exh99_3.htm

JUST ENERGY GROUP INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS AT

(unaudited in thousands of Canadian dollars)

	Notes		June 30, 2013			March 31, 2013
ASSETS
Non-current assets
Property, plant and equipment			$	270,450		$	258,003
Intangible assets				440,497			447,333
Contract initiation costs				60,752			58,446
Other non-current financial assets		7		28,963			31,305
Non-current receivables				10,448			11,046
Investments		6		9,090			9,000
Deferred tax asset				21,815			24,858
				842,015			839,991
Current assets
Inventory				6,518			6,073
Gas delivered in excess of consumption				1,055			5,224
Gas in storage				22,777			11,051
Current trade and other receivables				308,999			315,551
Accrued gas receivables				17,850			33,989
Unbilled revenues				114,777			129,166
Prepaid expenses and deposits				21,668			15,874
Other current assets		7		39,174			33,005
Corporate tax recoverable				9,966			9,761
Restricted cash				13,713			13,320
Cash and cash equivalents				33,895			38,498
				590,392			611,512
Assets classified as held for sale		5		73,276			77,439
				663,668			688,951
TOTAL ASSETS			$	1,505,683		$	1,528,942

DEFICIT AND LIABILITIES
Deficit attributable to equity holders of the parent
Deficit			$	(1,372,860	)	$	(1,300,280	)
Accumulated other comprehensive income		8		57,273			47,155
Shareholders’ capital		9		1,023,758			1,018,082
Equity component of convertible debentures				25,795			25,795
Contributed surplus				71,041			70,893
Shareholders’ deficit				(194,993	)		(138,355	)

Non-controlling interest				5,404			(702	)
TOTAL DEFICIT				(189,589	)		(139,057	)

Non-current liabilities
Long-term debt		10		813,015			795,224
Provisions				3,977			3,773
Deferred lease inducements				987			1,044
Other non-current financial liabilities		7		84,129			85,380
Deferred tax liability				32,142			31,327
				934,250			916,748
Current liabilities
Trade and other payables				299,431			301,820
Accrued gas payable				15,595			28,476
Deferred revenue				12,053			13,017
Income taxes payable				4,876			5,143
Current portion of long-term debt		10		167,727			162,474
Provisions				3,038			3,063
Other current financial liabilities		7		182,765			159,819
				685,485			673,812
Liabilities relating to assets classified as held for sale		5		75,537			77,439
				761,022			751,251
TOTAL LIABILITIES				1,695,272			1,667,999
TOTAL DEFICIT AND LIABILITIES			$	1,505,683		$	1,528,942

Commitments and Guarantees (Note 16)
See accompanying notes to the interim condensed consolidated financial statements

JUST ENERGY GROUP INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

FOR THE THREE MONTHS ENDED JUNE 30

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

	Notes			2013			2012
CONTINUING OPERATIONS
SALES		13		$	746,123		$	657,337
COST OF SALES		12	(b)		626,709			543,680
GROSS MARGIN					119,414			113,657
EXPENSES
Administrative expenses					36,020			33,838
Selling and marketing expenses					52,420			58,566
Other operating expenses		12	(a)		25,286			34,736
					113,726			127,140
Operating profit before the following					5,688			(13,483	)
Finance costs		10			(22,520	)		(16,310	)
Change in fair value of derivative instruments		7			(17,159	)		393,891
Proportionate share of loss from joint venture		6			(2,112	)		(1,159	)
Other income					491			2,302
Income (loss) before income taxes					(35,612	)		365,241
Provision for income taxes		11			4,158			32,697
PROFIT (LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS				$	(39,770	)	$	332,544

DISCONTINUED OPERATIONS
Loss for the period from discontinued operations		5			(2,179	)		(3,905	)
PROFIT (LOSS) FOR THE PERIOD				$	(41,949	)	$	328,639

Attributable to:
Shareholders of Just Energy				$	(41,824	)	$	328,472
Non-controlling interest					(125	)		167
PROFIT (LOSS) FOR THE PERIOD				$	(41,949	)	$	328,639


Earnings (loss) per share from continuing operations		14
Basic				$	(0.28	)	$	2.39
Diluted				$	(0.28	)	$	2.00
Earnings (loss) per share available to shareholders
Basic				$	(0.29	)	$	2.36
Diluted				$	(0.29	)	$	1.97

See accompanying notes to the interim condensed consolidated financial statements

JUST ENERGY GROUP INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE THREE MONTHS ENDED JUNE 30

(unaudited in thousands of Canadian dollars)

	Notes		2013			2012
Profit (loss) for the period			$	(41,949	)	$	328,639


Other comprehensive income (loss) to be reclassified to profit
or loss in subsequent periods:		8

Unrealized gain on translation of foreign operations				13,219			3,077

Amortization of deferred unrealized gain on discontinued hedges, net of
income taxes of $401 (2012 - $2,289)				(3,101	)		(9,292	)

Other comprehensive income (loss) to be reclassified to profit
or loss in subsequent periods, net of tax				10,118			(6,215	)

Total comprehensive income (loss) for the period, net of tax			$	(31,831	)	$	322,424


Total comprehensive income (loss) attributable to:

Shareholders of Just Energy			$	(31,706	)	$	322,257
Non-controlling interest				(125	)		167

Total comprehensive income (loss) for the period, net of tax			$	(31,831	)	$	322,424

See accompanying notes to the interim condensed consolidated financial statements

JUST ENERGY GROUP INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT

FOR THE THREE MONTHS ENDED JUNE 30

(unaudited in thousands of Canadian dollars)

	Notes			2013			2012
ATTRIBUTABLE TO THE SHAREHOLDERS
Accumulated earnings (deficit)
Accumulated earnings (deficit), beginning of period				$	87,496		$	(442,812	)
Profit (loss) for the period, attributable to the shareholders					(41,824	)		328,472
Accumulated earnings (deficit), end of period					45,672			(114,340	)

DIVIDENDS
Dividends, beginning of period					(1,387,776	)		(1,209,376	)
Dividends		15			(30,756	)		(44,390	)
Dividends, end of period					(1,418,532	)		(1,253,766	)
DEFICIT				$	(1,372,860	)	$	(1,368,106	)

ACCUMULATED OTHER COMPREHENSIVE INCOME		8
Accumulated other comprehensive income, beginning of period				$	47,155		$	70,293
Other comprehensive income (loss)					10,118			(6,215	)
Accumulated other comprehensive income, end of period				$	57,273		$	64,078

SHAREHOLDERS’ CAPITAL		9
Shareholders’ capital, beginning of period				$	1,018,082		$	993,181
Share-based compensation awards exercised					1,722			442
Dividend reinvestment plan					3,954			-
Shareholders’ capital, end of period				$	1,023,758		$	993,623

EQUITY COMPONENT OF CONVERTIBLE DEBENTURES
Balance, beginning of period				$	25,795		$	25,795
Balance, end of period				$	25,795		$	25,795

CONTRIBUTED SURPLUS
Balance, beginning of period				$	70,893		$	62,147
Add: Share-based compensation awards		12	(a)		1,837			3,232
Non-cash deferred share grant distributions					33			43
Less: Share-based awards exercised					(1,722	)		(442	)
Balance, end of period				$	71,041		$	64,980

NON-CONTROLLING INTEREST
Balance, beginning of period				$	(702	)	$	(637	)
Investment by minority shareholder		10	(h)		6,117			-
Foreign exchange impact on non-controlling interest and adjustment to acquisition value					114			5
Profit (loss) attributable to non-controlling interest					(125	)		167
Balance, end of period				$	5,404		$	(465	)
TOTAL DEFICIT				$	(189,589	)	$	(220,095	)
See accompanying notes to the interim condensed consolidated financial statements

JUST ENERGY GROUP INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED JUNE 30

(unaudited in thousands of Canadian dollars)

Net inflow (outflow) of cash related to the following activities	Notes			2013			2012

