Exhibit 1.3

Management's responsibility for financial reporting

The accompanying consolidated financial statements of Just Energy Group Inc. and all the information in this annual report are the responsibility of management and have been approved by the Board of Directors.

The consolidated financial statements have been prepared by management in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. The consolidated financial statements include some amounts that are based on estimates and judgments. Management has determined such amounts on a reasonable basis in order to ensure that the consolidated financial statements are presented fairly, in all material respects. Financial information presented elsewhere in this annual report has been prepared on a consistent basis with that in the consolidated financial statements.

Just Energy Group Inc. maintains systems of internal accounting and 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 that management fulfills its responsibilities for financial reporting and is ultimately responsible for reviewing and approving the consolidated financial statements. The Board carries out this responsibility principally through its Audit Committee.

The Audit Committee is appointed by the Board of Directors and is 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 consolidated financial statements with both management and the external auditors and reports its findings to the Board of Directors before such statements are approved by the Board.

The consolidated financial statements have been audited by Ernst & Young LLP, the external auditors, in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States) on behalf of the shareholders. The external auditors have full and free access to the Audit Committee, with and without the presence of management, to discuss their audit and their findings as to the integrity of the financial reporting and the effectiveness of the system of internal controls.

On behalf of Just Energy Group Inc.

/s/ Pat McCullough	/s/ Jim Brown

Pat McCullough	Jim Brown
Chief Executive Officer	Chief Financial Officer

Toronto, Canada
May 16, 2018

Management's report on internal control over financial reporting

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 internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Management has used "Internal Control - Integrated Framework" to evaluate the effectiveness of internal control over financial reporting, which is a recognized and suitable framework developed by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (COSO). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has evaluated the design and operation of the Company's internal control over financial reporting as of March 31, 2018, and has concluded that such internal control over financial reporting is effective.

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

/s/ Pat McCullough	/s/ Jim Brown

Pat McCullough	Jim Brown
Chief Executive Officer	Chief Financial Officer

Toronto, Canada
May 16, 2018

Report of independent registered public accounting firm

To the Shareholders and Board of Directors of Just Energy Group Inc.

OPINION ON INTERNAL CONTROL OVER FINANCIAL REPORTING

We have audited Just Energy Group Inc.'s ("Just Energy's") internal control over financial reporting as of March 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the "COSO criteria"). In our opinion, Just Energy maintained, in all material respects, effective internal control over financial reporting as of March 31, 2018, based on the COSO criteria.

We also have audited, in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the consolidated financial statements of financial position as at March 31, 2018 and March 31, 2017, the consolidated statements of income, comprehensive income, changes in shareholders' equity (deficiency) and cash flows for the years then ended, and the related notes, comprising a summary of significant accounting policies and other explanatory information and our report dated May 16, 2018 expressed an unqualified opinion thereon.

BASIS FOR OPINION

Just Energy's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on Just Energy's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to Just Energy in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, the U.S. federal securities laws and 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 control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of 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 FINANCIAL REPORTING

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and 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 financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Toronto, Canada

May 16, 2018

Report of independent registered public accounting firm

To the Board of Directors and Shareholders of Just Energy Group Inc.

OPINION ON THE CONSOLIDATED FINANCIAL STATEMENTS

We have audited the accompanying consolidated financial statements of Just Energy Group Inc. ("Just Energy"), which comprise the consolidated statements of financial position as at March 31, 2018 and March 31, 2017, the consolidated statements of income, comprehensive income, changes in shareholders' equity (deficiency) and cash flows for the years then ended, and the related notes, comprising a summary of significant accounting policies and other explanatory information (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Just Energy as at March 31, 2018 and March 31, 2017, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), Just Energy's internal control over financial reporting as of March 31, 2018, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and our report dated May 16, 2018 expressed an unqualified opinion on the effectiveness of Just Energy's internal control over financial reporting.

BASIS FOR OPINION

Management's Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with IFRS as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement, whether due to error or fraud. Those standards also require that we comply with ethical requirements, including independence. We are required to be independent with respect to Just Energy in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We are a public accounting firm registered with the PCAOB.

An audit includes performing procedures to assess the risks of material misstatements of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included obtaining and examining, on a test basis, audit evidence regarding the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to Just Energy's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances.

An audit also includes evaluating the appropriateness of accounting policies and principles used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a reasonable basis for our audit opinion.

/s/ Ernst & Young LLP

We have served as Just Energy's auditor since 2011.

Toronto, Canada

May 16, 2018

JUST ENERGY GROUP INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at March 31 (in thousands of Canadian dollars)

	Notes		2018			2017
ASSETS
Current assets
Cash and cash equivalents			$	48,861		$	57,376
Short-term investments		7		-			26,255
Restricted cash		8		3,515			3,620
Trade and other receivables		9		395,730			369,491
Unbilled revenues				301,577			218,413
Gas in storage				11,812			12,350
Prepaid expenses, deposits and other current assets		10		109,697			114,555
Fair value of derivative financial assets		15		218,769			11,656
Corporate tax recoverable				5,617			2,986
				1,095,578			816,702
Non-current assets
Investments		11		36,314			15,561
Property, plant and equipment		12		18,893			21,682
Intangible assets		13		401,926			357,987
Other non-current assets		14		19,987			-
Fair value of derivative financial assets		15		64,662			3,010
Deferred tax asset		21		9,449			23,013
				551,231			421,253
TOTAL ASSETS			$	1,646,809		$	1,237,955

LIABILITIES

Current liabilities
Trade and other payables		16	$	616,434		$	499,169
Deferred revenue				41,684			17,546
Income taxes payable				7,304			13,913
Fair value of derivative financial liabilities		15		86,288			168,793
Provisions		20		4,714			8,215
Current portion of long-term debt		19		121,451			-
				877,875			707,636
Non-current liabilities
Long-term debt		19		422,053			498,088
Deferred lease inducements				773			1,088
Fair value of derivative financial liabilities		15		51,871			178,724
Other non-current liabilities		18		56,576			-
Deferred tax liability		21		6,918			1,745
				538,191			679,645
TOTAL LIABILITIES				1,416,066			1,387,281
SHAREHOLDERS' EQUITY (DEFICIENCY)
Shareholders’ capital		22		1,215,826			1,198,439
Equity component of convertible debentures				13,029			13,508
Contributed surplus (deficit)				(22,693	)		58,266
Deficit				(1,066,931	)		(1,489,900	)
Accumulated other comprehensive income				91,934			70,361
Non-controlling interest				(422	)		-
TOTAL SHAREHOLDERS' EQUITY (DEFICIENCY)				230,743			(149,326	)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY			$	1,646,809		$	1,237,955

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

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

	Notes			2018			2017
OPERATIONS
Sales		24		$	3,626,570		$	3,757,054
Cost of sales		25	(b)		2,985,643			3,061,083
GROSS MARGIN					640,927			695,971
EXPENSES
Administrative					194,699			168,433
Selling and marketing					233,040			226,308
Other operating expenses		25	(a)		95,498			84,637
					523,237			479,378
Operating profit before the following					117,690			216,593
Finance costs		19			(55,972	)		(78,077	)
Change in fair value of derivative instruments and other		15			474,356			374,791
Other income					3,174			807
Profit before income taxes					539,248			514,114
Provision for income taxes		21			20,674			43,231
PROFIT FOR THE YEAR				$	518,574		$	470,883

Attributable to:
Shareholders of Just Energy				$	509,276		$	446,412
Non-controlling interest		18			9,298			24,471
PROFIT FOR THE YEAR				$	518,574		$	470,883


Earnings per share available to shareholders		27
Basic				$	3.41		$	3.02
Diluted				$	2.62		$	2.42

See accompanying notes to the consolidated financial statements

JUST ENERGY GROUP INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED MARCH 31
(in thousands of Canadian dollars)

	Notes		2018		2017
PROFIT FOR THE YEAR			$	518,574	$	470,883
Other comprehensive income to be reclassified to profit or loss in subsequent years:
Unrealized gain on translation of foreign operations				3,710		575
Unrealized gain on revaluation of investments - net of tax				17,863		-
				21,573		575
TOTAL COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX			$	540,147	$	471,458

Total comprehensive income attributable to:
Shareholders of Just Energy			$	530,849	$	446,987
Non-controlling interest		18		9,298		24,471
TOTAL COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX			$	540,147	$	471,458

See accompanying notes to the consolidated financial statements

JUST ENERGY GROUP INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIENCY)
FOR THE YEARS ENDED MARCH 31
(in thousands of Canadian dollars)

		Notes			2018			2017
ATTRIBUTABLE TO THE SHAREHOLDERS
Accumulated earnings (losses)
Accumulated earnings (losses), beginning of year					$	259,571		$	(186,841	)
Profit for the year, attributable to shareholders						509,276			446,412
Accumulated earnings, end of year						768,847			259,571

DIVIDENDS
Dividends, beginning of year						(1,749,471	)		(1,672,720	)
Dividends declared and paid			30			(86,307	)		(76,751	)
Dividends, end of year						(1,835,778	)		(1,749,471	)
DEFICIT					$	(1,066,931	)	$	(1,489,900	)

ACCUMULATED OTHER COMPREHENSIVE INCOME
Accumulated other comprehensive income, beginning of year					$	70,361		$	69,786
Other comprehensive income						21,573			575
Accumulated other comprehensive income, end of year					$	91,934		$	70,361

SHAREHOLDERS’ CAPITAL			22
Common shares
Common shares, beginning of year					$	1,070,076		$	1,069,434
Share-based units exercised						11,954			7,191
Acquisition of subsidiary			17			8,966
Repurchase and cancellation of shares						(11,941	)		(6,549	)
Common shares, end of year						1,079,055			1,070,076

Preferred shares
Preferred shares, beginning of year					$	128,363		$	-
Shares issued						9,260			132,973
Shares issuance costs						(852	)		(4,610	)
Preferred shares, end of year						136,771			128,363
SHAREHOLDERS’ CAPITAL					$	1,215,826		$	1,198,439

EQUITY COMPONENT OF CONVERTIBLE DEBENTURES
Balance, beginning of year					$	13,508		$	25,795
Add:Issuance of convertible debentures			19	(b)		7,130			5,899
Less: Redemption of convertible debentures			19	(e)		(7,609	)		(18,186	)
Balance, end of year					$	13,029		$	13,508

CONTRIBUTED SURPLUS (DEFICIT)
Balance, beginning of year					$	58,266		$	43,459
Add:	Share-based compensation expense		25	(a)		18,353			6,076
	Redemption of convertible debentures		19	(e)		7,126			18,328
	Non-cash deferred share grant distributions					45			40
Less:	Purchase of non-controlling interest		18			(89,010	)		-
	Share-based units exercised		22			(11,954	)		(7,191	)
	Share-based compensation adjustment					(5,519	)		(2,446	)
Balance, end of year					$	(22,693	)	$	58,266

NON-CONTROLLING INTEREST
Distributions to non-controlling shareholders						(9,603	)		(24,471	)
Foreign exchange impact on non-controlling interest						(117	)		-
Profit attributable to non-controlling interest						9,298			24,471
Balance, end of year					$	(422	)	$	-
TOTAL SHAREHOLDERS' EQUITY (DEFICIENCY)					$	230,743		$	(149,326	)

See accompanying notes to the consolidated financial statements

JUST ENERGY GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED MARCH 31

(in thousands of Canadian dollars)

Net inflow (outflow) of cash related to the following activities	Notes			2018			2017
OPERATING
Profit before income taxes				$	539,248		$	514,114

Items not affecting cash
Amortization of intangible assets		25	(a)		16,699			15,941
Depreciation of property, plant and equipment		25	(a)		4,115			6,579
Amortization included in cost of sales		25	(b)		3,116			2,974
Share-based compensation		25	(a)		18,353			6,076
Financing charges, non-cash portion					14,547			23,198
Other					(369	)		(363	)
Change in fair value of investments					1,289			-
Change in fair value of derivative instruments and other		15			(474,356	)		(374,791	)
Adjustment required to reflect net cash receipts from gas sales		32			(2,876	)		(681	)
Net change in non-cash working capital balances		33			(36,425	)		(22,756	)
Income taxes paid					(21,319	)		(19,840	)
Cash inflow from operating activities					62,022			150,451

INVESTING
Purchase of property, plant and equipment		12			(4,838	)		(8,315	)
Purchase of intangible assets		13			(30,938	)		(18,074	)
Acquisition of businesses		17			(10,832	)		(3,994	)
Short-term investments		7			25,532			(26,255	)
Investments in businesses		11			-			(5,394	)
Decrease in restricted cash		8			-			3,875
Cash outflow from investing activities					(21,076	)		(58,157	)

FINANCING
Dividends paid					(86,261	)		(76,710	)
Repayment of long-term debt					(100,000	)		(401,261	)
Issuance of long-term debt					100,000			160,000
Debt issuance costs					(4,115	)		(7,592	)
Credit facilities withdrawal					53,857			68,258
Issuance of preferred shares					9,260			132,973
Preferred shares issuance costs					(2,114	)		(5,422	)
Shares repurchase					(11,941	)		(6,549	)
Distributions to non-controlling interest					(9,603	)		(24,471	)
Cash outflow from financing activities					(50,917	)		(160,774	)

Effect of foreign currency translation on cash balances					1,456			(1,740	)

Net cash outflow					(8,515	)		(70,220	)
Cash and cash equivalents, beginning of year					57,376			127,596

Cash and cash equivalents, end of year				$	48,861		$	57,376

Supplemental cash flow information:
Interest paid				$	38,551		$	53,343

See accompanying notes to the consolidated financial statements

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

ORGANIZATION

Just Energy Group Inc. (“JEGI”, “Just Energy” or the “Company”) is a corporation established under the laws of Canada to hold securities and to distribute the income of its directly or indirectly owned operating subsidiaries 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 financial statements were approved by the Board of Directors on May 16, 2018.

