UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2021

Commission File Number: 001-35400

JUST ENERGY GROUP INC.

(Translation of registrant’s name into English)

100 King Street West, Suite 2630

Toronto, Ontario M5X 1E1

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):


DOCUMENTS INCLUDED AS PART OF THIS REPORT

Exhibit

99.1

    

Interim Condensed Consolidated Financial Statements (Unaudited) for the three months ended September 30, 2021 and 2020.

99.2

Management’s Discussion and Analysis for the three months ended September 30, 2021.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

JUST ENERGY GROUP INC.

(Registrant)

Dated: November 10, 2021

By:

/s/ Michael Carter

Name:

Michael Carter

Title:

Chief Financial Officer


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JUST ENERGY GROUP INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(unaudited in thousands of Canadian dollars)

    

    

As at

    

As at

 

September 30, 2021

March 31, 2021

 

    

Notes

    

(Unaudited)

    

(Audited)

 

ASSETS

 

  

 

  

 

  

Current assets

 

  

 

  

 

  

Cash and cash equivalents

 

$

199,952

$

215,989

Restricted cash

 

  

 

3,265

 

1,139

Trade and other receivables, net

 

4(a)

 

401,633

 

340,201

Gas in storage

 

  

 

26,005

 

2,993

Fair value of derivative financial assets

 

6

 

461,899

 

25,026

Income taxes recoverable

 

  

 

10,626

 

8,238

Other current assets

 

5(a)

 

155,855

 

163,405

 

1,259,235

 

756,991

Non-current assets

 

  

 

 

  

Investments

 

16(a)

 

61,889

 

32,889

Property and equipment, net

 

  

 

15,732

 

17,827

Intangible assets, net

 

  

 

68,026

 

70,723

Goodwill

 

  

 

163,945

 

163,770

Fair value of derivative financial assets

 

6

 

115,606

 

10,600

Deferred income tax assets

 

  

 

7,599

 

3,744

Other non-current assets

 

5(b)

 

41,506

 

35,262

 

474,303

 

334,815

TOTAL ASSETS

 

  

$

1,733,538

$

1,091,806

LIABILITIES

 

  

 

  

 

  

Current liabilities

 

  

 

  

 

  

Trade and other payables

 

7

$

1,024,383

$

921,595

Deferred revenue

 

  

 

9,373

 

1,408

Income taxes payable

 

  

 

3,637

 

4,126

Fair value of derivative financial liabilities

 

6

 

17,695

 

13,977

Provisions

 

 

835

 

6,786

Current portion of long-term debt

 

8

 

630,491

 

654,180

 

1,686,414

 

1,602,072

Non-current liabilities

 

  

 

 

  

Long-term debt

 

8

 

358

 

1,560

Fair value of derivative financial liabilities

 

6

 

13,262

 

61,169

Deferred income tax liabilities

 

  

 

6,773

 

2,749

Other non-current liabilities

 

  

 

14,155

 

19,078

 

34,548

 

84,556

TOTAL LIABILITIES

 

  

$

1,720,962

$

1,686,628

SHAREHOLDERS’ EQUITY (DEFICIT)

 

  

 

 

  

Shareholders’ capital

 

11

$

1,537,863

$

1,537,863

Contributed deficit

 

  

 

(10,607)

 

(11,634)

Accumulated deficit

 

  

 

(1,610,320)

 

(2,211,728)

Accumulated other comprehensive income

 

  

 

96,030

 

91,069

Non-controlling interest

 

  

 

(390)

 

(392)

TOTAL SHAREHOLDERS’ EQUITY (DEFICIT)

 

  

 

12,576

 

(594,822)

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

 

  

$

1,733,538

$

1,091,806

Basis of presentation (Note 3)

Commitments and contingencies (Note 15)

See accompanying notes to the Interim Condensed Consolidated Financial Statements

Scott Gahn

    

Stephen Schaefer

Chief Executive Officer and President

Corporate Director

1

JUST ENERGY GROUP INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

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

    

Three months ended September 30, 

Six months ended September 30, 

Notes

    

2021

    

2020

    

2021

    

2020

CONTINUING OPERATIONS

 

  

 

  

 

  

 

  

 

  

Sales

 

9

$

704,769

$

737,994

$

1,313,441

$

1,423,958

Cost of goods sold

 

 

623,298

 

517,283

 

1,151,660

 

934,110

GROSS MARGIN

 

  

 

81,471

 

220,711

 

161,781

 

489,848

INCOMES (EXPENSES)

 

  

 

 

 

 

Administrative

 

  

 

(37,181)

 

(43,957)

 

(66,951)

 

(82,099)

Selling and marketing

 

  

 

(44,787)

 

(47,912)

 

(84,459)

 

(94,871)

Other operating expenses

 

12(a)

 

(8,819)

 

(20,765)

 

(21,293)

 

(40,676)

Finance costs

 

8

 

(11,895)

 

(29,744)

 

(24,808)

 

(51,597)

Reorganization costs

 