OPERATING
Income (loss) from continuing operations before income taxes				$	(35,612	)	$	365,241
Items not affecting cash
Amortization of intangible assets and related supply contracts					12,538			21,773
Amortization of contract initiation costs					5,612			3,338
Amortization of property, plant and equipment					1,079			1,091
Amortization included in cost of sales					3,877			2,060
Share-based compensation		12	(a)		1,837			3,232
Financing charges, non-cash portion					3,476			2,502
Other					(60	)		18
Change in fair value of derivative instruments					17,159			(393,891	)
Cash flows used in operating activities of discontinued operations					(591	)		(2,152	)
					44,927			(362,029	)
Adjustment required to reflect net cash receipts from gas sales					5,843			(829	)

Changes in non-cash working capital					6,528			21,231
					21,686			23,614
Income tax paid					(312	)		(1,604	)
Cash inflow from operating activities					21,374			22,010

INVESTING
Purchase of property, plant and equipment					(13,642	)		(24,327	)
Purchase of intangible assets					(2,134	)		(1,542	)
Receipts from (advances of) long-term receivables					598			(818	)
Contract initiation costs					(8,107	)		(8,164	)
Cash flows used in investing activities of discontinued operations					(86	)		(1	)
Cash outflow from investing activities					(23,371	)		(34,852	)

FINANCING
Dividends paid					(26,769	)		(44,348	)
Issuance of long-term debt					126,448			66,502
Repayment of long-term debt					(107,489	)		(8,684	)
Debt issuance costs					(1,636	)		-
Investment made by minority shareholder					6,117			-
Cash flows provided by financing activities of discontinued operations					759			3,633
Cash inflow (outflow) from financing activities					(2,570	)		17,103
Effect of foreign currency translation on cash balances					(36	)		(85	)
Net cash inflow (outflow)					(4,603	)		4,176
Cash and cash equivalents reclassified to assets held for sale					-			(396	)
Cash and cash equivalents, beginning of period					38,498			53,220
Cash and cash equivalents, end of period				$	33,895		$	57,000


Supplemental cash flow information:
Interest paid				$	24,000		$	16,100

See accompanying notes to the interim condensed consolidated financial statements

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

1. ORGANIZATION

Just Energy Group Inc. (“JEGI”, “Just Energy” or the “Company”) is a 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 interim condensed consolidated financial statements consist of Just Energy and its subsidiaries and affiliates. The interim condensed consolidated financial statements were approved by the Board of Directors on August 8, 2013.

2.	OPERATIONS

Just Energy’s business involves the sale of natural gas and/or electricity to residential and commercial customers under long-term fixed-price, price-protected or variable-priced contracts. Just Energy markets its gas and electricity contracts in Canada, the U.S. and the United Kingdom, under the following trade names: Just Energy, Hudson Energy, Commerce Energy, Amigo Energy, Tara Energy and Pioneer Energy. 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.

Just Energy also offers green products through its JustGreen programs. The electricity JustGreen product offers customers the option of having all or a portion of their electricity sourced from renewable green sources such as wind, run of the river hydro or biomass. The gas JustGreen product offers carbon offset credits that allow customers to reduce or eliminate the carbon footprint of their homes or businesses. Additional green products that allow customers in certain jurisdictions to offset their carbon footprint without purchasing commodity products, can be offered in all states and provinces and are not dependent on energy deregulation.

In addition, Just Energy sells and rents high efficiency and tankless water heaters, air conditioners and furnaces to Ontario and Quebec residents through a subsidiary operating under the trade name National Home Services (“NHS”). Just Energy also operates a network marketing division under the trade name Momentis. Just Energy’s subsidiary, Hudson Energy Solar Corp. (“HES”), and its subsidiaries, provide a solar project development platform operating in New Jersey, Pennsylvania and Massachusetts, under the trade name Hudson Energy Solar. Through its subsidiary, Terra Grain Fuels, Inc. (“TGF”), Just Energy produces and sells wheat-based ethanol. As at March 31, 2013, TGF has been classified as held for sale; see Note 5.

3.	SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of compliance

These unaudited interim condensed consolidated financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”). Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the IASB, have been omitted or condensed.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

(b) Basis of presentation and interim reporting

These unaudited interim condensed consolidated financial statements should be read in conjunction with and follow the same accounting policies and methods of application as those used in the audited consolidated financial statements for the years ended March 31, 2013 and 2012, except for the adoption of new standards and interpretations effective April 1, 2013 as disclosed in Note 3(d).

The unaudited interim condensed consolidated financial statements are presented in Canadian dollars, the functional currency of Just Energy, and all values are rounded to the nearest thousand.

The unaudited interim operating results are not necessarily indicative of the results that may be expected for the full year ending March 31, 2014, due to seasonal variations resulting in fluctuations in quarterly results. Gas consumption by customers is typically highest in October through March and lowest in April through September. Electricity consumption is typically highest in January through March and July through September. Electricity consumption is lowest in October through December and April through June. For the 12 months ended June 30, 2013, the consumer and commercial segments, where the seasonal impact is recognized, reported gross margin of $482,927 (2012-$490,991) and profit of $237,601 (2012-$209,728).

The unaudited interim condensed consolidated financial statements include the accounts of Just Energy and its directly or indirectly owned subsidiaries and affiliates as at June 30, 2013. Subsidiaries and affiliates are consolidated from the date of acquisition and control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries and affiliates are prepared for the same reporting period as Just Energy, using consistent accounting policies. All intercompany balances, sales, expenses and unrealized gains and losses resulting from intercompany transactions are eliminated on consolidation.

(d) New standards, interpretations and amendments adopted by the Company during the quarter

The following new accounting standards applied or adopted had no material impact on the interim condensed consolidated financial statements. Please see Note 4 (II) – ACCOUNTING STANDARDS ISSUED BUT NOT YET APPLIED in the audited consolidated financial statements for the years ended March 31, 2013 and 2012 for further details.

IAS 1, Presentation of Items of Other Comprehensive income – Amendments to IAS 1
IFRS 7, Disclosures – Offsetting Financial Assets and Financial Liabilities – Amendments to IFRS 7
IFRS 10, Consolidated Financial Statements
IFRS 11, Joint Arrangements, and IAS 28, Investment in Associates and Joint Ventures
IFRS 12, Disclosure of Interests in Other Entities
IFRS 13, Fair Value Measurement
IAS 28, Investments in Associates and Joint Ventures
IAS 32, Offsetting Financial Assets and Financial Liabilities – Amendments to IAS 32
IAS 34, Interim financial reporting and segment information for total assets and liabilities

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

4. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the unaudited interim condensed 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 unaudited interim condensed consolidated financial statements relate to the following:

Impairment of non-financial assets

Just Energy’s impairment test is based on value-in-use calculations that use a discounted cash flow model. The cash flows are derived from the budget for the next five years and are sensitive to the discount rate used as well as the expected future cash inflows and the growth rate used for extrapolation purposes.

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 asset’s future economic benefits to be consumed by Just Energy.

Provisions for litigation

The State of California has filed a number of complaints to the Federal Energy Regulatory Commission (“FERC”) against many suppliers of electricity, including Commerce, a subsidiary of Just Energy, with respect to events stemming from the 2001 energy crisis in California. Pursuant to the complaints, the State of California is challenging the FERC’s enforcement of its market-based rate system. At this time, the likelihood of damages or recoveries and the ultimate amounts, if any, with respect to this litigation are not certain; however, an estimated amount has been recorded in these unaudited interim condensed consolidated financial statements as at June 30, 2013. In the general course of operations, Just Energy has made additional provisions for litigation matters that have arisen.

Trade receivables

Just Energy reviews its individually significant receivables at each reporting date to assess whether an impairment loss should be recorded in the interim condensed consolidated statements of income (loss). In particular, judgment by management is required in the estimation of the amount and timing of future cash flows when determining the impairment loss. In estimating these cash flows, Just Energy makes judgments about the borrower’s financial situation and the net realizable 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.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

Fair value of financial instruments

Where the fair value of financial assets and financial liabilities recorded in the interim condensed consolidated statements of financial position cannot be derived from active markets, they are determined using valuation techniques including discounted cash flow models. 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 7 for further details about the assumptions as well as sensitivity analysis.