2.	OPERATIONS

Just Energy is a leading retail energy provider specializing in electricity and natural gas commodities, energy efficiency solutions and renewable energy options. With offices located across the United States (“U.S.”), Canada, the United Kingdom (“U.K.”), Germany, Ireland and Japan, Just Energy serves residential and commercial customers, providing homes and businesses with a broad range of energy solutions that deliver comfort, convenience and control. Just Energy is the parent company of Amigo Energy, Green Star Energy, Hudson Energy, Interactive Energy Group, EdgePower Inc., Just Energy Advanced Solutions, Tara Energy, terrapass and EdgePower Inc.

By fixing the price of natural gas or electricity under its fixed-price or price-protected program contracts for a period of up to five years, Just Energy’s customers offset their exposure to changes in the price of these essential commodities. Variable rate products allow customers to maintain competitive rates while retaining the ability to lock into a fixed price at their discretion. Just Energy derives its margin or gross profit from the difference between the price at which it is able to sell the commodities to its customers and the related price at which it purchases the associated volumes from its suppliers.

In addition, Just Energy markets smart thermostats, offering the thermostats as a standalone unit or bundled with certain commodity products. The smart thermostats are manufactured and distributed by ecobee Inc. (“ecobee”), a company in which Just Energy holds a 8.5% fully diluted equity interest. Just Energy also offers green products through its JustGreen program. The JustGreen electricity product offers customers the option of having all or a portion of their electricity sourced from renewable green sources such as wind, solar, hydropower or biomass. The JustGreen gas 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 be offered in all states and provinces without being dependent on energy deregulation.

Just Energy markets its product offerings through a number of sales channels including door-to-door marketing, broker, retail and affinity relationships, and online marketing. Prior to August 1, 2017, the online marketing of gas and electricity contracts was primarily conducted through Just Ventures LLC and Just Ventures L.P. (collectively, “Just Ventures”), a joint venture in which Just Energy held a 50% equity interest. This exclusive relationship ended on July 31, 2017. See Note 18 for further information.

FINANCIAL STATEMENT PREPARATION

(a)

Statement of compliance with IFRS

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The policies applied in these consolidated financial statements were based on IFRS issued and outstanding as at March 31, 2018.

10.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

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

(b)

Principles of consolidation

The consolidated financial statements include the accounts of Just Energy and its directly or indirectly owned subsidiaries as at March 31, 2018. Subsidiaries are consolidated from the date of acquisition and control, and continue to be consolidated until the date that such control ceases. Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect these returns through its power over the investee. The financial statements of the subsidiaries are 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.

SIGNIFICANT ACCOUNTING POLICIES

Cash and cash equivalents and restricted cash

All highly liquid 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 as defined above, net of outstanding bank overdrafts.

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

Short-term investments

Short-term investments include investments in equities and fixed income producing securities and are held for trading.

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

Accrued gas receivable is stated at fair value and results when customers consume more gas than has been delivered by Just Energy to local distribution companies (“LDCs”). Accrued gas payable represents the obligation to the LDCs with respect to gas consumed by customers in excess of that delivered to the LDCs.

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

Assuming normal weather and consumption patterns, during the winter months, customers will have consumed more than what was delivered, resulting in the recognition of unbilled revenues/accrued gas payable; however, in the summer months, customers will have consumed less than what was delivered, resulting in the recognition of gas delivered in excess of consumption/deferred revenue.

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

11.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

Gas in storage

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

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

Property, plant and equipment

Property, plant and 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 present value of all dismantling and removal costs. Where major components of property, plant and equipment have different useful lives, the components are recognized and depreciated separately. Just Energy recognizes, in the carrying amount, the cost of replacing part of an item when the cost is incurred and if it is probable that the future economic benefits embodied with the item can be reliably measured. When significant parts of property, plant and equipment are required to be replaced at intervals, Just Energy recognizes such parts as individual 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 plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in the consolidated statements of income as a general and administrative expense when incurred. Depreciation is provided over the estimated useful lives of the assets as follows:

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 (in years)	Straight-line	5

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

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

Business combinations

All identifiable assets acquired and liabilities assumed are measured at the acquisition date at fair value. The Company records all identifiable intangible assets including identifiable assets that had not been recognized by the acquiree before the business combination. Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets acquired and liabilities assumed is recorded as goodwill. During the measurement period (which is within one year from the acquisition date), Just Energy may adjust the amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date. Adjustments related to facts and circumstances that did not exist at the consolidated balance sheet date are taken to the income statement. The Company records acquisition-related costs as expenses in the periods in which the costs are incurred with the exception of certain costs relating to registering and issuing debt and equity securities which may be recorded in equity. Non-controlling interests are recognized at their proportionate share of the fair value of identifiable assets and liabilities, unless otherwise indicated.

12.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

Goodwill

Goodwill is initially measured at cost, which is the excess of the cost of the business combination over Just Energy’s share in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities. Any negative difference is recognized directly in the consolidated statements of income.

After initial recognition, goodwill is measured at cost, less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of Just Energy’s operating segments that are expected to benefit from the synergies of the combination, irrespective of whether other assets and liabilities of the acquiree are assigned to those segments.

Intangible assets

Intangible assets acquired outside of a business combination are measured at cost on initial recognition. Intangible assets acquired in a business combination are recorded at fair value on the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and/or accumulated impairment losses. The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite useful lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization method and amortization period of an intangible asset with a finite useful life are reviewed at least once annually. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense related to intangible assets with finite lives is recognized in the consolidated statements of income 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, acquired through business combinations and asset purchases, as well as software, commodity billing and settlement systems and information technology system development.

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

The brand and goodwill are considered to have indefinite useful lives and are not amortized, but rather tested annually for impairment. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable.

13.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset, and are recognized in the consolidated statements of income 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 (in years)	Straight-line	5
Sales network and affinity relationships (in years)	Straight-line	5	-	8
Information technology system development (in years)	Straight-line	3	-	5
Software (in years)	Straight-line	1
Technology (in years)	Straight-line	15

Impairment of non-financial assets

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 estimated at least annually. The recoverable amount is 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-use is determined by discounting estimated future pre-tax cash flows using a pre-tax discount rate that reflects the current market assessment of the time value of money and the specific risks of the asset. In determining fair value less costs to sell, an appropriate valuation model has to be used. The recoverable amount of assets that do not generate independent cash flows is determined based on the CGU to which the asset belongs.

An impairment loss is recognized in the consolidated statements of income 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 consolidated statements of income, an impairment loss is recognized in the expense category associated with the function of the impaired asset.

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

Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each segment to which the goodwill relates. Where the recoverable amount of the segment is less than its carrying amount, an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods.

14.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

Leases

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

Just Energy as a lessee

Operating lease payments are recognized as an expense in the consolidated statements of income on a straight-line basis over the lease term.

Just Energy as a lessor

Leases where Just 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 recognized over the lease term on the same basis as rental income.

Financial instruments

Financial assets and liabilities

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

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

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held-for-trading and financial assets designated upon initial recognition as at fair value through profit or loss. Financial assets are classified as fair value through profit or loss if they are acquired for the purpose of selling or repurchasing in the near term. This category includes derivative financial instruments entered into that are not designated as hedging instruments in hedge relationships as defined by IAS 39, Financial Instruments: Recognition and Measurement (“IAS 39”). Included in this class are primarily physical delivered energy contracts, for which the own-use exemption could not be applied, financially settled energy contracts and foreign currency forward contracts.

An analysis of fair values of financial instruments and further details as to how they are measured are provided in Note 15. Related realized and unrealized gains and losses are included in the consolidated statements of income.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Assets in this category include receivables. Loans and receivables are initially recognized at fair value net of transaction costs. They are subsequently measured at amortized cost using the effective interest rate method less any impairment. The effective interest amortization is included in finance costs in the consolidated statements of income.

15.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

Financial assets classified as available for sale

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

Derecognition

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

Impairment of financial assets

Just Energy assesses whether there is objective evidence that a financial asset is impaired at each reporting date. A financial asset is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of the asset (an incurred “loss event”) and that loss event has an impact on the estimated future cash flows that can be reliably estimated.

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

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

The carrying amount 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 discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of other income in the consolidated statements of income.

Loans and receivables, 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 the impairment 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.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held-for-trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

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

16.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

Gains or losses on liabilities held-for-trading are recognized in the consolidated statements of income.

Other financial liabilities

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

Derecognition

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

Derivative instruments

Just Energy enters into fixed-term contracts with customers to provide electricity and gas at fixed prices. These customer contracts expose Just Energy to changes in consumption as well as changes in the market prices of gas and electricity. To reduce its exposure to movements in commodity prices, Just Energy enters into contracts with suppliers that expose the Company to changes in prices for the purchase and sale of power and natural gas. These contracts are treated as derivatives as they do not meet the own-use criteria under IAS 32. The primary factors affecting the fair value of derivative 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 in Just Energy’s consolidated financial statements in the future.

Just Energy analyzes 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 economic characteristics are not closely related to those of the host contract and the host contract is not carried as held-for-trading or designated as fair value through profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognized in profit or loss.

All derivatives are recognized at fair value on the date on which the derivative is entered into and are remeasured to fair value at each reporting date. Derivatives are carried in the consolidated statements of financial position as other financial assets when the fair value is 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 and are included within change in fair value of derivative instruments and other.

Offsetting of financial instruments

Financial assets 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 settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

17.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

Fair value of financial instruments

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

For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques that are recognized by market participants. Such techniques may include using recent arm’s-length market transactions, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis, or other valuation models. An analysis of fair values of financial instruments and further details as to how they are measured are provided in Note 15.

Revenue recognition

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

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

The Company assumes credit risk for all customers in Alberta, Illinois, Texas, Michigan, California, Georgia, Delaware, Ohio, the U.K. and for certain large-volume customers in British Columbia. In these markets, the Company ensures that credit review processes are in place prior to the commodity flowing to the customer.

Foreign currency translation

Functional and presentation currency

Items included in the consolidated financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). For U.S. based subsidiaries, this is U.S. dollars (“USD”), for subsidiaries based in the U.K. it is British pounds (“GBP”), and for subsidiaries based in Germany and Ireland it is Euros (“EUR”). The consolidated financial statements are presented in Canadian dollars, which is the parent Company’s presentation and functional currency.

Transactions

Foreign currency transactions 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 exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the consolidated statements of income.

18.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

Translation of foreign operations

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

	•	assets and liabilities for each consolidated statement of financial position presented are translated at the closing rate at the date of that consolidated statement of financial position; and

•

income and expenses for each consolidated statement of income 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 comprehensive income (“OCI”).

When a foreign operation is partially disposed of or sold, exchange differences that were recorded in accumulated other comprehensive income are recognized in the consolidated statements of income as part of the gain or loss on sale.

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

Earnings per share amounts

The computation of earnings per share is based on the weighted average number of shares outstanding during the year. Diluted earnings per share are computed in a similar way to basic earnings per share except that the weighted average number of shares outstanding is 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.

Share-based compensation plans

Equity-based compensation liability

Share-based compensation are equity-settled transactions. The cost of share-based compensation is measured by reference to the fair value at the date on which it was granted. Awards are valued at the grant date and are not adjusted for changes in the prices of the underlying shares and other measurement assumptions. The cost of equity-settled transactions is recognized, together with the corresponding increase in equity, over the period in which the performance or service conditions are fulfilled, ending on the date on which the relevant grantee becomes fully entitled to the award. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting period reflects the extent to which the vesting period has expired and Just Energy’s best estimate of the number of the shares that will ultimately vest. The expense or credit recognized 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 surplus are reversed and credited to shareholders' capital.

