directors** |
|--|---------|----------------------------|

 

Corporate indemnities have beenprovided by Just Energy to all directors and certain officers of its subsidiaries and affiliates for various items including, butnot limited to, all costs to settle suits or actions due to their association with Just Energy and its subsidiaries and/or affiliates,subject to certain restrictions. Just Energy has purchased directors’ and officers’ liability insurance to mitigatethe cost of any potential future suits or actions. Each indemnity, subject to certain exceptions, applies for so long as the indemnifiedperson is a director or officer of one of Just Energy’s subsidiaries and/or affiliates. The maximum amount of any potentialfuture payment cannot be reasonably estimated.

** **
|  | **(c)** | **Operations** |
|--|---------|----------------|

 

In the normal course of business,Just Energy and/or Just Energy’s subsidiaries and affiliates have entered into agreements that include guarantees in favourof third parties, such as purchase and sale agreements, leasing agreements and transportation agreements. These guarantees mayrequire Just Energy and/or its subsidiaries to compensate counterparties for losses incurred by the counterparties as a resultof breaches in representation and regulation or as a result of litigation claims or statutory sanctions that may be suffered bythe counterparty as a consequence of the transaction. The maximum payable under these guarantees is estimated to be $104.9 million.

 

| **** |
|------|

| **32.** |  | **SUPPLEMENTALCASH FLOW INFORMATION** |
|---------|--|---------------------------------------|

** **
| **(a)** |  | **Adjustmentsrequired to reflect net cash receipts from gas sales** |
|---------|--|---------------------------------------------------------------------|

 

|                                   |   | 2019   |   |   | 2018   |   |
|----------------------------------------|--------|--------|--------|--------|--------|--------|
| Changes in:                            |   |   |   |   |   |   |   |   |
| Accrued gas receivable                 |   | $      | 2,256  |   |   | $      | 459 |   |
| Gas delivered in excess of consumption |   |   | (405   | )      |   |   | 516 |   |
| Accrued gas payable                    |   |   | 676    |   |   |   | (276 | ) |
| Deferred revenue                       |   |   | 1,659  |   |   |   | (3,575 | ) |
|                                   |   | $      | 4,186  |   |   | $      | (2,876 | ) |

 

 

|   |   | 67. |
|--------|--------|-----|

| **JUST ENERGY GROUP INC.**                                                         |
|------------------------------------------------------------------------------------|
| **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                 |
| **FOR THE YEAR ENDED MARCH 31, 2019**                                              |
| *(in thousands of Canadian dollars, except where indicated and per share amounts)* |

 
| **(b)** |  | **Net changein working capital** |
|---------|--|----------------------------------|

 

|                                     |   | As at March 31, 2019 |    |   | As at March 31, 2018 |   |
|------------------------------------------|--------|----------------------|---------|--------|----------------------|--------|
| Accounts receivable and unbilled revenue |   | $                    | 18,242  |        |                 | $      | (108,900 | ) |
| Gas in storage                           |   |                 | (601    | )      |                 |   | 538 |   |
| Prepaid expenses and deposits            |   |                 | (88,184 | )      |                 |   | (15,534 | ) |
| Provisions                               |   |                 | 4,309   |   |                 |   | (3,501 | ) |
| Trade and other payables                 |   |                 | 53,261  |   |                 |   | 90,972 |   |
|                                     |   | $                    | (12,973 | )      |                 | $      | (36,425 | ) |

 

 

 

 

 

 

 

 

66.

----