5. DISCONTINUED OPERATIONS

In March 2013, Just Energy formally commenced the process to dispose of TGF. The business of TGF has been operating in an unpredictable product environment, making it difficult for management to derive real growth and profitability from the segment. In addition, it has been viewed as a non-core business since it was acquired with the Universal Energy acquisition in 2009. The disposal of TGF is due to be completed within the current fiscal year. As at June 30, 2013, TGF is classified as held for sale and as a discontinued operation.

The results of TGF for the three months ended June 30 are presented below:

	2013			2012

Sales	$	30,774		$	23,537
Cost of sales		29,188			22,935
Gross margin		1,586			602

Expenses
Administrative expenses		1,752			2,266
Other operating expenses		514			671
		2,266			2,937
Operating loss		(680	)		(2,335	)
Finance costs		(1,499	)		(1,570	)
LOSS FOR THE PERIOD FROM DISCONTINUED OPERATIONS	$	(2,179	)	$	(3,905	)

Loss per share
Basic loss per share from discontinued operations	$	(0.02	)	$	(0.03	)
Diluted loss per share from discontinued operations	$	(0.02	)	$	(0.03	)

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

The major classes of assets and liabilities of TGF classified as held for sale are as follows:


	Notes	As at
Assets		June 30, 2013		March 31, 2013
Non-current assets
Property, plant and equipment		$	61,611	$	63,289
Intangible assets			36		39

Current assets
Inventory			4,913		7,666
Current trade and other receivables			5,152		5,215
Prepaid expenses and deposits			997		1,068
Cash and cash equivalents			567		162
ASSETS CLASSIFIED AS HELD FOR SALE		$	73,276	$	77,439

Current liabilities
Bank indebtedness		$	3,364	$	5,191
Trade and other payables			4,879		6,013
Deferred revenue			9		19
Debt	10		67,285		66,216
LIABILITIES RELATING TO ASSETS CLASSIFIED AS HELD FOR SALE		$	75,537	$	77,439

Following the classification as discontinued operations, an impairment loss of $64,729 was recognized in the prior fiscal year, to reduce the carrying amount of the assets in the disposal group to the fair value less costs to sell. This was recognized in discontinued operations in the statement of income (loss).

TGF has commitments for each of the next three years as follows:

COMMITMENTS
	Less than 1 year		1 to 3 years		Total
As at June 30, 2013
Premises and equipment leasing	$	562	$	896	$	1,458
Grain production contracts		10,964		-		10,964
	$	11,526	$	896	$	12,422

10.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

6.	INVESTMENTS

(i)

Just Energy has a 50% interest in Just Ventures LLC and Just Ventures L.P. (collectively “Just Ventures”), jointly controlled entities that are involved in the marketing of Just Energy products. The marketing efforts of Just Ventures are primarily Internet and telemarketing-based, which differs from Just Energy’s traditional sales channels.

Just Ventures is currently funded by its investors and all advances are recorded as additional capital contributions.

	2013			2012
Share of the associate's revenue and loss
Revenue eliminated on consolidation	$	2,249		$	375
Loss	$	(2,112	)	$	(1,159	)
Carrying amount of the investment	$	-		$	-

At any time subsequent to the second anniversary of the joint venture agreements, the other participant in the joint venture has the ability to sell part or all of its interest in Just Ventures (the “Put”). The amount is determined based on the fair value of the previous month’s billed customers. As at June 30, 2013, the Put was estimated to have a nominal value.

(ii)	In August, 2012, the Company issued a US$2,500 promissory note to its joint venture partner. The promissory note receivable matures on August 24, 2037, and bears interest at the annual federal rate established by the Internal Revenue Service.

(iii)

In August, 2012, Just Energy through a subsidiary acquired a 15% interest in ecobee Inc., a private company that designs, manufactures and distributes smart thermostats, for an amount of $6,460. The Company intends to market these smart thermostats in all its core markets linking them to commodity and home service sales.

11.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

7.	FINANCIAL INSTRUMENTS

(a) Fair value

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 electricity, unforced capacity, heat rates, heat rate options, renewable and gas swap and forward 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 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 gas options.

Effective July 1, 2008, Just Energy ceased the utilization of hedge accounting. Accordingly, all the mark-to-market changes on Just Energy’s derivative instruments are recorded on a single line on the interim condensed consolidated statements of income (loss). Due to the commodity volatility and size of Just Energy, the swings in mark to market on these positions will increase the volatility in Just Energy’s earnings.

The following table illustrates gains/(losses) related to Just Energy’s derivative financial instruments classified as held-for-trading and recorded on the interim condensed consolidated statements of financial position as other assets and other liabilities, with their offsetting values recorded in change in fair value of derivative instruments.


	Change in fair value of derivative instruments
	For the three months		For the three months
	ended		ended
	June 30, 2013		June 30, 2012


Fixed-for-floating electricity swaps (i)	$	(15,763)	$	84,673
Renewable energy certificates (ii)		5,651		1,142
Verified emission-reduction credits (iii)		(15)		1,371
Options (iv)		347		673
Physical gas forward contracts (v)		12,266		71,317
Physical electricity forward contracts (viii)		(15,482)		160,348
Transportation forward contracts (vi)		1,655		4,993
Fixed financial swaps (vii)		(15,896)		44,314
Unforced capacity forward contracts (ix)		362		(303)
Unforced capacity physical contracts (x)		6,215		2,794
Heat rate swaps (xi)		5,211		23,361
Weather derivative		-		2,689
Foreign exchange forward contracts (xii)		(873)		(318)
Amortization of deferred unrealized gains on
discontinued hedges		3,502		11,581
Share swap		(589)		(7,016)
Amortization of derivative financial instruments
related to acquisitions		(3,650)		(13,506)
Prepayment option on long-term debt		(100)		-
Change in fair value of contingent consideration		-		5,778
Change in fair value of derivative
instruments	$	(17,159)	$	393,891

12.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

The following table summarizes certain aspects of the financial assets and liabilities recorded in the
interim condensed consolidated statements of financial position as at June 30, 2013:

	Other assets		Other assets		Other financial liabilities		Other financial liabilities
	(current)		(non-current)		(current)		(non-current)


Fixed-for floating electricity swaps (i)	$	3,380	$	1,654	$	56,716	$	42,524
Renewable energy certificates (ii)		1,863		6,237		1,385		1,200
Verified emission-reduction credits (iii)		61		75		595		607
Options (iv)		114		-		488		49
Physical gas forward contracts (v)		63		-		57,852		19,027
Physical electricity forward contracts (viii)		6,535		8,385		4,230		1,212
Transportation forward contracts (vi)		1,824		415		720		77
Fixed financial swaps (vii)		28		-		40,261		19,433
Unforced capacity forward contracts (ix)		-		-		1,662		-
Unforced capacity physical contracts (x)		8,009		4,910		579		-
Heat rate swaps (xi)		17,297		6,987		-		-
Foreign exchange forward contracts (xii)		-		-		1,359		-
Share swap		-		-		16,504		-
Cash-out option on RSG plan		-		-		414		-
Prepayment option on long-term debt		-		300		-		-
As at June 30, 2013	$	39,174	$	28,963	$	182,765	$	84,129

The following table summarizes certain aspects of the financial assets and liabilities recorded in the
consolidated statements of financial position as at March 31, 2013:

	Other assets		Other assets		Other financial liabilities		Other financial liabilities
	(current)		(non-current)		(current)		(non-current)