19.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

Employee future benefits

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

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

Participation in 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 of hire, and for the EUPP, there is a six-month vesting period from the employee's enrollment date in the plan.

Obligations for contributions to the Plan are recognized as an expense in the consolidated statements of income when the employee makes a contribution.

Income taxes

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

Current income tax relating to items recognized directly in other comprehensive income or equity is recognized in other comprehensive income or equity and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations where applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

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

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

•

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

20.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

•

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

Deferred tax assets are recognized for all deductible temporary differences, the carryforward of unused tax credits and any unused tax 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 tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a 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 differences associated with investments in subsidiaries, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

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

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

Deferred tax relating to items recognized in cumulative translation adjustment or equity is recognized in cumulative translation adjustment or equity and not in profit or loss.

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

Provisions

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

Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost in the consolidated statements of income.

21.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

Selling and marketing expenses

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

Commissions related to obtaining and renewing Commercial customer contracts are paid in one of the following ways: all or partially up front or as a residual payment over the term of the contract. If the commission is paid all or partially up front, it is recorded as prepaid expenses and expensed in selling and marketing expenses over the term for which the associated revenue is earned. If the commission is paid as a residual payment, the amount is expensed as earned.

In addition, commissions related to leasing thermostats are capitalized as part of the cost of the equipment.

Green provision and certificates

Just Energy is a retailer of green energy and records a provision to its regulators as green energy sales are recognized. A corresponding cost is included in cost of sales. Just Energy measures its provision based on the extent of green certificates that it holds or has committed to purchase and has recorded this obligation net of its green certificates. Any provision balance in excess of the green certificates held or that Just Energy has committed to purchase is measured at fair value. Green certificates are purchased by Just Energy to settle its obligation with the regulators.

Non-current assets held-for-sale and discontinued operations

Just Energy classifies non-current assets and disposal groups as held-for-sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held-for-sale are measured at the lower of their carrying amount and fair value less costs to sell. The criteria for the held-for-sale classification is regarded as 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 year from the date of classification. Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the consolidated statements of income. Property, plant and equipment and intangible assets are not depreciated or amortized once classified as held-for-sale.

22.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

5.	SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the consolidated financial statements requires the use of estimates and assumptions to be made in applying the accounting policies that affect the reported amounts of assets, liabilities, income, expenses and the disclosure of contingent liabilities. The estimates 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 readily apparent from other sources.

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

Business combinations

In accounting for business combinations, judgment is required in estimating the acquisition date fair values 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 have been deemed reasonable by management. During the measurement period (which is within one year from the acquisition date), Just Energy may adjust the amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date. Refer to Note 4 for further details.

Impairment of non-financial assets

Just Energy’s impairment test is based on fair value less cost to sell calculations that use EBITDA multiple model. The EBITDA is derived from actual figures and the EBITDA-multiple is sourced from external sources of information.

Deferred taxes

Significant management judgment is required to determine the amount of deferred tax assets and liabilities that can be recognized, based upon the likely timing and the level of future taxable income realized, including the usage of tax-planning strategies.

Useful life of key property, plant and equipment and intangible assets

The amortization method and useful lives reflect the pattern in which management expects the assets’ future economic benefits to be consumed by Just Energy.

Provisions for litigation

Significant management judgment is required to determine the amount of provisions to record a liability relating to litigation.

23.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost in the consolidated statements of income. Refer to Note 20 for further information.

Trade receivables

Just Energy reviews its individually significant receivables at each reporting date to assess whether an impairment loss should be recorded in the consolidated statements of income. In particular, judgment by management is required in the estimation of the amount and timing of future cash flows when determining the allowance for doubtful accounts. In estimating these cash flows, Just Energy makes judgments about the borrower’s financial situation and the fair value of collateral. These estimates are based on assumptions about a number of factors and actual results may differ, resulting in future changes to the allowance.

Fair value of financial instruments

Where the fair values of financial assets and financial liabilities recorded in the consolidated statements of financial position cannot be derived from active markets, they are determined using valuation techniques including discounted cash flow models or transacted/quoted prices of identical assets that are not active. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. The judgment includes consideration of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. Refer to Note 15 for further details about the assumptions as well as a sensitivity analysis.

Subsidiaries

Subsidiaries that are not wholly owned by Just Energy require judgment determining the amount of control that Just Energy has over that entity and the appropriate accounting treatments. In these consolidated financial statements, management has determined that Just Energy controlled Just Ventures until July 31, 2017 and, therefore, has treated the 50% that is not owned by Just Energy as a non-controlling interest until July 31, 2017. Refer to Note 18 for further details on change in control during fiscal 2018. Just Energy also owns 95% of the issued and outstanding shares of db swdirekt GmbH (“SWDirekt”), and 51% of the issued and outstanding shares of db swpro GmbH (“SWPro”), and, therefore, has treated the 5% and 49% that is not owned by Just Energy as a non-controlling interest.

6.	ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE

The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the consolidated financial statements are disclosed below. Just Energy intends to adopt these standards, if applicable, when they become effective.

IFRS 9, Financial Instruments (“IFRS 9”), was issued by the IASB on July 24, 2014, and will replace IAS 39. IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. Two measurement categories continue to exist to account for financial liabilities in IFRS 9, fair value through profit or loss (“FVTPL”) and amortized cost. Financial liabilities held-for-trading are measured at FVTPL, and all other financial liabilities are measured at amortized cost unless the fair value option is applied. The treatment of embedded derivatives under the new standard is consistent with IAS 39 and is only applied to financial liabilities. IFRS 9 uses a new expected loss impairment model and also uses a new model for hedge accounting aligning the accounting treatment with risk management activities. The measurement of impairment of financial assets is based on an expected credit loss model. It is no longer necessary for a triggering event to have occurred before credit losses are recognized. IFRS 9 is effective for annual periods beginning on or after January 1, 2018.

24.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

As part of the implementation of IFRS 9, the Company has established a transition team to implement the accounting system, process and internal control changes that result from the new standard. The new impairment and classification and measurement requirements will be applied by adjusting the Company’s consolidated financial statements on April 1, 2018, the date of initial application, with no restatement of comparative period financial information.

The transition team has assessed the impact of IFRS 9 on the consolidated financial statements and has determined that the adoption of IFRS 9 will enhance disclosure requirements and is expected to increase the deficit as at April 1, 2018, primarily due to the increases in the expected lifetime credit losses for its contract assets, as well as trade and other receivables. Contract assets such as unbilled revenues are required to be tested for impairment under IFRS 9. As a result, the increase to the expected lifetime credit losses is expected to be approximately $11.0 million to $14.0 million, net of taxes. The investment in Ecobee will be classified as fair value through profit or loss, instead of as available-for-sale. Further gains and losses related to the investment in Ecobee will go through the statement of income instead of other comprehensive income. The Company will continue to revise, refine and validate the impairment models and related process controls leading up to the June 30, 2018 reporting.

IFRS 15, Revenue from Contracts with Customers (“IFRS 15”), was jointly issued by the IASB and the Financial Accounting Standards Board, effective for annual reporting periods beginning on or after January 1, 2018, with early adoption permitted. IFRS 15 outlined a single comprehensive model to account for revenue arising from contracts with customers and will replace the majority of existing IFRS requirements on revenue recognition including IAS 18, Revenue. The core principle of IFRS 15 is to recognize revenue to depict the transfer of goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The standard provides a single, principles-based five-step model that will apply to revenue earned from a contract with a customer, regardless of the type of revenue transaction or industry. The standard will also provide guidance on the recognition and measurement of gains and losses on the sale of some non-financial assets that are not an output of the entity’s ordinary activities. The standard also specifies that direct incremental costs of obtaining and fulfilling a contract that are expected to be recovered should be capitalized and amortized over the expected contract term. Disclosure requirements will increase including disaggregation of total revenue, information about performance obligations, changes in contract asset and liability account balances between periods and key judgments and estimates made. Just Energy will be implementing IFRS 15 using the modified retrospective approach where IFRS 15 will be applied to 2019 results beginning April 1, 2018 without restating comparative periods.

Management has appointed an IFRS 15 transition team to assess the financial statement impact of IFRS 15. The transition team has assessed the impact of IFRS 15 on the consolidated financial statements and its revenue recognition policies and has determined that the capitalization of direct incremental costs paid on all active contracts existing as at March 31, 2018 will result in an increase in the opening retained earnings in the range of $18.0 million to $22.0 million, net of taxes. The standard specifies that an entity recognizes revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. Depending on whether certain criteria are met, revenue is recognized either over time, in a manner that depicts the entity’s performance, or at a point in time, when control is transferred to the customer. The transition team also assessed Just Energy’s revenue streams and underlying contracts with customers. The majority of revenues within the scope of IFRS 15 are earned through the sale of gas and electricity and other value added products. We have not identified any significant differences in the timing or amount of recognition of revenue as a result of IFRS 15, and therefore the changes to revenue earned on customer contracts is not expected to be significant. Additional disclosure however will be required on the disaggregation of revenue. The transition team is currently assessing how revenues will be disaggregated to meet the new disclosure requirement. Transition adjustments will be disclosed in the Q1 2019 interim condensed financial statements.

25.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

Amendments to IFRS 2, Share-based Payment (“IFRS 2”), clarify how to account for certain types of share-based payment transactions. IFRS 2 stipulates new conditions on the accounting for three main areas: the effects of vesting conditions on the measurement of a cash-settled share-based payment transaction; the classification of a share-based payment transaction with net settlement features for withholding tax obligations; and the accounting of a modification to the terms and conditions of a share-based payment that changes the transaction from cash-settled to equity-settled. IFRS 2 is applied prospectively; retroactive application is only permitted if the application can be performed without using hindsight. Requirements to apply IFRS 2 are effective for annual periods beginning on or after January 1, 2018. Management has appointed an IFRS 2 transition team to assess the financial statement impact of IFRS 2. The transition team will implement the accounting system, process and internal control changes that result from the new standard.

IFRS 16, Leases (“IFRS 16”), was issued by the IASB in January 2016. This guidance brings most leases onto the balance sheet for lessees under a single model, eliminating the distinction between operating and finance leases. Lessor accounting remains largely unchanged and the distinction between operating and finance leases is retained. Furthermore, per the standard, a lessee recognizes a right-of-use asset 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 payable over the lease term, discounted at the rate implicit in the lease. Lessees are permitted to make an accounting policy election, by class of underlying asset, to apply a method like IAS 17’s operating lease accounting and not recognize lease assets and lease liabilities for leases with a lease term of 12 months or less, and on a lease-by-lease basis, to apply a method similar to current operating lease accounting to leases for which the underlying asset is of low value. IFRS 16 supersedes IAS 17, Leases and its related Interpretations, and is effective for periods beginning on or after January 1, 2019, with earlier adoption permitted if IFRS 15 has also been applied. Just Energy has not yet assessed the impact of this standard.

SHORT-TERM INVESTMENTS

	As at		As at
	March 31, 2018		March 31, 2017
Fixed income	$	-	$	23,872
Equities		-		2,383
	$	-	$	26,255

RESTRICTED CASH

As part of the disposal of the Commercial Solar division on November 5, 2014, Just Energy was required to transfer cash into restricted bank accounts. The Company has indemnified the buyer for certain obligations. The cash will be released as these obligations are satisfied. As of March 31, 2018, these restricted cash balances were $3,515 (2017 - $3,620).

TRADE AND OTHER RECEIVABLES

	As at		As at
	March 31, 2018		March 31, 2017
Trade account receivables, net	$	332,083	$	288,255
Accrued gas receivable		15,893		16,352
Other		47,754		64,884
	$	395,730	$	369,491

26.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

10.	PREPAID EXPENSES, DEPOSITS AND OTHER CURRENT ASSETS

	As at		As at
	March 31, 2018		March 31, 2017
Prepaid expenses and deposits	$	64,752	$	62,087
Green certificates		42,230		49,236
Gas delivered in excess of consumption		2,715		3,232
	$	109,697	$	114,555

11.

INVESTMENTS

(a)

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, Just Energy further increased its investment in the company by $5.4 million. The Company markets these smart thermostats in all its core markets, bundling the thermostats with commodity and home service products. As at March 31, 2018, Just Energy owns approximately 8.5% of ecobee. Previously, this investment was measured at cost as fair value could not be measured reliably. This investment is measured at fair value and is classified as available-for-sale. The fair value of the investment has been determined directly from transacted/quoted prices of identical assets that are not active (Level 2 measurement). During the year ended March 31, 2018, the fair value of the investment increased by $20.6 million (2017 - $nil).

(b)

Just Energy has an instrument that is convertible upon the option of the holder into an equity investment in Energy Earth, a private company that offers products related to the conservation of natural resources. This investment is designated as fair value through profit or loss. The fair value of the investment has been determined by reference to direct inputs other than quoted prices that are observable for the asset (Level 2 measurement). During the year ended March 31, 2018, the fair value of the investment increased by $1.3 million (2017 - $nil) to $3.9 million (2017 - $nil).

27.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

12.	PROPERTY, PLANT AND EQUIPMENT

As at March 31, 2018

	Computer equipment			Furniture and fixtures			Office equipment			Thermo-stats			Leasehold improvements			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

As at March 31, 2017

	Computer equipment			Furniture and fixtures			Vehicles			Office equipment			Thermostats			Leasehold improvements			Total
Cost:
Opening balance - April 1, 2016	$	19,494		$	7,300		$	6		$	23,157		$	12,792		$	8,913		$	71,662
Additions		3,651			788			-			1,142			1,213			1,521			8,315
Retirements		(4,531	)		(1,493	)		(6	)		(9,649	)		(594	)		(6,046	)		(22,319	)
Exchange differences		58			179			-			297			60			129			723
Ending balance, March 31, 2017		18,672			6,774			-			14,947			13,471			4,517			58,381

Accumulated depreciation:
Opening balance - April 1, 2016		(11,968	)		(5,544	)		(6	)		(16,314	)		(4,985	)		(7,800	)		(46,617	)
Depreciation charge to cost of sales		-			-			-			-			(2,974	)		-			(2,974	)
Depreciation charge for the year		(2,426	)		(409	)		-			(3,183	)		-			(561	)		(6,579	)
Retirements		4,531			1,493			6			9,649			281			6,046			22,006
Exchange differences		(1,737	)		(316	)		-			(247	)		(35	)		(200	)		(2,535	)
Ending balance, March 31, 2017		(11,600	)		(4,776	)		-			(10,095	)		(7,713	)		(2,515	)		(36,699	)

Net book value, March 31, 2017	$	7,072		$	1,998		$			$	4,852		$	5,758		$	2,002		$	21,682

28.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

13.

INTANGIBLE ASSETS

As at March 31, 2018

	Goodwill			Brand			Technology ¹			Customer relationships			Sales networks 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

¹ Technology includes work in progress IT projects of $19.8 million.

As at March 31, 2017

	Gas contracts			Electricity contracts			Goodwill		Brand		Technology			Sales network and affinity relationships			Total
Cost:
Opening balance - April 1, 2016	$	122,010		$	320,185		$	280,513	$	30,423	$	83,876		$	160,243		$	997,250
Retirements		(123,204	)		(331,335	)		-		-		(55,296	)		(111,578	)		(621,413	)
Acquisition of a subsidiary		-			-			6,020		-		-			-			6,020
Additions		-			-			-		-		18,074			-			18,074
Exchange differences		1,194			11,150			2,668		731		1,871			4,930			22,544
Ending balance, March 31, 2017		-			-			289,201		31,154		48,525			53,595			422,475

Accumulated amortization:
Opening balance - April 1, 2016		(122,010	)		(320,185	)		-		-		(71,837	)		(137,345	)		(651,377	)
Retirements		123,204			331,335			-		-		55,296			111,578			621,413
Amortization charge for the year		-			-			-		-		(9,329	)		(6,612	)		(15,941	)
Exchange differences		(1,194	)		(11,150	)		-		-		(1,771	)		(4,468	)		(18,583	)
Ending balance, March 31, 2017		-			-			-		-		(27,641	)		(36,847	)		(64,488	)
Net book value, March 31, 2017	$	-		$	-		$	289,201	$	31,154	$	20,884		$	16,748		$	357,987

The capitalized internally developed costs relate to the development of new customer billing and analysis software solutions for the different energy markets of Just Energy. All research costs and development costs not eligible for capitalization have been expensed and are recognized in administrative expenses.

29.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

14.

OTHER NON-CURRENT ASSETS

	As at		As at
	March 31, 2018		March 31, 2017
Prepaid commission	$	17,101	$	-
Income taxes recoverable		2,336		-
Other		550		-
	$	19,987	$	-

15.

FINANCIAL INSTRUMENTS

(a)

Fair value of derivative financial instruments and other

The fair value of financial instruments is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., an exit price). Management has estimated the value of financial swaps, physical forwards and option contracts for electricity, natural gas, carbon and renewable energy certificates, and generation and transmission capacity contracts using a discounted cash flow method, which employs market forward curves that are either directly sourced from third parties or are developed internally based on third-party market data. These curves can be volatile, thus leading to volatility in the mark to market with no immediate impact to cash flows. Gas options have been valued using the Black option value model using the applicable market forward curves and the implied volatility from other market traded options.

The following table illustrates gains (losses) related to Just Energy’s derivative financial instruments classified as fair value through profit or loss and recorded on the consolidated statements 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 statements of income.

	For the			For the
	year ended			year ended
	March 31, 2018			March 31, 2017
Change in fair value of derivative instruments and other

Physical forward contracts and options (i)	$	400,583		$	215,935
Financial swap contracts and options (ii)		59,710			144,288
Foreign exchange forward contracts		(1,842	)		(1,756	)
Share swap		(4,484	)		(98	)
6.5% convertible bond conversion feature		7,764			14,261
Unrealized foreign exchange on 6.5% convertible bond		6,101			(4,309	)
Other derivative options		6,524			6,470
Change in fair value of derivative instruments and other	$	474,356		$	374,791

30.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

The following table summarizes certain aspects of the fair value of derivative financial assets and liabilities recorded in the consolidated 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 (i)	$	198,891	$	60,550	$	32,451	$	29,003
Financial swap contracts and options (ii)		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

The following table summarizes certain aspects of the fair value of derivative financial assets and liabilities recordedi n the consolidated statement of financial position as at March 31, 2017:

	Financial assets (current)		Financial assets (non-current)		Financial liabilities (current)		Financial liabilities (non-current)

Physical forward contracts and options	$	982	$	983	$	89,472	$	124,173
Financial swap contracts and options		3,207		2,027		65,362		46,246
Foreign exchange forward contracts		565		-		-		295
Share swap		-		-		13,916		-
6.5% convertible bond conversion feature		-		-		-		8,010
Other derivative options		6,902		-		43		-
As at March 31, 2017	$	11,656	$	3,010	$	168,793	$	178,724

Below is a summary of the financial instruments classified through profit or loss as at March 31, 2018, to which Just Energy has committed:

(i) Physical forward contracts and options consist of:

•

Electricity contracts with a total remaining volume of 32,522,439 MWh, a weighted average price of $42.50/MWh and expiry dates up to December 31, 2027.

•

Natural gas contracts with a total remaining volume of 86,541,853 GJs, a weighted average price of $3.72/GJ and expiry dates up to October 31, 2023.

•

Renewable energy certificates (“RECs”) and emission-reduction credit contracts with a total remaining volume of 3,662,766 MWh and 422,550 tonnes, respectively, a weighted average price of $27.84/REC and $2.50/tonne, respectively, and expiry dates up to December 31, 2028 and December 31, 2021.

•

Electricity generation capacity contracts with a total remaining volume of 5,410 MWCap, a weighted average price of $6,912.86/MWCap and expiry dates up to October 31, 2022.

•

Ancillary contracts with a total remaining volume of 933,679 MWh, a weighted average price of $19.45/MWh and expiry dates up to December 31, 2020.

31.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

(ii) Financial swap contracts and options consist of:

•

Electricity contracts with a total remaining volume of 15,724,012 MWh, an average price of $49.41/MWh and expiry dates up to July 23, 2023.

•

Natural gas contracts with a total remaining volume of 117,006,333 GJs, an average price of $3.54/GJ and expiry dates up to December 31, 2022.

•

Electricity generation capacity contracts with a total remaining volume of 273 MWCap, a weighted average price of $4,146.69/MWCap and expiry dates up to October 31, 2020.

•

Ancillary contracts with a total remaining volume of 962,506 MWh, a weighted average price of $13.76/MWh and expiry dates up to December 31, 2019.

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

Share swap agreement

Just Energy has entered into a share swap agreement to manage the consolidated statement of income volatility associated with the Company’s restricted share grant and deferred share grant plans. The value, on inception, of the 2,500,000 shares under this share swap agreement was approximately $33,803. 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 consolidated statements of financial position. Changes in the fair value of the share swap agreement are recorded through the consolidated statements of income as a change in fair value of derivative instruments and other.

Fair value (“FV”) hierarchy derivatives

Level 1

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

Level 2

Fair value measurements that require observable 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 to be classified under Level 2, significant inputs must be directly or indirectly observable in the market. Just Energy values its New York Mercantile Exchange (“NYMEX”) financial gas fixed-for-floating swaps under Level 2.

Level 3

Fair value measurements that require unobservable market data or use statistical techniques to derive forward curves from observable market data and unobservable inputs are classified as Level 3 in the FV hierarchy. For the supply contracts, Just Energy uses quoted market prices as per available market forward data and applies a price-shaping profile to calculate the monthly prices from annual strips and hourly prices from block strips for the purposes of mark-to-market calculations. The profile is based on historical settlements with counterparties or with the system operator and is considered an unobservable input for the purposes of establishing the level in the FV hierarchy. For the natural 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.

32.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

For the share swap, Just Energy uses a forward interest rate curve along with a volume weighted average share price.

Just Energy’s accounting policy is to recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. There were no transfers into or out of Level 1, Level 2 or Level 3 during the years ended March 31, 2018 or 2017.

Fair value measurement input sensitivity

The main cause of changes in the fair value of derivative instruments is changes in the forward curve prices used for the fair value calculations. Just Energy provides a sensitivity analysis of these forward curves under the “Market risk” section of this note. Other inputs, including volatility 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, 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

The following table illustrates the classification of derivative financial assets (liabilities) in the FV hierarchy as at March 31, 2017:

	Level 1		Level 2			Level 3			Total
Derivative financial assets	$	-	$	-		$	14,666		$	14,666
Derivative financial liabilities		-		(17,741	)		(329,776	)		(347,517	)
Total net derivative liabilities	$	-	$	(17,741	)	$	(315,110	)	$	(332,851	)

Key assumptions used when determining the significant unobservable inputs 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.

33.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

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

	Year ended			Year ended
	March 31, 2018			March 31, 2017
Balance, beginning of year	$	(315,110	)	$	(638,231	)
Total gains (losses)		105,709			(42,084	)
Purchases		207,531			(30,265	)
Sales		(64,464	)		2,084
Settlements		232,698			393,386
Balance, end of year	$	166,364		$	(315,110	)

(b)

Classification of non-derivative financial assets and liabilities

As at March 31, 2018 and March 31, 2017, the carrying value of cash and cash equivalents, short-term investments, restricted cash, current trade and other receivables, unbilled revenues and trade and other payables approximates their fair value due to their short-term nature.

Long-term debt recorded at amortized cost has a fair value as at March 31, 2018 of $570.1 million (2017 - $542.0 million) and the interest payable on outstanding amounts is at rates that vary with Bankers’ Acceptances, LIBOR, Canadian bank prime rate or U.S. prime rate, with the exceptions of 6.75% $100M convertible debentures, 6.75% $160M convertible debentures, 6.5% convertible bonds and 5.75% convertible debentures which are fair valued based on market value. The 6.75% $100M convertible debentures, 6.75% convertible debentures, 6.5% convertible bonds and 5.75% convertible debentures are classified as Level 1 in the FV hierarchy.

Investments in equity instruments are recorded at fair value as at March 31, 2018 of $36.3 million and are measured based on Level 2 of the fair value hierarchy. Level 2 inputs for non-derivative financial assets include quoted prices for similar assets in active markets, quoted prices for identical or similar assets that are not active.

The fair values of both the investment in ecobee and Energy Earth has been derived from transacted/quoted prices of identical assets that are not active. No adjustments were made in valuing the investment in ecobee or Energy Earth based on unobservable inputs that would be significant to the entire measurement and require the fair value measurement to be categorized within Level 3 of the fair value hierarchy.