Fixed-for floating electricity swaps (i)	$	2,632	$	1,421	$	42,959	$	38,524
Renewable energy certificates (ii)		1,413		686		1,326		1,033
Verified emission-reduction credits (iii)		60		73		568		579
Options (iv)		214		-		909		67
Physical gas forward contracts (v)		2		-		63,284		25,586
Physical electricity forward contracts (viii)		10,970		16,515		2,804		51
Transportation forward contracts (vi)		970		437		1,557		51
Fixed financial swaps (vii)		4,052		23		27,350		19,200
Unforced capacity forward contracts (ix)		456		-		2,134		289
Unforced capacity physical contracts (x)		2,008		3,865		113		-
Heat rate swaps (xi)		10,228		7,885		-		-
Foreign exchange forward contracts (xii)		-		-		486		-
Share swap		-		-		15,915		-
Cash-out option on RSG plan		-		400		-		-
Prepayment option on long-term debt		-		-		414		-
As at March 31, 2013	$	33,005	$	31,305	$	159,819	$	85,380

13.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

The following table summarizes financial instruments classified as held-for-trading as at June 30, 2013, to
which Just Energy has committed:
			Total			Fair value
	Contract type	Notional volume	remaining	Maturity date	Fixed price	favourable/	Notional
			volume			(unfavourable)	value

(i)	Fixed-for-floating	0.00-210.00	20,176,411	July 1, 2013	$0.03-$136.75	($94,206)	$973,277
	electricity swaps *	MWh	MWh	December 31, 2019
(ii)	Renewable energy	10-160,000	5,631,471	December 31, 2013	$0.30-$215.00	$5,515	$44,454
	certificates	MWh	MWh	May 31, 2028
(iii)	Verified emission-	2,000-73,082	726,000	December 31, 2013	$4.75-$11.50	($1,066)	$5,418
	reduction credits	tonnes	tonnes	December 31, 2016
(iv)	Options	738-42,235	420,369	July 31, 2013	$3.59-$10.99	($423)	($336)
		GJ/month	GJ	December 31, 2014
(v)	Physical gas forward	0.35-5,076.00	37,779,353	July 1, 2013	$2.49-$11.88	($76,816)	$212,376
	contracts	GJ/day	GJ	December 31, 2018
(vi)	Transportation forward	11-140,747	29,498,987	July 1, 2013	$0.00-$3.56	$1,442	$60,396
	contracts	GJ/day	GJ	August 31, 2015
(vii)	Fixed financial swaps	982-327,320	89,931,130	July 31, 2013	$2.62-$7.65	($59,666)	$393,003
		GJ/month	GJ	December 31, 2018
(viii)	Physical electricity	0.2.-200.00	18,695,503	July 1, 2013	$25.50-$91.60	$9,478	$916,508
	forwards	MWh	MWh	June 30, 2018
(ix)	Unforced capacity	4,200-4,650	50,250	May 31, 2014	$60.57-$60.57	($1,662)	$3,215
	forward contracts	MWCap	MWCap	May 31, 2014
(x)	Unforced capacity	4.99-210.00	7,016	July 31, 2013	$6-$14,000	$12,340	$63,234
	physical contracts	MWCap	MWCap	May 31, 2016
(xi)	Heat rate swaps	1-50	1,702,330	July 1, 2013	$24.66-$56.68	$24,284	$64,022
		MWh	MWh	October 31, 2016
(xii)	Foreign exchange		n/a	July 2, 2013	$0.98-$1.05	($1,359)	$34,603
	forward contracts	US$403,292-$5,500,000		April 1, 2014

* Some of the electricity fixed-for-floating contracts related to the Province of Alberta are load-following, wherein the quantity of electricity contained in the supply contract “follows” the usage of customers designated by the supply contract. Notional volumes associated with these contracts are estimates and are subject to change with customer usage requirements. There are also load shaped fixed-for-floating contracts in these and the rest of Just Energy’s electricity markets wherein the quantity of electricity is established but varies throughout the term of the contracts.

The estimated amortization of deferred gains and losses on the discontinued hedges reported in accumulated other comprehensive income that is expected to be amortized to the interim condensed consolidated statements of income (loss) within the next 12 months is a gain of approximately $9,300.

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 other assets balance recognized in the interim condensed consolidated financial statements.

Share swap agreement

The Company has entered into a share swap agreement to manage the risks 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. The Company marks to market the fair value of the share swap agreement and has included that value as other current financial liabilities on the interim condensed consolidated statements of financial position. Changes in the fair value of the share swap agreement are recorded through the interim condensed consolidated statements of income (loss) as a change in fair value of derivative instruments.

14.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

Fair value (“FV”) hierarchy

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. Just Energy values its cash and cash equivalents, current trade and other receivables, unbilled revenues, trade and other payables under Level 1.

Level 2

Fair value measurements that require 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, inputs must be substantially 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 only extend 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.

Fair value measurement input sensitivity

The main cause of changes in the fair value of derivative instruments are 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 financial assets (liabilities) in the FV hierarchy as at June 30, 2013:


	Level 1		Level 2		Level 3		Total
Financial assets
Cash and short-term deposits	$	47,608	$	-	$	-	$	47,608
Loans and receivables		-		434,224		-		434,224
Derivative financial assets		-		-		68,137		68,137
Financial liabilities
Derivative financial liabilities		-		(38,670)		(228,224)		(266,894)
Other financial liabilities		(299,431)		-		-		(299,431)
Total net derivative liabilities	$	(251,823)	$	395,554	$	(160,087)	$	(16,356)

15.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

The following table illustrates the classification of financial assets (liabilities) in the FV hierarchy as at March 31, 2013:

	Level 1		Level 2		Level 3		Total
Financial assets
Cash and short-term deposits	$	51,818	$	-	$	-	$	51,818
Loans and receivables		-		455,763		-		455,763
Derivative financial assets		-		-		64,310		64,310
Financial liabilities
Derivative financial liabilities		-		(32,243)		(212,956)		(245,199)
Other financial liabilities		(301,820)		-		-		(301,820)
Total net derivative liabilities	$	(250,002)	$	423,520	$	(148,646)	$	24,872

The following table illustrates the changes in net fair value of financial assets (liabilities) classified as Level 3
in the FV hierarchy for the three months ended June 30, 2013 and the year ended March 31, 2013:

	June 30, 2013			March 31, 2013
Balance, beginning of period	$	(148,646)	$	(819,354)
Total gains (losses)		(45,825)		79,853
Purchases		(25,003)		49,885
Sales		2,161		(525)
Settlements		57,226		541,495
Transfer out of Level 3		-		-
Balance, end of period	$	(160,087)	$	(148,646)

(b) Classification of financial assets and liabilities

The following table represents the carrying amounts and fair values of financial assets and liabilities measured at amortized cost.

As at June 30, 2013	Carrying amount		Fair value

Cash and cash equivalents	$	33,895	$	33,895
Restricted cash		13,713		13,713
Current trade and other receivables		308,999		308,999
Unbilled revenues		114,777		114,777
Non-current receivables		10,448		10,448
Other financial assets		68,137		68,137
Trade and other payables		299,431		299,431
Long-term debt		980,742		914,412
Other financial liabilities		266,894		266,894

For the three months ended June 30
		2013		2012
Interest expense on financial liabilities not held-for-trading	$	22,520	$	16,310

As at June 30, 2013 and March 31, 2013, the carrying value of cash and cash equivalents, restricted cash, current trade and other receivables, unbilled revenues and trade and other payables approximates their fair value due to their short-term nature.

16.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

The carrying value of long-term debt approximates its fair value as 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 following exceptions:

(i)	the $90 million, $330 million and $100 million convertible debentures, which are fair valued based on market value, and,

(ii)	the carrying value of the senior unsecured note which approximates fair value due to the limited time that has passed since its issuance.

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. operations.