The following table illustrates the classification of investments in the FV hierarchy as at March 31, 2018:

	Level 1		Level 2		Level 3		Total
Investment in ecobee	$	-	$	32,446	$	-	$	32,446
Investment in Energy Earth		-		3,900		-		3,900
Total investments	$	-	$	36,314	$	-	$	36,314

34.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

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

(i) Market risk

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

Foreign currency risk

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

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

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

With respect to translation exposure, if the Canadian dollar had been 5% stronger or weaker against the U.S. dollar for the year ended March 31, 2018, assuming that all the other variables had remained constant, profit for the year would have been $15.0 million lower/higher and other comprehensive income would have been $37.8 million lower/higher.

Interest rate risk

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

A 1% increase (decrease) in interest rates would have resulted in a decrease (increase) of approximately $758 in profit before income taxes for the year ended March 31, 2018 (2017 – $332).

Commodity price risk

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

35.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

Commodity price sensitivity – all derivative financial instruments

If all the energy prices associated with derivative financial instruments including natural gas, electricity, verified emission-reduction credits and renewable energy certificates had risen (fallen) by 10%, assuming that all of the other variables had remained constant, profit before income taxes for the year ended March 31, 2018 would have increased (decreased) by $228,721 ($227,245), primarily as a result of the change in fair value of Just Energy’s derivative financial instruments.

Commodity price sensitivity – Level 3 derivative financial instruments

If the energy prices associated with only Level 3 derivative financial instruments including natural gas, electricity, verified emission-reduction credits and renewable energy certificates had risen (fallen) by 10%, assuming that all of the other variables had remained constant, profit before income taxes for the year ended March 31, 2018 would have increased (decreased) by $232,801 ($231,393), primarily as a result of the change in fair value of Just Energy’s derivative financial instruments.

(ii) Credit risk

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

Customer credit risk

In Alberta, Texas, Illinois, British Columbia, California, Michigan, Delaware, Ohio, Georgia and the U.K., Just Energy has customer credit risk and, therefore, credit review processes have been implemented to perform credit 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 credit risk in its margin expectations for all the above markets.

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

	March 31, 2018		March 31, 2017

Current	$	113,786	$	96,510
1– 30 days		44,374		30,672
31–60 days		21,241		12,806
61–90 days		12,686		8,358
Over 90 days		69,207		47,059
	$	261,294	$	195,405

36.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

Changes in the allowance for doubtful accounts related to the balances in the table above were as follows:

	March 31, 2018			March 31, 2017

Balance, beginning of year	$	49,431		$	58,789
Provision for doubtful accounts		56,300			56,041
Bad debts written off		(41,802	)		(64,262	)
Foreign exchange		(3,808	)		(1,137	)
Balance, end of year	$	60,121		$	49,431

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

Counterparty credit risk

Counterparty credit 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 related customer margin. Counterparty limits are established within the Risk Management Policy. Any exceptions to these limits require approval from the Board of Directors of Just Energy. The Risk Department and Risk Committee monitor current and potential credit exposure to individual counterparties and also monitor overall aggregate counterparty exposure. However, the failure of a counterparty to meet its contractual obligations could have a material adverse effect on the operations and cash flows of Just Energy.

As at March 31, 2018, the estimated counterparty credit risk exposure amounted to $283,431 (2017 - $14,666), representing the risk relating to Just Energy’s exposure to derivatives that are in an asset position.

(iii) Liquidity risk

Liquidity risk is the potential inability to meet financial obligations as they fall due. Just Energy manages this risk by monitoring detailed weekly cash flow forecasts covering a rolling six-week period, monthly cash forecasts for the next 12 months, and quarterly forecasts for the following two-year period to ensure adequate and efficient use of cash resources and credit facilities.

The following are the contractual maturities, excluding interest payments, reflecting undiscounted disbursements of Just Energy’s financial liabilities:

As at March 31, 2018:

	Carrying		Contractual		Less than						More than
	amount		cash flows		1 year		1-3 years		4-5 years		5 years
Trade and other payables	$	616,434	$	616,434	$	616,434	$	-	$	-	$	-
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
	$	1,298,097	$	4,362,996	$	2,605,938	$	1,396,359	$	329,658	$	31,041

37.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

As at March 31, 2017:

	Carrying		Contractual		Less than						More than
	amount		cash flows		1 year		1-3 years		4-5 years		5 years
Trade and other payables	$	499,169	$	499,169	$	499,169	$	-	$	-	$	-
Long-term debt¹		498,088		527,743		-		367,743		160,000		-
Gas, electricity and non-commodity contracts		347,517		3,397,692		1,982,896		1,189,745		188,282		36,769
	$	1,344,774	$	4,424,604	$	2,482,065	$	1,557,488	$	348,282	$	36,769

¹Included in long-term debt are the 6.75% $100M convertible debentures, 6.75% 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 March 31, 2018, 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		$	30,815			$	41,386			$	24,300			$	-

(iv)

Supplier risk

Just Energy purchases the majority of the gas and electricity delivered to its customers through long-term contracts entered into with various suppliers. Just Energy has an exposure to supplier risk as the ability to continue to deliver gas and electricity to its customers is reliant upon the ongoing operations of these suppliers and their ability to fulfill their contractual obligations. As at March 31, 2018, Just Energy has applied an adjustment factor to determine the fair value of its financial assets in the amount of $4,737 (2017 - $4,980) to accommodate for its counterparties’ risk of default.

16.

TRADE AND OTHER PAYABLES

	As at		As at
	March 31, 2018		March 31, 2017
Commodity suppliers' payables	$	209,610	$	203,581
Accrued liabilities		135,733		140,753
Green provisions		152,542		70,955
Sales tax payable		15,794		19,241
Trade accounts payable		45,887		20,025
Payable for former JV partner (Note 18)		26,375		-
Accrued gas payable		12,261		12,537
Other payables		18,232		32,077
	$	616,434	$	499,169

38.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

17.	ACQUISITION OF BUSINESSES

Acquisition of Intell Enercare Solutions Inc.

On June 6, 2017, Just Energy completed the acquisition of 100% of the issued and outstanding shares of Intell Enercare Solutions Inc., a complete service provider for supply, design and installation of energy saving technologies, for up to $11.0 million, subject to closing adjustments. The purchase price consideration included cash consideration of $2.2 million. There is contingent consideration where Just Energy will pay up to $9.0 million to the sellers over three years provided that certain EBITDA targets are satisfied. The EBITDA target with respect to the contingent consideration for 2018 is $3,500. For the 2019 and 2020 years, it is $3,000 and $2,500, respectively. The fair value of the contingent consideration at acquisition was estimated to be $7.8 million based on the three-year forecast. The acquisition of Intell Enercare Solutions Inc. was accounted for using the purchase method of accounting. Just Energy allocated the preliminary purchase price to the identified assets and liabilities acquired based on their fair values at the time of acquisition as follows:

NET ASSETS ACQUIRED

Intangible assets	$	877
Goodwill		9,644
Working capital		(302	)
Deferred tax		(232	)
Total consideration	$	9,987

Cash paid, net of estimated working capital adjustment	$	2,199
Contingent consideration		7,788
Total consideration	$	9,987

The transaction costs related to the acquisition have been expensed and are included in other operating expenses in the consolidated statements of income. The goodwill represents the synergies and potential for cross-selling energy saving technologies to Just Energy customers. The amount of revenue and profit or (loss) of Intell Enercare Solutions Inc. since the acquisition date included in the consolidated statement of income for the fiscal year is $1,495 and ($850), respectively. The revenue and profit or (loss) for the current reporting period assuming the acquisition date for Intell Enercare Solutions Inc. that occurred during the year had been as of the beginning of the annual reporting period would be $1,635 and ($1,019), respectively. The fair value of the contingent consideration was subsequently reduced to $1,300 during the year through the consolidated statements of income due to changes in the assumptions within the forecast.

Acquisition of SWDirekt and db swpro GmbH

On December 8, 2016, Just Energy completed the acquisition of 95% of the issued and outstanding shares of SWDirekt, a retail energy company, and 51% of the issued and outstanding shares of SWPro, a sales and marketing company, for $6.4 million, subject to closing adjustments. Terms of the deal include a $2.2 million payment upon the achievement of sales targets.

The acquisition of SWDirekt and SWPro was accounted for using the purchase method of accounting. Just Energy allocated the purchase price to the identified assets and liabilities acquired based on their fair values at the time of acquisition as follows:

39.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

NET ASSETS ACQUIRED

Working capital	$	588
Property, plant and equipment		56
Intangible assets		1,172
Goodwill		4,831
Non-controlling interest		(41	)
Other liabilities		(221	)
Total consideration	$	6,385

Cash paid, net of working capital adjustment	$	4,221
Contingent consideration		2,164
Total consideration	$	6,385

The contingent consideration was subsequently written down to $nil through the consolidated statements of income due to changes within the cash flows forecast.

Acquisition of EdgePower, Inc.

On February 28, 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 HVAC controls, as well as enterprise monitoring, in hundreds of commercial buildings in North America. Just Energy acquired 100% of the 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$14.0 million, of which US$7.0 million was paid in cash and US $7.0 million was settled through the issuance of 1,415,285 Just Energy common shares. The goodwill that was acquired as part of this acquisition relates 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 to continuing employment and the achievement of certain annual and cumulative performance thresholds of the EdgePower business. The payment is calculated as 20% of EBITDA for the EdgePower business for the years of 2019-2021 with minimum thresholds that must be met. As at the acquisition date, the amount recognized for management remuneration was nil. The amount of revenue and loss of EdgePower since the acquisition date included in the consolidated statements of income for the reporting period is $209 and $112, respectively. The revenue and profit or loss for the current reporting period assuming the acquisition date for EdgePower that occurred during the year had been as of the beginning of the annual reporting period would be $4,282 and $2,469, respectively.

40.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

The following is the preliminary purchase price allocation for EdgePower:

NET ASSETS ACQUIRED

Working capital	$	993
Intangible assets		15,115
Goodwill		5,879
Deferred tax liabilities		(4,066	)
Total consideration	$	17,921

Cash paid, net of working capital adjustment	$	8,286
Common shares issued		8,966
Payable to seller		669
Total consideration	$	17,921

18.

NON-CONTROLLING INTEREST

	March 31, 2018			March 31, 2017
Profit (loss) allocated to non-controlling interest
Just Ventures (a)	$	9,603		$	24,558
Just Energy Deutschland GmbH (b)		(305	)		(72	)
SWPro (b)		-			(15	)
	$	9,298		$	24,471

	Just Ventures			Just Energy Deutschland GmbH			SWPro
	(until August 1, 2017)
Summarized financial information for 2018:
Gross margin	$	38,501		$	82		$	78
Selling and marketing expenses		13,829			2,148			477
Profit (loss) from operations		24,672			(2,106	)		(399	)
Cash flows provided by (used in) operating activities		24,672			(2,106	)		(399	)
Cash flows used in financing activities		(24,672	)		-			-

Summarized financial information for 2017:	Just Ventures			Just Energy Deutschland GmbH			SWPro
Gross margin	$	82,357		$	5		$	(43	)
Selling and marketing expenses		34,264			235			100
Profit (loss) from operations		48,093			(349	)		(143	)
Cash flows provided by (used in) operating activities		48,093			(349	)		(143	)
Cash flows used in financing activities		(48,093	)		-			-

41.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

(a)

On August 1, 2017, Just Energy announced that it reached an agreement with its joint venture partner, Red Ventures LLC, to end the exclusive relationship for online sales of the Just Energy brand in North America. To facilitate the transaction, Just Energy acquired the outstanding 50% interest of each of Just Ventures LLC in the United States and Just Ventures L.P. in Canada. Under the terms of the agreement, the purchase price is a function of go-forward earnings based on the current client base and is payable in quarterly installments over five years estimated at $99.8 million. As at March 31, 2018, the current liabilities amount to $26.4 million and long-term liabilities amount to $56.6 million.

(b)

Just Energy owns 95% of the issues and outstanding shares of Just Energy Deutschland GmbH and 51% of the issued and outstanding shares of db SWPro GmbH (“SWPro”), and therefore, has treated the 5% and 49%, respectively, that is not owned by Just Energy as a non-controlling interest.

19.

LONG-TERM DEBT AND FINANCING

	Maturity	March 31, 2018			March 31, 2017
Credit facility (a)	September 1, 2018	$	122,115		$	68,258
Less: Debt issue costs (a)			(664	)		(2,257	)
6.75% 100M convertible debentures (b)	March 31, 2023		85,760			-
6.75% 160M convertible debentures (c)	December 31, 2021		148,146			145,579
6.5% convertible bonds (d)	July 29, 2019		188,147			190,486
5.75% convertible debentures (e)	September 30, 2018		-			96,022
			543,504			498,088
Less: Current portion			(121,451	)		-
			422,053			498,088

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)	$	122,115	$	-	$	-	$	-	$	122,115
6.75% $100M convertible debentures (b)		-				100,000				100,000
6.75% $160M convertible debentures (c)		-		-		160,000		-		160,000
6.5% convertible bonds (d)		-		193,410		-		-		193,410
	$	122,115	$	193,410	$	260,000	$	-	$	575,525

42.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

The details for long-term debt is as follows:

	As at April 1, 2017		Cash inflows / (outflows)			FX			Non-cash changes			As at March 31, 2018

Credit facility (a)	$	66,001	$	53,857		$	-		$	1,593		$	121,451
6.75% $100M convertible debentures (b)		-		95,869			-			(10,109	)		85,760
6.75% $160M convertible debentures (c)		145,579		-			-			2,567			148,146
6.5% convertible bonds (d)		190,486		-			(6,101	)		3,761			188,147
5.75% convertible debentures (e)		96,022		(100,000	)		-			3,978			-
		498,088		49,726			(6,101	)		1,790			543,504
Less: Current portion		-		-			-			-			(121,451	)
		498,088		49,726			(6,101	)		1,790			422,053

	As at April 1, 2016			Cash inflows / (outflows)			FX		Non-cash changes			As at March 31, 2017

Credit facility (a)	$	(2,980	)	$	68,258		$	-	$	723		$	66,001
6.75% $160M convertible debentures (c)		-			152,407			-		(6,828	)		145,579
6.5% convertible bonds (d)		182,564			-			4,309		3,613			190,486
5.75% convertible debentures (e)		93,637			-			-		2,385			96,022
6.0% convertible debentures (f)		311,028			(321,261	)		-		10,233			-
Senior unsecured note (g)		76,294			(80,000	)		-		3,706			-
		660,543			(180,596	)		4,309		13,832			498,088

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

	2018		2017
Credit facility (a)	$	12,883	$	10,564
6.75% $100M convertible debentures (b)		497
6.75% $160M convertible debentures (c)		12,773		7,090
6.5% convertible bonds (d)		15,753		16,418
5.75% convertible debentures (e)		9,173		8,135
6.0% convertible debentures (f)		-		19,396
Loss on redemption of 6.0% convertible debentures (f)		-		4,415
Senior unsecured note (g)		-		10,999
Unwinding of discount and other		4,893		1,060
	$	55,972	$	78,077

(a)

As at March 31, 2018, Just Energy has a $342.5 million credit facility to meet working capital requirements, which includes an increase to the capacity by $50 million for a letter of credit facility (the “LC facility”), effective December 30, 2016. The principal amount outstanding under the LC facility is guaranteed by Export Development Canada under its Account Performance Security Guarantee Program. The syndicate of lenders includes Shell Energy North America (Canada) Inc./Shell Energy North America (U.S.), L.P., Canadian Imperial Bank of Commerce (“CIBC”), National Bank of Canada, HSBC Bank Canada, Alberta Treasury Branches, JP Morgan Chase Bank, N.A. and Canadian Western Bank.

43.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

Interest is payable on outstanding loans at rates that vary with Bankers’ Acceptance rates, LIBOR, Canadian bank prime rate or U.S. prime rate. Under the terms of the operating credit facility, Just Energy is able to make use of Bankers’ Acceptances and LIBOR advances at stamping fees of 3.40%. Prime rate advances are at a rate of bank prime (Canadian bank prime rate or U.S. prime rate) plus 2.40% and letters of credit are at a rate of 3.40%. Interest rates are adjusted quarterly based on certain financial performance indicators.

As at March 31, 2018, the Canadian prime rate was 3.45% and the U.S. prime rate was 4.75%. Just Energy has drawn $122.1 million against the facility and the total letters of credit outstanding as of the current period amounted to $113.4 million (2017 - $109.2 million). As at March 31, 2018, Just Energy has $102 million of the facility remaining as well as a $5 million swing line with CIBC 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 and secured by a general security agreement and a pledge of the assets and securities of Just Energy and the majority of its operating subsidiaries and affiliates excluding, primarily, the international operations. Just Energy is required to meet a number of financial covenants under the various debt agreements. As at March 31, 2018, the Company was compliant with all of these covenants.

Subsequent to March 31, 2018, the Company has renegotiated an agreement with a syndicate of lenders to extend Just Energy’s credit facility for an additional two years to September 1, 2020. For further details please refer to Note 34 to the consolidated financial statements.

(b)

On February 22, 2018, Just Energy issued $100 million of convertible unsecured senior subordinated debentures (the “6.75% $100 million convertible debentures”). The 6.75% $100 million convertible debentures bear interest at an annual rate of 6.75%, payable semi-annually in arrears on March 31 and September 30 in each year, and have a maturity date of March 31, 2023. Each $1,000 principal amount of the 6.75% $100 million convertible debentures is convertible at the option of the holder at any time prior to the close of business on the earlier of the maturity date and the last business day immediately preceding the date fixed for redemption into 112.3596 common shares of Just Energy, representing a conversion price of $8.90, subject to certain anti-dilution provisions. Holders who convert their debentures will receive accrued and unpaid interest 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 convertible debentures will not be redeemable at the option of the Company on or before March 31, 2021. After March 31, 2021 and prior to March 31, 2022, the 6.75% $100 million convertible debentures may 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 less than 30 days’ prior notice, at a price equal to their principal amount plus accrued and unpaid interest, provided that the weighted average trading price of the common shares of Just Energy on the Toronto Stock Exchange (the “TSX”) for the 20 consecutive trading days ending five trading days preceding the date on which the notice of redemption is given is at least 125% of the conversion price. On or after March 31, 2022, the 6.75% $100 million convertible debentures may 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 less than 30 days’ prior notice, at a price equal to their principal amount plus accrued and unpaid interest.

44.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

The conversion feature of the 6.75% $100 million convertible debentures has been accounted for as a separate component of shareholders’ equity in the amount of $9.7 million. Upon initial recognition of the convertible debentures, Just Energy recorded a deferred tax liability of $2.6 million and reduced the equity component of the convertible debentures by this amount. The remainder of the net proceeds of the 6.75% $100 million convertible debentures has been recorded as long-term debt, which is being accreted up to the face value of $100 million over the term of the 6.75% $100 million convertible debentures using an effective interest rate of 10.7%. If the 6.75% $100 million convertible debentures are converted into common shares, the value 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, 2018.

(c)

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

The 6.75% $160 million convertible debentures will not be redeemable at the option of the Company on or before December 31, 2019. After December 31, 2019 and prior to December 31, 2020, the 6.75% $160 million convertible debentures may 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 less than 30 days’ prior notice, at a price equal to their principal amount plus accrued and unpaid interest, provided that the weighted average trading price of the common shares of Just Energy on the Toronto Stock Exchange (the “TSX”) for the 20 consecutive trading days ending five trading days preceding the date on which the notice of redemption is given is at least 125% of the conversion price. On or after December 31, 2020, the 6.75% $160 million convertible debentures may 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 less than 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 convertible debentures has been accounted for as a separate component of shareholders’ equity in the amount of $8.0 million. Upon initial recognition of the convertible debentures, Just Energy recorded a deferred tax liability of $2.1 million and reduced the equity component of the convertible debentures by this amount. The remainder of the net proceeds of the 6.75% $160 million convertible debentures has been recorded as long-term debt, which is being accreted up to the face value of $160 million over the term of the 6.75% $160 million convertible debentures using an effective interest rate of 9.1%. If the 6.75% $160 million convertible debentures are converted into common shares, the value of the conversion will be reclassified to share capital along with the principal amount converted. No amounts of the 6.75% $160 million convertible debentures have been converted or redeemed as at March 31, 2018.

(d)

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

45.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

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 per common 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, elect to satisfy its obligation in cash equal to the market value of the underlying shares to be received.

As a result of the debt being denominated in a different functional currency than that of Just Energy, the conversion feature is recorded as a financial liability instead of a component of equity. Therefore, the conversion feature of the 6.5% convertible bonds has been accounted for as a separate financial liability with an initial value of US$8,517. The remainder of the net proceeds of the 6.5% convertible bonds has been recorded as long-term debt, which is being accreted up to the face value of $150.0 million over the term of the 6.5% convertible bonds using an effective interest rate of 8.8%. At each reporting period, the conversion feature is recorded at fair value with changes in fair value recorded through profit or loss. As at March 31, 2018, the fair value of this conversion feature is US$0.2 million and is included in other non-current financial liabilities. No amounts of the 6.5% convertible bonds have been converted or redeemed as at March 31, 2018.

(e)

In September 2011, Just Energy issued $100 million of convertible unsecured subordinated debentures (the “5.75% convertible debentures”), which was used to fund an acquisition. The 5.75% convertible debentures bear interest at an annual rate of 5.75%, payable semi-annually on March 31 and September 30 in each year, and have a maturity date of September 30, 2018. Each $1,000 principal amount of the 5.75% convertible debentures is convertible at the option of the holder at any time prior to the close of business on the earlier of the maturity date and the last business day immediately preceding the date fixed for redemption into 56.0 common shares of Just Energy, representing a conversion price of $17.85. On or after September 30, 2016, the 5.75% convertible debentures may 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 less than 30 days’ prior notice, at a price equal to their principal amount plus accrued and unpaid interest.

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

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

(f)

In May 2010, Just Energy issued $330 million of convertible extendible unsecured subordinated debentures (the “6.0% convertible debentures”). The 6.0% convertible debentures bear interest at a rate of 6.0% per annum payable semi-annually in arrears on June 30 and December 31, with an original maturity date of June 30, 2017.

46.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

On November 7, 2016, Just Energy redeemed $225 million of the 6.0% convertible debentures. Of the amount paid, $222 million was recorded as a reduction in the liability component of the 6.0% convertible debentures, a non-cash loss on early redemption of $3.1 million was classified as finance costs, and $12.9 million was recorded as an increase in contributed surplus. On February 21, 2017, Just Energy redeemed $94.6 million of the 6.0% convertible debentures. Of the amount paid, $93.4 million was recorded as a reduction in the liability component of the 6.0% convertible debentures, a non-cash loss on early redemption of $1.3 million was classified as finance costs, and $5.4 million was recorded as an increase in contributed surplus.

(g)

The senior unsecured note was originally issued in the amount of $105 million bearing interest at 9.75% and maturing in June 2018. Just Energy early redeemed $25 million on March 31, 2016 and June 30, 2016, respectively, with the remaining $55 million repaid on October 5, 2016.

20.

PROVISIONS

	2018			2017
Cost
Balance, beginning of year	$	8,215		$	17,989
Provisions reversed and used during the year		(3,323	)		(10,602	)
Unwinding of discount		-			389
Foreign exchange impact		(178	)		439
Balance, end of year	$	4,714		$	8,215

Legal proceedings

In March 2012, Davina Hurt and Dominic Hill filed a lawsuit against Commerce Energy Inc., Just Energy Marketing Corp. and the Company (collectively referred to as “Just Energy”) in the Ohio Federal Court claiming entitlement to payment of minimum wage and overtime under Ohio wage claim laws and the federal Fair Labor Standards Act (“FLSA”) on their own behalf and similarly situated door-to-door sales representatives who sold for Commerce Energy Inc. in certain regions of the United States. The Court granted the plaintiffs’ request to certify the lawsuit as a class action. Approximately 1,800 plaintiffs opted into the federal minimum wage and overtime claims, and approximately 8,000 plaintiffs were certified as part of the Ohio state overtime claims. A jury trial on the liability phase was completed on October 6, 2014. The jury refused to find a willful violation by Just Energy but reached a verdict that supports the plaintiffs’ class and collective action that certain individuals were not properly classified as outside salespeople in order to qualify for an exemption under the minimum wage and overtime requirements pursuant to the FLSA and Ohio wage and hour laws. Just Energy disagrees with the result of the October 2014 trial and is of the opinion that it is not supported by existing law and precedent. On January 9, 2015, the Court struck the plaintiffs’ damage expert report. A separate damages phase on contested matters is scheduled for trial by the end of May 2018. Potential amounts owing have yet to be determined. Just Energy’s appeal opportunities will remain open after conclusion of the damages phase. Just Energy strongly believes it complied with the law and continues to vigorously defend against the claims.