A portion of Just Energy’s income is generated in U.S. dollars and is subject to currency fluctuations. The performance of the Canadian dollar relative to the U.S. dollar could positively or negatively affect Just Energy’s income. Due to its growing operations in the U.S., Just Energy expects to have a greater exposure to U.S. fluctuations in the future than in prior years. Just Energy has economically hedged between 0% and 50% of certain forecasted cross border cash flows that are expected to occur within the next 13 to 24 months and between 50% and 90% of forecasted cross border cash flows that are expected to occur within the next 12 months. The level of 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 three months ended June 30, 2013, assuming that all the other variables had remained constant, loss for the period would have been $980 higher/lower and other comprehensive loss would have been $7,600 lower/higher.

Interest rate risk

Just Energy is also 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 long-term debt exposes it to material financial risks but has set out parameters to actively manage this risk within its Risk Management Policy.

17.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

A 1% increase (decrease) in interest rates would have resulted in a decrease (increase) in income before income taxes for the period ended June 30, 2013, of approximately $260.

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 for 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 severity of weather from normal.

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, income before income taxes for the three months ended June 30, 2013 would have increased (decreased) by $222,073 ($220,118) 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, income before income taxes for the three months ended June 30, 2013 would have increased (decreased) by $210,419 ($208,672) 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, Massachusetts, California, Michigan and Georgia, 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.

18.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

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

	June 30, 2013		March 31, 2013

Current	$	88,141	$	86,604
1 – 30 days		21,149		33,944
31 – 60 days		7,424		7,893
61 – 90 days		5,517		4,340
Over 91 days		36,901		31,853
	$	159,132	$	164,634

Changes in the allowance for doubtful accounts were as follows:

	June 30, 2013			March 31, 2013

Balance, beginning of period	$	40,190		$	34,926
Provision for doubtful accounts		9,465			30,850
Bad debts written off		(3,681	)		(23,120	)
Other		791			(2,466	)
Balance, end of period	$	46,765		$	40,190

In the remaining markets, the local distribution companies (“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 that provide 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 JEGI. 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 June 30, 2013, the estimated counterparty credit risk exposure amounted to $227,269 representing the risk relating to the Company’s derivative financial assets and accounts receivable.

(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.

19.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

The following are the contractual maturities, excluding interest payments, reflecting undiscounted disbursements of Just Energy’s financial liabilities as at June 30, 2013:

			Contractual cash								More than 5
	Carrying amount		flows		Less than 1 year		1 to 3 years		4 to 5 years		years
Trade and other payables	$	299,431	$	299,431	$	299,431	$	-	$	-		$	-
Long-term debt*		980,742		1,035,526		167,727		195,979		511,061			160,759
Derivative instruments		266,894		2,728,619		1,428,709		1,083,532		209,880			6,498
	$	1,547,067	$	4,063,576	$	1,895,867	$	1,279,511	$	720,941		$	167,257

As at March 31, 2013:

			Contractual cash								More than 5
	Carrying amount		flows		Less than 1 year		1 to 3 years		4 to 5 years		years
Trade and other payables	$	301,820	$	301,820	$	301,820	$	-	$	-		$	-
Long-term debt*		957,698		1,014,227		162,474		189,801		403,946			258,006
Derivative instruments		245,199		2,549,866		1,372,855		993,719		182,020			1,272
	$	1,504,717	$	3,865,913	$	1,837,149	$	1,183,520	$	585,966		$	259,278

* Included in long-term debt are the $330,000, $100,000 and $90,000 relating to 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, at June 30, 2013, 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 to 3 years			4 to 5 years			More than 5 years
Interest payments		$	61,331		$	103,066		$	66,463		$	9,830

(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. Just Energy has discounted the fair value of its financial assets by $1,854 to accommodate for its counterparties’ risk of default.

20.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

8. ACCUMULATED OTHER COMPREHENSIVE INCOME

For the three months ended June 30, 2013
	Foreign
	currency
	translation		Cash flow
	adjustments		hedges		Total
Balance, beginning of period	$	34,726	$	12,429	$	47,155
Other comprehensive income (loss) to be reclassified to profit or loss in subsequent periods:
Unrealized foreign currency translation adjustment		13,219		-		13,219
Amortization of deferred unrealized gain on discontinued
hedges, net of income taxes of $401		-		(3,101)		(3,101)
Balance, end of period	$	47,945	$	9,328	$	57,273

For the three months ended June 30, 2012
	Foreign
	currency
	translation		Cash flow
	adjustments		hedges		Total
Balance, beginning of period	$	31,419	$	38,874	$	70,293
Other comprehensive income (loss) to be reclassified to profit or loss in subsequent periods:
Unrealized foreign currency translation adjustment		3,077		-		3,077
Amortization of deferred unrealized gain on discontinued
hedges, net of income taxes of $2,289		-		(9,292)		(9,292)
Balance, end of period	$	34,496	$	29,582	$	64,078

9.	SHAREHOLDERS’ CAPITAL

Just Energy is authorized to issue an unlimited number of common shares and 50,000,000 preference shares both with no par value. Shares outstanding have no preferences, rights or restrictions attached to them. Details of issued and outstanding shareholders’ capital as at June 30, 2013, with comparatives as at March 31, 2013, are as follows:

	Three months ended			Year ended
Issued and outstanding	June 30, 2013			March 31, 2013
	Shares	Amount		Shares	Amount

Balance, beginning of period	142,029,340	$	1,018,082	139,348,926	$	993,181
Share-based awards exercised	118,809		1,722	235,301		3,320
Dividend reinvestment plan (i)	591,745		3,954	2,444,284		21,574
Shares issued for cash	-		-	829		7
Balance, end of period	142,739,894	$	1,023,758	142,029,340	$	1,018,082

21.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

(i) Dividend reinvestment plan

Under Just Energy’s dividend reinvestment plan (“DRIP”), shareholders holding a minimum of 100 common shares can elect to receive their dividends in common shares rather than cash at a 2% discount to the simple average closing price of the common shares for the five trading days preceding the applicable dividend payment date, providing that the common shares are issued from treasury and not purchased on the open market. The DRIP was suspended as of February 1, 2012, but was re-instated as of September 30, 2012.

(ii) Repurchase and cancellation of shares and debentures

During the 12 month period commencing February 14, 2013 and ending February 13, 2014, Just Energy has approval to make a normal course issuer bid (“NCIB”) to purchase up to 10,000,000 common shares. Just Energy commenced another NCIB on February 22, 2013 with an expiration of February 21, 2014 for the 6% convertible extendible unsecured subordinated debentures due June 30, 2017 (the “6% $330 million debentures”); and the 5.75% convertible unsecured subordinated debentures due September 30, 2018 (the “5.75% $100 million debentures”). Under the NCIB, Just Energy may purchase such convertible debentures, up to $33,000 of the 6% $330 million convertible extendible unsecured subordinated debentures and $10,000 of the 5.75% $100 million debentures.

10.	LONG-TERM DEBT AND FINANCING

	June 30, 2013			March 31, 2013
Credit facility (a)	$	113,176	$	110,121
Less: debt issue costs (a)		(235)		(427)
$105 million senior unsecured note (b)		105,000		105,000
Less: debt issue costs (b)		(7,039)		(7,335)
TGF credit facility (c)(i)		28,571		28,571
TGF debentures (c)(ii)		38,714		37,645
NHS financing (d)		270,253		257,427
$90 million convertible debentures (e)		88,008		87,610
$330 million convertible debentures (f)		299,500		297,928
$100 million convertible debentures (g)		88,032		87,579
HES financing (h)
Credit facility		11,703		11,431
Construction loan		8,158		9,776
Term loan		6,856		-
Less: debt issue costs		(3,050)		(1,884)
Capital leases (i)		380		472
		1,048,027		1,023,914
Less: transfer of discontinued operations		(67,285)		(66,216)
Less: current portion		(167,727)		(162,474)
	$	813,015	$	795,224

22.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

Future annual minimum repayments are as follows:

	Less than 1 year		1 to 3 years		4 to 5 years		More than 5 years		Total

Credit facility (a)	$	113,176	$	-	$	-	$	-	$	113,176
$105 million senior unsecured note (b)		-		-		105,000		-		105,000
NHS financing (d)		45,967		93,603		75,430		55,253		270,253
$90 million convertible debentures (e)		-		90,000		-		-		90,000
$330 million convertible debentures (f)		-		-		330,000		-		330,000
$100 million convertible debentures (g)		-		-		-		100,000		100,000
HES financing - Credit facility (h)		-		11,703		-		-		11,703
HES financing - Construction loan (h)		8,158		-		-		-		8,158
HES financing - Solar term loan (h)		181		538		631		5,506		6,856
Capital leases (i)		245		135		-		-		380
	$	167,727	$	195,979	$	511,061	$	160,759	$	1,035,526

The following table details the finance costs for the three months ended June 30. Interest is expensed at the
effective interest rate.
	Three months		Three months
		ended		ended
	June 30, 2013		June 30, 2012
Credit facility (a)	$	3,339	$	3,194
$105 million senior unsecured note (b)		3,262		-
NHS financing (d)		4,874		3,020
$90 million convertible debentures (e)		1,748		1,718
$330 million convertible debentures (f)		6,522		6,392
$100 million convertible debentures (g)		1,890		1,854
HES financing (h)		801		-
Capital lease interest (i)		15		49
Unwinding of discount on provisions		69		83
	$	22,520	$	16,310

(a) As at June 30, 2013, Just Energy has a $370 million credit facility to meet working capital requirements. The syndicate of lenders includes Canadian Imperial Bank of Commerce, Royal Bank of Canada, National Bank of Canada, Société Générale, The Bank of Nova Scotia, The Toronto-Dominion Bank and Alberta Treasury Branches. The term of the facility expires on December 31, 2013.

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 that vary between 2.88% and 4.00%. Prime rate advances are at rates of interest that vary between bank prime plus 1.88% and 3.00% and letters of credit are at rates that vary between 2.88% and 4.00%. Interest rates are adjusted quarterly based on certain financial performance indicators.

23.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

As at June 30, 2013, the Canadian prime rate was 3.0% and the U.S. prime rate was 3.25%. As at June 30, 2013, Just Energy had drawn $113,176 (March 31, 2013 - $110,121) against the facility and total letters of credit outstanding amounted to $121,214 (March 31, 2013 - $115,466). As at June 30, 2013, unamortized debt issue costs relating to the facility are $235 (March 31, 2013 - $427). As at June 30, 2013, Just Energy has $135,610 of the facility remaining for future working capital and 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, among others, NHS, HES, TGF and the U.K. operations. Just Energy is required to meet a number of financial covenants under the credit facility agreement. During the three months ended June 30, 2013, certain financial covenants were amended and/or waived to accommodate the growth of the business. As at June 30, 2013, all of these covenants had been met.

(b) On December 12, 2012, the Company issued $105,000 in senior unsecured notes (“$105,000 senior unsecured note”) bearing interest at 9.75% and maturing in June 2018. Just Energy incurred costs of $7,039 and has recorded these as a debt issuance cost. These costs will be charged to operations as finance costs over the term of the debt. The $105,000 senior unsecured note is subject to certain financial and other covenants. As at June 30, 2013, all of these covenants have been met.

In conjunction with the covenant requirements associated with the issuance of the senior unsecured note, the following represents select financial disclosure for the “Restricted Subsidiaries” as defined within the Note Indenture, which generally excludes NHS, TGF, HES, Momentis and the UK operations.

	Three months ended June 30, 2013
Sales		715,886
Gross margin		105,082
Finance costs		16,845
Profit for the period		52,316
Non-cash financing costs		3,380
Intercompany interest charges		18,148
Share-based compensation		1,739
Income tax paid		312
Dividends paid from unrestricted subsidiaries		-

(c) The debt obligations of TGF, have been reclassified to liabilities relating to assets held for sale and currently comprise the following separate facilities:

24.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

(i) TGF credit facility

A credit facility of up to $50,000 was established with a syndicate of Canadian lenders led by Conexus Credit Union and was arranged to finance the construction of the ethanol plant in 2007. The facility represents a fixed repayment term of ten years, commencing March 1, 2009, which includes interest costs at a rate of prime plus 3% with principal repayments commencing on March 1, 2010. The credit facility is secured by a demand debenture agreement, a first priority security interest on all assets and undertakings of TGF, a mortgage on title to the land owned by TGF and a general security interest on all other current and acquired assets of TGF. The credit facility includes certain financial covenants, the most significant of which relate to current ratio, debt to equity ratio, debt service coverage and minimum shareholders’ capital. As at June 30, 2013, the amount owing under this facility amounted to $28,571. Pursuant to a forbearance agreement dated as of June 1, 2013, the lenders have agreed that TGF shall not be required to make any principal payments until December 31, 2013. The lenders have no recourse to the Company or any other Just Energy entity.

(ii) TGF debentures

A debenture purchase agreement with a number of private parties providing for the issuance of up to $40,000 aggregate principal amount of debentures was entered into in 2006. On April 1, 2011, the interest rate was increased to 12%. The agreement includes certain financial covenants, the more significant of which relate to current ratio, debt to capitalization ratio, debt service coverage, debt to EBITDA and minimum shareholders’ equity. The maturity date has been extended to May 15, 2014, with a call right any time after April 1, 2013. Pursuant to a waiver and forbearance agreement made as of June 24, 2013, the debenture holders have agreed to waive any principal and interest payments to and including January 1, 2014. As at June 30, 2013, the amount owing under this debenture agreement amounted to $38,714. The debenture holders have no recourse to the Company or any other Just Energy entity.

(iii) TGF has a working capital operating line of $7,000 bearing interest at a rate of prime plus 2%. In addition to the amount shown in Note 5 as bank indebtedness, TGF has total letters of credit issued of $250.

(d) NHS entered into a long-term financing agreement for the funding of new and existing rental water heater and furnace and air conditioner contracts. Pursuant to the agreement, NHS receives financing of an amount equal to the present value of the five, seven or ten years of monthly rental income, discounted at the agreed upon financing rate of 7.25% to 7.99%, and as settlement, is required to remit an amount equivalent to the rental stream from customers on the water heater, furnace and air conditioner contracts for the five, seven or ten years. As security for performance of the obligation, NHS has provided security over the water heaters, furnace and air conditioner equipment and rental contracts, subject to the financing rental agreement, as collateral.

The financing agreement is subject to a holdback provision, of 3% to 5%. Once all obligations of NHS are satisfied or expired, the remaining funds in the holdback account will immediately be released to NHS. NHS has $240,347 owing under this agreement, including $9,595 relating to the holdback provision, recorded in non-current receivables.

NHS assumed debt, relating to the acquisition of customer contracts in the prior year. The current outstanding debt of $29,906 bears interest at 7.5% to 11.0%, is secured by the underlying assets and will be satisfied through blended monthly payments up to August of 2022. NHS has $2,168 in restricted cash as at June 30, 2013 related to this debt.

NHS is required to meet a number of non-financial covenants under these agreements. As at June 30, 2013, all of these covenants had been met.

24.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

(e) In conjunction with an acquisition, the Company also acquired the obligations of the convertible unsecured subordinated debentures (the “$90 million convertible debentures”) issued in October 2007. The fair value of the $90 million convertible debentures was estimated by discounting the remaining contractual payments at the time of acquisition. This discount will be accreted using an effective interest rate of 8%. These instruments have a face value of $90,000 and mature on September 30, 2014, unless converted prior to that date, and bear interest at an annual rate of 6% payable semi-annually on March 31 and September 30 of each year. Each $1,000 principal amount of the $90 million convertible debentures is convertible at any time prior to maturity or on the date fixed for redemption, at the option of the holder, into approximately 39.94 common shares, representing a conversion price of $25.04 per common share as at June 30, 2013. Pursuant to the $90 million convertible debentures, if the Company fixes a record date for the payment of a dividend, the conversion price shall be adjusted in accordance therewith. During the period ended June 30, 2013, interest expense amounted to $1,748.