47.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

In August 2013, Levonna Wilkins, a former door-to-door independent contractor for Just Energy Marketing Corp. (“JEMC”), filed a lawsuit against Just Energy Illinois Corp., Commerce Energy Inc., JEMC and the Company (collectively referred to as “Just Energy”) in the Illinois Federal District Court claiming entitlement to payment of minimum wage and overtime under Illinois wage claim laws and the FLSA on her own behalf and similarly situated door-to-door sales representatives who sold in Illinois. On March 13, 2015, the Court granted Wilkins’ request to certify the lawsuit as a class action to include a class made up of Illinois sales representatives who sold for Just Energy Illinois Corp. and Commerce Energy Inc. On March 22, 2016, Just Energy’s summary judgment motion to dismiss Wilkins’ claims was denied. On June 16, 2016, the Court granted Just Energy’s motion for reconsideration which objected to Wilkins’ class definition and revised the definition to exclude sales representatives who sold for Commerce Energy Inc. Certain class plaintiffs were dismissed by agreement of the parties due to failure to appear at deposition or failure to fit within the revised class definition. Motion for decertification of the class was filed and remains pending and under review with the Court. Just Energy strongly believes it complied with the law and continues to vigorously contest this matter.

In March 2015, Kevin Flood, a former door-to-door independent contractor for Just Energy Marketing Corp., filed a lawsuit against JEMC, Just Energy New York Corp. and the Company (collectively referred to as “Just Energy”) in New York Federal District Court (Southern District) claiming entitlement to payment of minimum wage and overtime under New York wage claim laws and the FLSA on his own behalf and similarly situated door-to-door sales representatives who sold in New York. On January 25, 2016, the Court granted Flood’s request to certify the lawsuit as a class action for the FLSA claims to include a class made up of New York sales representatives who sold for Just Energy New York. 167 individuals opted in to the FLSA class. Flood also filed a request to certify the lawsuit as a class action for alleged violations of the New York wage claim laws. On January 20, 2017, the Court granted Just Energy’s motion for summary judgment dismissing Flood’s claims and denied the motion to certify the class action. On February 16, 2017, Flood and opt-in plaintiffs filed an appeal of the dismissal of the Federal District Court’s order to the Court of Appeals for the Second Circuit. Appellate oral argument was held on February 20, 2018 and the review remains pending with the Court. Just Energy strongly believes it complied with the law and will vigorously contest the appeal of the dismissal.

In May 2015, Kia Kordestani, a former door-to-door independent contractor (“IC”) sales representative for Just Energy Corp., filed a lawsuit against Just Energy Corp., Just Energy Ontario L.P. and the Company (collectively referred to as “Just Energy”) in the Superior Court of Justice, Ontario, claiming status as an employee and seeking benefits and protections of the Employment Standards Act such as minimum wage, overtime pay, and vacation and public holiday pay on his own behalf and similarly situated door-to-door sales representatives who sold in Ontario. On Just Energy’s request, Mr. Kordestani was removed as a plaintiff but replaced with Haidar Omarali, also a former door-to-door sales representative. In August 2015, Omarali filed a motion to certify a proposed class action of door-to-door sales representatives, and the Court set a hearing for June 21, 2016. The Court issued its certification decision on July 27, 2016, which granted Omarali’s request for certification with certain changes. Importantly, the Court refused to certify Omarali’s request for damages on an aggregate basis, finding that any alleged class member damages “cannot be determined without proof by individual class members”, and the Court left any further resolution on this issue to the common issues trial judge. The Court also refused to certify Omarali’s request for the option of punitive damages against Just Energy and found that there was no evidence that Just Energy’s conduct justified a punitive damages question, largely because the evidence presented showed that over the years Just Energy was “reassured that their sales agents were indeed ICs, not employees” by “various administrative agencies including the Canada Revenue Agency, the Workplace Safety and Insurance Board, and at least on one occasion before an employment officer of the “Employment Standards Act”. Examinations are being held during 2018. No trial date has been scheduled. Just Energy strongly believes it complied with the law and continues to vigorously contest this matter.

48.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

21.

INCOME TAXES

(a)

Tax expense

	2018			2017
Current tax expense	$	2,555		$	27,123
Deferred tax expense (benefit)
Origination and reversal of temporary differences	$	129,177		$	152,945
Benefit arising from previously unrecognized tax loss or temporary difference		(111,058	)		(136,837	)
Deferred tax expense		18,119			16,108
Provision for income taxes	$	20,674		$	43,231

(b)

Reconciliation of the effective tax rate

The provision for income taxes represents an effective rate different than the Canadian corporate statutory rate of 26.50% (2017 – 26.50%).

	2018			2017
Income before income taxes	$	539,248		$	514,114
Combined statutory Canadian federal and provincial income tax rate		26.50	%		26.50	%
Income tax expense based on statutory rate	$	142,901		$	136,240
Increase (decrease) in income taxes resulting from:
Benefit of mark-to-market loss and other temporary differences not recognized	$	(111,058	)	$	(136,837	)
Variance between combined Canadian tax rate and the tax rate applicable to foreign earnings		1,000			40,396
Other permanent items		(12,169	)		3,432
Total income tax expense	$	20,674		$	43,231

(c)

Recognized deferred tax assets and liabilities

Recognized deferred tax assets and liabilities are attributed to the following:

	2018			2017
Mark-to-market losses on derivative instruments	$	17,580		$	28,667
Tax losses and excess of tax basis over book basis		78,825			9,893
Total deferred tax asset		96,405			38,560
Offset of deferred taxes		(93,873	)		(17,292	)
Net deferred tax asset	$	2,532		$	21,268

Partnership income deferred for tax purposes	$	(6,249	)	$	(8,281	)
Mark-to-market gains on derivative instruments		(54,158	)		(391	)
Book to tax differences on other assets		(30,480	)		(4,476	)
Convertible debentures		(2,986	)		(4,144	)
Total deferred tax liability		(93,873	)		(17,292	)
Offset of deferred taxes		93,873			17,292

49.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

(d)

Movement in deferred tax balances

	Balance April 1, 2017			Recognized in profit or loss			Recognized in OCI			Balance March 31, 2018
Partnership income deferred for tax	$	(8,281	)	$	2,032		$	-		$	(6,249	)
Book to tax differences on other assets		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

	Balance April 1, 2016			Recognized in profit or loss			Recognized in OCI			Balance March 31, 2017
Partnership income deferred for tax	$	(22,306	)	$	14,025		$	-		$	(8,281	)
Book to tax differences - customer contracts		(5,139	)		5,139			-			-
Book to tax differences on other assets		19,181			(11,557	)		(2,207	)		5,417
Mark-to-market (gains) losses on derivative instruments		50,481			(22,205	)		-			28,276
Convertible debentures		(2,634	)		(1,510	)		-			(4,144	)
	$	39,583		$	(16,108	)	$	(2,207	)	$	21,268

(e)

Unrecognized deferred tax assets

Deferred tax assets not reflected as at March 31 are as follows:

	2018		2017
Losses available for carryforward	$	-	$	55,745
Mark-to-market on losses on derivative instruments		-		86,767
Excess of tax over book basis		15,824		14,718
Alternative minimum tax credit carryforward		-		2,068

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

	2018
2029	$	-
2030		-
2031 and thereafter		138,372
Total	$	138,372

50.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

22.

SHAREHOLDERS’ CAPITAL

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

On February 7, 2017, Just Energy closed its underwritten public offering of 4,000,000 of its 8.50% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Shares (the “preferred shares”) at a public offering price of US$25.00 per preferred share, for gross proceeds of US$100 million. In addition, concurrently with the closing of the public offering of preferred shares, Just Energy closed a non-brokered private placement of 40,000 preferred shares at a price of US$25.00 per preferred share, for gross proceeds of US$1 million.

Just Energy had the ability to make a normal course issuer bid (“NCIB”) to purchase for cancellation a portion of the outstanding 5.75% convertible debentures as well as the Just Energy common shares up to March 16, 2018. Under each NCIB, Just Energy could have purchased debentures and common shares representing 10% of the outstanding public float at close of business February 28, 2017 up to daily and total limits. For the year ended March 31, 2018, Just Energy had purchased $11.9 million of common shares through the NCIB program, compared to $nil, purchased in the prior year.

Details of issued and outstanding shareholders’ capital are as follows:

	Year ended						Year ended
	March 31, 2018						March 31, 2017
	Shares			Amount			Shares			Amount
Common shares:

Issued and outstanding
Balance, beginning of year		147,013,538		$	1,070,076			147,183,778		$	1,069,434
Share-based awards exercised		1,643,156			11,954			679,760			7,191
Acquisition of a subsidiary		1,415,285			8,966			-			-
Repurchase and cancellation of shares		(1,677,827	)		(11,941	)		(850,000	)		(6,549	)
Balance, end of year		148,394,152		$	1,079,055			147,013,538		$	1,070,076

Preferred shares:

Issued and outstanding
Balance, beginning of year		4,040,000		$	128,363			-		$	-
Shares issued for cash		283,300			9,260			4,040,000			132,973
Preferred shares issuance cost		-			(852	)		-			(4,610	)
Balance, end of year		4,323,300		$	136,771			4,040,000		$	128,363

Shareholders' capital		152,717,452		$	1,215,826			151,053,538		$	1,198,439

51.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

23.

SHARE-BASED COMPENSATION PLANS

(a)

Stock option plan

Just Energy may grant awards under its 2010 share option plan (formerly the 2001 Unit Option Plan) to directors, officers, full-time employees and service providers (non-employees) of Just Energy and its subsidiaries and affiliates. In accordance with the share option plan, Just Energy may grant options to a maximum of 11,300,000 shares. As at March 31, 2018, there were 814,166 options still available for grant under the plan. Of the options issued, 500,000 options remain outstanding as at March 31, 2018 with an exercise price of $7.88. The exercise price of the share options equals the closing market price of the Company’s shares on the last business day preceding the grant date. The share options vest over periods ranging from three to five years from the grant date and expire after five or ten years from the grant date. There were no new grants during fiscal 2018.

(b)

Restricted share grants

Just Energy grants awards under the 2010 Restricted Share Grants Plan (formerly the 2004 unit appreciation rights, “UARs”) in the form of fully paid RSGs to senior officers, employees and service providers of its subsidiaries and affiliates. As at March 31, 2018, there were 3,004,624 RSGs (2017 – 4,107,830) still available for grant under the plan. Of the RSGs issued, 1,635,882 remain outstanding as at March 31, 2018 (2017 – 1,668,780). Except as otherwise provided, (i) the RSGs vest from one to five years from the grant date providing, in most cases, on the applicable vesting date the RSG grantee continues as a senior officer, employee or service provider of Just Energy or any affiliate thereof; (ii) the RSGs expire no later than ten years 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.

There are 420,000 RSGs granted to senior management that do not receive dividend payments. In addition to a continued employment condition for vesting, there are certain share price targets that must be met.

RSGs available for grant

	2018			2017
Balance, beginning of year		4,107,830			4,591,312
Less: Granted		(1,716,743	)		(676,270	)
Add: Cancelled/forfeited		613,537			192,788
Balance, end of year		3,004,624			4,107,830

The average grant date fair value of RSGs granted in the year was $6.94 (2017 - $7.91).

(c)

Performance bonus grants

Just Energy grants awards under the 2013 performance bonus incentive plan (the “PBG Plan”) in the form of fully paid PBGs to senior officers, employees, consultants and service providers of its subsidiaries and affiliates. As at March 31, 2018, there were 2,270,480 (2017 – 2,650,513) PBGs still available for grant under the PBG Plan. Of the PBGs issued, 1,050,094 remain outstanding as at March 31, 2018 (2017 –1,158,025). Except as otherwise 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 continues as a senior officer, employee, consultant or service provider of Just Energy or any affiliate thereof; (ii) the PBGs expire no later than three years from the grant date; (iii) a holder of PBGs is entitled to payments at the same rate as dividends paid to JEGI shareholders; and (iv) when vested, Just Energy, at its sole discretion, shall have the option of settling payment for the PBGs, to which the holder is entitled in the form of either cash or in common shares.

52.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

PBGs available for grant

	2018			2017
Balance, beginning of year		2,650,513			2,842,409
Less: Granted		(812,787	)		(278,680	)
Add: Cancelled/forfeited		432,754			86,784
Balance, end of year		2,270,480			2,650,513

The average grant date fair value of PBGs granted in the year was $7.08 (2017 - $7.96).

(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 on the basis that each director is required to annually receive 15% of their compensation entitlement in DSGs and/or common shares and may elect to receive all or any portion of the balance of their annual compensation in DSGs and/or common shares. The holders of DSGs and/or common shares are also granted additional DSGs/common shares on a monthly basis equal to the monthly dividends paid to the shareholders of Just Energy. The DSGs vest on the earlier of the date of the director's resignation or three years following the date of grant and expire ten years following the date of grant. As at March 31, 2018, there were 77,405 DSGs (2017 – 117,936) available for grant under the plan. Of the DSGs issued, 114,949 DSGs (2017 – 93,506) remain outstanding as at March 31, 2018.