On and after September 30, 2012, but prior to the maturity date, the $90 million convertible debentures are redeemable, in whole or in part, at a price equal to the principal amount thereof, plus accrued and unpaid interest, at Just Energy’s sole option on not more than 60 days’ and not less than 30 days’ prior notice.

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 $90 million 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 $90 million convertible debentures being repaid by 95% of the current market price on the date of redemption or maturity, as applicable.

(f) In order to fund an acquisition in May 2010, Just Energy issued $330 million of convertible extendible unsecured subordinated debentures (the “$330 million convertible debentures”). The $330 million convertible debentures bear interest at a rate of 6% per annum payable semi-annually in arrears on June 30 and December 31, with a maturity date of June 30, 2017. Each $1,000 principal amount of the $330 million convertible debentures is convertible at any time prior to maturity or on the date fixed for redemption, at the option of the holder, into approximately 55.6 common shares of the Company, representing a conversion price of $18 per share. During the period ended June 30, 2013, interest expense amounted to $6,522. The $330 million convertible debentures are not redeemable prior to June 30, 2013, except under certain conditions after a change of control has occurred. On or after June 30, 2013, but prior to June 30, 2015, the $330 million convertible debentures may be redeemed by the Company, in whole or in part, on not more than 60 days’ and not less than 30 days’ prior notice, at a redemption price equal to the principal amount thereof, plus accrued and unpaid interest, provided that the current market price (as defined herein) on the date on which notice of redemption is given is not less than 125% of the conversion price ($22.50). On and after June 30, 2015, and prior to maturity, the $330 million convertible debentures may be redeemed by Just Energy, in whole or in part, at a redemption price equal to the principal amount thereof, plus accrued and unpaid interest.

The Company may, at its own option, on not more than 60 days’ and not less than 40 days’ prior notice, subject to applicable regulatory approval and provided that 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 $330 million 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 $330 million convertible debentures being repaid by 95% of the current market price on the date of redemption or maturity, as applicable.

26.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

The conversion feature of the $330 million convertible debentures has been accounted for as a separate component of shareholders’ deficit in the amount of $33,914. Upon initial recognition of the convertible debentures, Just Energy recorded a deferred tax liability of $15,728 and reduced the value of the equity component of convertible debentures by this amount. The remainder of the net proceeds of the $330 million convertible debentures has been recorded as long-term debt, which will be accreted up to the face value of $330,000 over the term of the $330 million convertible debentures using an effective interest rate of 8.8%. If the $330 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.

(g) On September 22, 2011, Just Energy issued $100 million of convertible unsecured subordinated debentures (the “$100 million convertible debentures”), which was used to purchase Fulcrum. The $100 million 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 $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 56.0 common shares of Just Energy, representing a conversion price of $17.85. The $100 million convertible debentures are not redeemable at the option of the Company on or before September 30, 2014. After September 30, 2014, and prior to September 30, 2016, the $100 million convertible debentures may be redeemed by the Company, in whole or in part, 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 is at least 125% of the conversion price. On or after September 30, 2016, the $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.

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 $100 million 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 $100 million convertible debentures being repaid by 95% of the current market price on the date of redemption or maturity, as applicable.

The conversion feature of the $100 million convertible debentures has been accounted for as a separate component of shareholders’ deficit in the amount of $10,188. Upon initial recognition of the convertible debentures, Just Energy recorded a deferred tax liability of $2,579 and reduced the equity component of the convertible debenture by this amount. The remainder of the net proceeds of the $100 million convertible debentures has been recorded as long-term debt, which will be accreted up to the face value of $100,000 over the term of the $100 million convertible debentures using an effective interest rate of 8.6%. If the $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.

27.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

(h) Effective August, 2012, HES through a subsidiary, entered into a US$30 million financing agreement to assist with the construction of certain solar projects. The credit facility matures August 1, 2014 with no prepayment permitted, bearing interest, and payable quarterly, at U.S. prime plus 6.9% or Eurodollar rate plus 7.9%.

As at June 30, 2013, HES had drawn $11,703 and had unamortized debt issue costs relating to the facility of $686.

HES, through a subsidiary, has entered into an arrangement providing access to construction loans to fund certain specified projects. As at June 30, 2013, $8,158 has been advanced under these loans and had unamortized debt issue costs of $1,002. The construction loans bear interest at 10% and are due upon completion of the underlying solar projects. Upon completion of the solar projects, the construction loan will be settled from the proceeds of a term loan to be received from the same counterparty and an investment from an institutional investor. The term loan to be received will bear interest at 8% and mature in six years. The investment will provide the institutional investor with a significant portion of the tax incentives generated by the projects funded.

During the quarter HES received proceeds of $6,856 under a term loan to satisfy a prior construction loan and has unamortized debt issue costs of $1,362. The term loan bears interest at 8% and matures on June 21, 2019. In addition, HES received $6,117 from an institutional investor under this arrangement. The proceeds received have been recorded as a contribution from a non-controlling interest. The minority shareholder has approximately 49% interest in certain projects and is entitled to a significant portion of the tax incentives generated by these projects. The minority shareholder’s interest will decrease to 5% in approximately five years from the original investment.

(i) The Company, through its subsidiaries, leases certain computer and office equipment and software. These financing arrangements bear interest at rates ranging from 0% to 29% and mature between July 1, 2013 and January 31, 2015.

11.	INCOME TAXES


	Fiscal 2014		Fiscal 2013
Current income tax expense (recovery)	$	(39)	$	257
Deferred tax expense		4,197		32,440
Provision for income taxes	$	4,158	$	32,697

28.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

12.	OTHER INCOME, EXPENSES AND ADJUSTMENTS

(a)	Other operating expenses

	For the three		For the three
	months ended		months ended
	June 30, 2013		June 30, 2012
Amortization of gas contracts	$	2,060	$	3,959
Amortization of electricity contracts		1,636		9,471
Amortization of acquired water heater and HVAC contracts		1,054		414
Amortization of other intangible assets		7,788		7,929
Amortization of property, plant and equipment		1,079		1,091
Bad debt expense		9,832		8,640
Share-based compensation(i)		1,837		3,232
	$	25,286	$	34,736

(i) During the three months ended June 30, 2013, the Company issued approximately 520,000 restricted share grants, performance bonus grants and deferred share grants to employees and directors. These share-based payments had a grant date fair value of approximately $6.51 and will be expensed over their vesting period which is approximately three years. These equity instruments are valued based on the grant date value of the underlying shares. Performance bonus grants (“PBGs”) are a new share-based compensation plan. PBGs have all the same characteristics as restricted share grants except that holders of PBGs must exchange their PBGs into common shares when vested.

(b) Amortization and cost of inventories included in cost of sales in the interim condensed consolidated statements of income (loss)


	For the three		For the three
	months ended		months ended
	June 30, 2013		June 30, 2012
Amortization	$	3,877	$	2,060
Direct energy costs and other		622,832		541,620
	$	626,709	$	543,680

	For the three			For the three
	months ended			months ended
	June 30, 2013			June 30, 2012
Amortization of gas contracts		$	2,514		$	3,219
Amortization of electricity contracts			1,136			10,287

(d) Employee benefits expense

		For the three			For the three
		months ended			months ended
	June 30, 2013			June 30, 2012
Wages, salaries and commissions		$	57,457		$	59,005
Benefits			5,645			5,006
		$	63,102		$	64,011

29.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

13.	REPORTABLE BUSINESS SEGMENTS

Effective April 1, 2013, Just Energy revised its reportable segments to include the following: consumer energy marketing, commercial energy marketing, ethanol (TGF), home services (NHS) and solar (HES). Previously Just Energy presented its reportable segments to include gas energy marketing, electricity energy marketing, home services and other. This revised presentation is consistent with the organizational alignment and management structure. This change reflects the Company’s evolution to attract a more diverse client base consisting of both consumer and commercial customers. This change in segment reporting had no impact on the Company’s interim condensed consolidated statements of financial position, income (loss) or cash flows for the periods. The prior year segmented disclosure has been restated to conform to the current period presentation.

Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.

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 interim condensed consolidated financial statements. Just Energy is not considered to have any key customers.

For the three months ended June 30, 2013

		Consumer		Commercial
		division		division		Ethanol		Home services		Solar		Consolidated

Sales		$	413,320	$	314,736	$	-	$	16,848	$	1,219	$	746,123
Gross margin			70,316		35,618		-		12,985		495		119,414
Amortization of property, plant
	and equipment		732		280		-		67		-		1,079
Amortization of intangible assets			5,634		5,850		-		1,054		-		12,538
Administrative expenses			22,340		7,468		-		5,412		800		36,020
Selling and marketing expenses			31,655		17,089		-		3,553		123		52,420
Other operating expenses			8,637		2,934		-		98		-		11,669
Operating profit (loss) for the
	period	$	1,318	$	1,997	$	-	$	2,801	$	(428)	$	5,688
Finance costs			(7,298)		(9,547)		-		(4,874)		(801)		(22,520)
Change in fair value of derivative
	instruments		(17,650)		(3,471)		-		-		3,962		(17,159)
Proportionate share of loss from joint venture			(2,112)		-		-		-		-		(2,112)
Other income (loss)			560		(69)		-		-		-		491
Provision for income taxes			2,517		794		-		847		-		4,158
Profit (loss) from continuing operations		$	(27,699)	$	(11,884)	$	-	$	(2,920)	$	2,733	$	(39,770)
Discontinued operations			-		-		(2,179)		-		-		(2,179)
Profit (loss) for the period		$	(27,699)	$	(11,884)	$	(2,179)	$	(2,920)	$	2,733	$	(41,949)
Capital expenditures		$	476	$	432	$	-	$	9,023	$	3,711	$	13,642
Total goodwill		$	214,099	$	45,061	$	-	$	283	$	-	$	259,443
Total assets		$	760,404	$	271,379	$	73,532	$	278,523	$	121,845	$	1,505,683
Total liabilities		$	937,608	$	340,815	$	75,793	$	305,445	$	35,611	$	1,695,272

30.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

For the three months ended June 30, 2012

		Consumer		Commercial
		division		division		Ethanol		Home services		Solar		Consolidated

Sales		$	324,669	$	321,742	$	-	$	10,922	$	4	$	657,337
Gross margin			67,343		37,831		-		8,479		4		113,657
Amortization of property, plant
	and equipment		723		300		-		57		11		1,091
Amortization of intangible assets			5,129		16,230		-		414		-		21,773
Administrative expenses			22,667		6,723		-		3,792		656		33,838
Selling and marketing expenses			43,300		14,173		-		1,081		12		58,566
Other operating expenses			8,157		3,215		-		500		-		11,872
Operating profit (loss) for the
	period	$	(12,633)	$	(2,810)	$	-	$	2,635	$	(675)	$	(13,483)
Finance costs			(4,345)		(8,944)		-		(3,021)		-		(16,310)
Change in fair value of derivative
	instruments		282,917		111,279		-		(305)		-		393,891
Proportionate share of loss from Joint Venture			(1,159)		-		-		-		-		(1,159)
Other income (loss)			654		(52)		-		2		1,698		2,302
Provision for (recovery of) income tax expense			(4,255)		11,431		-		25,521		-		32,697
Profit (Loss) from continued operations			269,689		88,042		-		(26,210)		1,023		332,544
Discontinued Operations			-		-		(3,905)		-				(3,905)
Profit (loss) for the period		$	269,689	$	88,042	$	(3,905)	$	(26,210)	$	1,023	$	328,639
Capital expenditures		$	978	$	888	$	1	$	9,151	$	13,310	$	24,328
As at March 31, 2013
Total goodwill		$	212,571	$	43,528	$	-	$	283	$	-	$	256,382
Total assets		$	320,797	$	756,032	$	77,439	$	267,293	$	107,381	$	1,528,942
Total liabilities		$	407,383	$	854,216	$	77,439	$	294,523	$	34,438	$	1,667,999

Geographic information

Revenue from external customers
		For the three			For the three
	months ended			months ended
	June 30, 2013			June 30, 2012
Canada		$	165,513		$	178,032
United States			574,445			479,305
United Kingdom			6,165			-
Total revenue per interim condensed consolidated statements of income (loss)		$	746,123		$	657,337

The revenue is based on the location of the customer.

31.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

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 June 30, 2013			As at March 31, 2013
Canada		$	390,047		$	391,420
United States			319,691			312,823
United Kingdom			1,209			1,093
Total		$	710,947		$	705,336

14. EARNINGS (LOSS) PER SHARE

	2013			2012
Basic earnings (loss) per share
Profit (loss) from continuing operations	$	(39,770	)	$	332,544
Profit (loss) available to shareholders	$	(41,824	)	$	328,472
Basic shares outstanding		142,268,827			139,352,152
Basic earnings (loss) per share from continuing operations	$	(0.28	)	$	2.39
Basic earnings (loss) per share available to shareholders	$	(0.29	)	$	2.36

Diluted earnings (loss) per share
Profit (loss) from continuing operations	$	(39,770	)	$	332,544
Profit (loss) available to shareholders	$	(41,824	)	$	328,472
Adjustment for dilutive impact of convertible debentures		7,505			7,250
Adjusted earnings (loss) from continuing operations	$	(32,265	)	$	339,794
Adjusted earnings (loss) available to shareholders	$	(34,319	)	$	335,722
Basic shares outstanding		142,268,827			139,352,152
Dilutive effect of:
Restricted share grants		4,065,286	(i)		3,711,204
Deferred share grants		169,135	(i)		136,730
Convertible debentures		27,530,520	(i)		27,082,427
Shares outstanding on a diluted basis		174,033,768			170,282,513
Diluted earnings (loss) per share from continuing operations	$	(0.28	)	$	2.00
Diluted earnings (loss) per share available to shareholders	$	(0.29	)	$	1.97
(i)The assumed conversion into shares results in an anti-dilutive position; therefore, these items have been excluded from dilutive earnings (loss) per share.

32.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

15.	DIVIDENDS PAID AND PROPOSED

For the period ended June 30, 2013, dividends of $0.21 (2012-$0.31) per share were declared, paid and reinvested by Just Energy. This amounted to $30,756 (2012-$44,390), which was approved throughout the period by the Board of Directors and was paid out or reinvested during the period.

Declared dividends subsequent to quarter-end

On July 2, 2013, the Board of Directors of Just Energy declared a dividend in the amount of $0.07 per common share ($0.84 annually). The dividend was paid on July 31, 2013 to shareholders of record at the close of business on July 15, 2013.

On August 2, 2013, the Board of Directors of Just Energy declared a dividend in the amount of $0.07 per common share ($0.84 annually). The dividend will be paid on August 31, 2013 to shareholders of record at the close of business on August 15, 2013.

16.	COMMITMENTS AND GUARANTEES

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

As at June 30, 2013

	Less than 1 year			1 to 3 years			4 to 5 years			More than 5 years			Total
Premises and equipment leasing		$	7,495		$	10,832		$	6,835		$	5,847	$	31,009
Royalty payments			-			1,122			9,393			35,267		45,782
Long-term gas and electricity contracts			1,428,709			1,083,532			209,880			6,498		2,728,619
		$	1,436,204		$	1,095,486		$	226,108		$	47,612	$	2,805,410

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. For the main office building of Just Energy, there is a renewal option for an additional five years. No purchase options are included in any major leasing contracts. Royalty represents the future payments NHS is required to make on revenue earned on its current installed base. 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.

33.

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2013

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

Guarantees

Pursuant to separate arrangements with various entities, 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 June 30, 2013 was $37.7 million.

As at June 30, 2013, Just Energy had total letters of credits outstanding in the amount of $121,214 (Note 10(a)).

17.	COMPARATIVE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

34.