DSGs available for grant

	2018			2017
Balance, beginning of year		117,936			147,430
Less: Granted		(40,531	)		(29,494	)
Balance, end of year		77,405			117,936

The weighted average grant date fair value of DSGs granted in the year was $6.32 (2017 - $7.54).

24.

REPORTABLE BUSINESS SEGMENTS

Just Energy’s reportable segments include the following: Consumer Energy and Commercial Energy. Just Energy has aggregated the operating segments into these reportable segments on the basis that the operating segments share economic characteristics. These characteristics include the nature of the product and services sold, the distribution methods, and the type of customer class and regulatory environment. The Consumer Energy segment includes cash and cash equivalents, as well as the long-term debt.

Transactions between operating segments are in the normal course of operations and are recorded at the exchange amount. Allocations made between segments for shared assets or allocated expenses are based on the number of customers in the respective segments.

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

53.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

For the year ended March 31, 2018

	Consumer		Commercial		Consolidated
	division		division

Sales	$	2,235,093	$	1,391,477	$	3,626,570
Gross margin		487,591		153,336		640,927
Administrative expenses		157,513		37,186		194,699
Selling and marketing expenses		157,997		75,043		233,040
Depreciation of property, plant and equipment		3,775		340		4,115
Amortization of intangible assets		12,707		3,992		16,699
Other operating expenses		69,884		4,800		74,684
Operating profit for the year	$	85,715	$	31,975	$	117,690
Finance costs						(55,972	)
Change in fair value of derivative instruments and other						474,356
Other income						3,174
Provision for income taxes						(20,674	)
Profit for the year					$	518,574
Capital expenditures	$	32,252	$	3,524	$	35,776
Total goodwill	$	147,252	$	153,421	$	300,673
Total assets	$	1,180,741	$	466,068	$	1,646,809
Total liabilities	$	875,587	$	540,479	$	1,416,066

For the year ended March 31, 2017

	Consumer		Commercial		Consolidated
	division		division

Sales	$	2,083,833	$	1,673,221	$	3,757,054
Gross margin		512,919		183,052		695,971
Administrative expenses		129,882		38,551		168,433
Selling and marketing expenses		142,883		83,425		226,308
Depreciation of property, plant and equipment		6,259		320		6,579
Amortization of intangible assets		13,637		2,304		15,941
Other operating expenses		51,914		10,203		62,117
Operating profit for the year	$	168,344	$	48,249	$	216,593
Finance costs						(78,077	)
Change in fair value of derivative instruments and other						374,791
Other income						807
Provision for income taxes						(43,231	)
Profit for the year					$	470,883
Capital expenditures	$	17,681	$	8,708	$	26,389
Total goodwill	$	146,669	$	142,532	$	289,201
Total assets	$	712,899	$	525,056	$	1,237,955
Total liabilities	$	1,214,561	$	172,720	$	1,387,281

54.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

Sales from external customers

The revenue is based on the location of the customer.

	For the		For the
	year ended		year ended
	March 31, 2018		March 31, 2017
Canada	$	414,183	$	476,208
United States		2,465,794		2,793,004
International		746,593		487,842
Total	$	3,626,570	$	3,757,054

Non-current assets

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

	As at March 31, 2018		As at March 31, 2017
Canada	$	201,985	$	189,911
United States		207,147		182,840
International		11,687		6,918
Total	$	420,819	$	379,669

25.

OTHER EXPENSES

(a)

Other operating expenses

	For the		For the
	year ended		year ended
	March 31, 2018		March 31, 2017
Amortization of intangible assets	$	16,699	$	15,941
Depreciation of property, plant and equipment		4,115		6,579
Bad debts expense		56,331		56,041
Share-based compensation		18,353		6,076
	$	95,498	$	84,637

(b)

Amortization and energy costs included in cost of sales in the consolidated statements of income

	For the		For the
	year ended		year ended
	March 31, 2018		March 31, 2017
Amortization	$	3,116	$	2,974
Direct energy costs and other		2,982,527		3,058,109
	$	2,985,643	$	3,061,083

55.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

(c)

Employee benefits expense

	For the		For the
	year ended		year ended
	March 31, 2018		March 31, 2017
Wages, salaries and commissions	$	237,867	$	206,499
Benefits		24,100		19,946
	$	261,967	$	226,445

26.

IMPAIRMENT TESTING OF GOODWILL AND INTANGIBLE ASSETS WITH INDEFINITE LIVES

Goodwill acquired through business combinations and intangible assets with indefinite lives have been allocated to one of five CGUs. These units are the U.K. Consumer, North America Consumer, U.K. Commercial, and North America Commercial and the Germany division. The goodwill associated with the EdgePower acquisition was not allocated to an operating segment for the purposes of impairment test as at March 31, 2018.

For impairment testing, goodwill and brand have been allocated as follows as at March 31, 2018:

	Consumer division				Commercial division				Germany		Total
	North America		UK		North America		UK
Goodwill	$	128,502	$	13,355	$	153,421	$	-	$	5,395	$	300,673
Brand		15,405		-		14,800		-		-		30,205
	$	143,907	$	13,355	$	168,221	$	-	$	5,395	$	330,878

For the year ended March 31, 2017, goodwill and brand were allocated to the following operating and reporting segments:

	Consumer		Commercial		Total
	2017		2017		2017
Goodwill	$	146,669	$	142,532		289,201
Brand		16,491		14,663		31,154
	$	163,160	$	157,195		320,355

Just Energy has historically performed its annual impairment test using a value-in-use, discounted cash flow projection model. The change in the goodwill impairment model was made for the purpose of reducing the amount of unobservable inputs and did not avoid or delay an impairment charge. Just Energy considers the relationship between its market capitalization and its book value, among other factors, when reviewing for indicators of impairment. As at March 31, 2018, the market capitalization of Just Energy was above the book value of its equity.

The recoverable amount of each of the CGUs has been determined based on a fair value less costs of disposal model using actual EBITDA of the operating segment multiplied by the entity’s EBITDA multiple. The EBITDA multiple and the EBITDA of the CGU that has been utilized in the fair value less costs to disposal model are consistent with external sources of information and are considered a Level 2 input within the fair value hierarchy.

The EBITDA multiple is derived from the expected return on investment by Just Energy’s investors which equated to 8.5 for the year ended March 31, 2018. A 5% decrease in the EBITDA multiple would not have an impact on the results of the impairment test.

56.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

27.

EARNINGS PER SHARE

	For the		For the
	year ended		year ended
	March 31, 2018		March 31, 2017
BASIC EARNINGS PER SHARE
Profit as per consolidated statement of income	$	509,276	$	446,412
Dividend to preferred shareholders - net of tax		8,364		1,218
Earnings available to shareholders	$	500,912	$	445,194
Basic weighted average shares outstanding		147,039,737		147,589,186
Basic earnings per share available to shareholders	$	3.41	$	3.02

DILUTED EARNINGS PER SHARE
Earnings available to shareholders		500,912		445,194
Adjustment for dilutive impact of convertible debentures		22,407		12,776
Adjusted earnings available to shareholders	$	523,319	$	457,970
Basic weighted average shares outstanding		147,039,737		147,589,186
Dilutive effect of:
Restricted share and performance bonus grants		2,924,587		2,945,119
Deferred share grants		95,536		81,176
Convertible debentures		49,979,055		38,804,494
Shares outstanding on a diluted basis		200,038,914		189,419,975
Diluted earnings per share available to shareholders	$	2.62	$	2.42

28.

CAPITAL DISCLOSURE

Just Energy defines capital as shareholders’ equity (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 flow for dividend payments to shareholders.

Just Energy manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. The Board of Directors does not establish quantitative return on capital criteria for management, but rather promotes year-over-year sustainable 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 debt, and as at March 31, 2018 and 2017, all of these covenants have been met.

57.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

29.

RELATED PARTY TRANSACTIONS AND KEY MANAGEMENT PERSONNEL REMUNERATION

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

Subsidiaries

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

Key management personnel

Just Energy’s key management personnel and persons connected with them, are also considered to be related parties for disclosure purposes. Key management personnel are defined as those individuals having authority and responsibility for planning, directing and controlling the activities of Just Energy and comprise of the Chair of the Board of Directors, the Co-Chief Executive Officers and the Chief Financial Officer.

During the years ended March 31, 2018 and 2017, Just Energy recorded the following as an expense related to these individuals:

	As at		As at
	March 31, 2018		March 31, 2017
Salaries and benefits	$	8,939	$	7,199
Share-based compensation, net		3,738		3,223
	$	12,677	$	10,422

As at March 31, 2018, key management personnel held approximately 1,774,094 RSGs/PBGs (2017 – 2,126,745).

30.

DIVIDENDS PAID

For the year ended March 31, 2018, dividends of $0.50 (2017 - $0.50) per common share were declared by Just Energy. These dividends amounted to $74,881 (2017 - $75,094), and were approved by the Board of Directors and were paid out during the year.

For the year ended March 31, 2018, dividends of US$2.125 (2017 - $0.3128) per preferred share were declared by Just Energy. These dividends amounted to $11,380 (2017 - $1,657), and were approved by the Board of Directors and were paid out during the year.

58.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

31.

COMMITMENTS AND GUARANTEES

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

As at March 31, 2018

	Less than 1 year		1-3 years		4-5 years		More than 5 years		Total
Premises and equipment leasing	$	4,874	$	7,388	$	6,691	$	7,302	$	26,255
Gas, electricity and non-commodity contracts		1,867,383		1,202,940		69,658		31,041		3,171,022
	$	1,872,257	$	1,210,328	$	76,349	$	38,343	$	3,197,277

Just Energy has entered into leasing contracts 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 customers to supply gas and electricity. These contracts have various expiry dates and renewal options.

(a)

Surety bonds and letters of credit

Pursuant to separate arrangements with Westchester Fire Insurance Company, Travelers Casualty and Surety Company of America, Berkley Insurance Company 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. Such surety bond postings are required in order to operate in certain states or markets. Total surety bonds issued as at March 31, 2018 amounted to $56.5 million.

As at March 31, 2018, Just Energy had total letters of credit outstanding in the amount of $113.4 million (Note 19(a)).

(b)

Officers and directors

Corporate indemnities have been provided by Just Energy to all directors and certain officers of its subsidiaries and affiliates for various items including, but not 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 mitigate the cost of any potential future suits or actions. Each indemnity, subject to certain exceptions, applies for so long as the indemnified person is a director or officer of one of Just Energy’s subsidiaries and/or affiliates. The maximum amount of any potential future 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 favour of third parties, such as purchase and sale agreements, leasing agreements and transportation agreements. These guarantees may require Just Energy and/or its subsidiaries to compensate counterparties for losses incurred by the counterparties as a result of breaches in representation and regulation or as a result of litigation claims or statutory sanctions that may be suffered by the counterparty as a consequence of the transaction. The maximum payable under these guarantees is estimated to be $78.6 million.

59.

JUST ENERGY GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2018

(in thousands of Canadian dollars, except where indicated and per share amounts)

32.	ADJUSTMENTS REQUIRED TO REFLECT NET CASH RECEIPTS FROM GAS SALES

	2018			2017
Changes in:
Accrued gas receivable	$	459		$	(2,735	)
Gas delivered in excess of consumption		516			3,106
Accrued gas payable		(276	)		1,284
Deferred revenue		(3,575	)		(2,336	)
	$	(2,876	)	$	(681	)

33.	CHANGES IN NON-CASH WORKING CAPITAL

	As at			As at
	March 31, 2018			March 31, 2017
Accounts receivable and unbilled revenues	$	(108,900	)	$	18,069
Gas in storage		538			(9,282	)
Prepaid expenses and deposits		(15,534	)		3,361
Provisions		(3,501	)		(9,774	)
Trade and other payables		90,972			(25,130	)
	$	(36,425	)	$	(22,756	)

34.

SUBSEQUENT EVENTS

Subsequent to March 31, 2018, the Company has renegotiated an agreement with a syndicate of lenders that includes CIBC, National Bank of Canada, HSBC Bank Canada, JPMorgan Chase Bank N.A., Alberta Treasury Branches and Canadian Western Bank. In addition, Morgan Stanley Senior Funding, Inc., a subsidiary of Morgan Stanley Bank N.A., joined the syndicate. The agreement was finalized on April 18, 2018 and extends Just Energy’s credit facility for an additional two years to September 1, 2020. The facility size was increased to $352.5 million from $342.5 million, with an accordion for Just Energy to draw up to $370.0 million.

35.	COMPARATIVE CONSOLIDATED FINANCIAL STATEMENTS

Certain figures in the comparative consolidated financial statements have been reclassified from statements previously presented to conform to the presentation of the current year’s consolidated financial statements.

60.