13

 

(18,577)

 

 

(38,586)

 

Restructuring costs

(7,118)

(7,118)

Gain on September 2020 Recapitalization transaction, net

52,152

50,341

Unrealized gain (loss) of derivative instruments and other

 

6

 

287,515

 

(84,968)

 

579,652

 

(7,619)

Realized gain (loss) of derivative instruments

 

 

49,134

 

(85,457)

 

66,346

 

(219,903)

Unrealized gain on investment

16(a)

29,000

29,000

Other expenses, net

 

  

 

(57)

 

(2,425)

 

(546)

 

(3,057)

Profit (loss) from continuing operations before income taxes

 

  

 

325,804

 

(49,483)

 

600,136

 

33,249

Provision (recovery) for income taxes

 

10

 

(245)

 

673

 

(1,212)

 

1,307

PROFIT (LOSS) FROM CONTINUING OPERATIONS

 

  

$

326,049

$

(50,156)

$

601,348

$

31,942

DISCONTINUED OPERATIONS

 

  

 

 

 

 

Loss after tax from discontinued operations

 

 

 

(1,210)

 

 

(4,158)

PROFIT (LOSS) FOR THE PERIOD

 

  

$

326,049

$

(51,366)

$

601,348

$

27,784

Attributable to:

 

  

 

 

 

 

Shareholders of Just Energy

 

  

$

326,046

$

(51,250)

$

601,408

$

27,897

Non-controlling interest

 

  

 

3

 

(116)

 

(60)

 

(113)

PROFIT (LOSS) FOR THE PERIOD

 

  

$

326,049

$

(51,366)

$

601,348

$

27,784

Earnings per share from continuing operations

 

14

 

 

 

 

Basic

 

  

$

6.78

$

(4.37)

$

12.51

$

2.99

Diluted

 

  

$

6.66

$

(4.37)

$

12.29

$

2.97

Loss per share from discontinued operations

 

 

 

 

 

Basic

 

  

$

$

(0.10)

$

$

(0.39)

Diluted

 

  

$

$

(0.10)

$

$

(0.39)

Earnings per share available to shareholders

 

14

 

 

 

 

Basic

 

  

$

6.78

$

(4.47)

$

12.51

$

2.60

Diluted

 

  

$

6.66

$

(4.47)

$

12.29

$

2.58

See accompanying notes to the Interim Condensed Consolidated Financial Statements

2

JUST ENERGY GROUP INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited in thousands of Canadian dollars)

    

Three months ended September 30, 

Six months ended September 30, 

2021

    

2020

    

2021

    

2020

PROFIT (LOSS) FOR THE PERIOD

 

  

$

326,049

$

(51,366)

$

601,348

$

27,784

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

Unrealized gain (loss) on translation of foreign operations

 

  

 

(2,351)

 

(349)

 

4,961

 

794

Unrealized gain on translation of foreign operations from discontinued operations

 

  

 

 

363

 

 

789

Gain on translation of foreign operations disposed and reclassified to Interim Condensed Consolidated Statements of Income (Loss)

 

 

 

 

 

833

 

(2,351)

 

14

 

4,961

 

2,416

TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD, NET OF TAX

 

  

$

323,698

$

(51,352)

$

606,309

$

30,200

Total comprehensive income (loss) attributable to:

 

  

 

 

 

 

Shareholders of Just Energy

 

  

$

323,695

$

(51,236)

$

606,369

$

30,313

Non-controlling interest

 

  

 

3

 

(116)

 

(60)

 

(113)

TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD, NET OF TAX

 

  

$

323,698

$

(51,352)

$

606,309

$

30,200

See accompanying notes to the Interim Condensed Consolidated Financial Statements

3

JUST ENERGY GROUP INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS’ DEFICIT

(unaudited in thousands of Canadian dollars)

    

Six months ended September 30, 

2021

    

2020

ATTRIBUTABLE TO THE SHAREHOLDERS

 

  

 

  

 

  

Accumulated earnings

Accumulated earnings (loss), beginning of period

 

  

$

(261,702)

$

140,446

Profit for the period as reported, attributable to shareholders

 

  

 

601,408

 

27,897

Accumulated earnings, end of period

 

  

$

339,706

$

168,343

DIVIDENDS AND DISTRIBUTIONS

 

  

 

 

Dividends and distributions, beginning of period

 

  

 

(1,950,026)

 

(1,950,003)

Dividends and distributions declared and paid

 

 

 

(23)

Dividends and distributions, end of period

 

  

$

(1,950,026)

$

(1,950,026)

ACCUMULATED DEFICIT

 

  

$

(1,610,320)

$

(1,781,683)

ACCUMULATED OTHER COMPREHENSIVE INCOME

 

  

 

 

Accumulated other comprehensive income, beginning of period

 

  

$

91,069

$

84,651

Other comprehensive income

 

  

 

4,961

 

2,416

Accumulated other comprehensive income, end of period

 

  

$

96,030

$

87,067

SHAREHOLDERS’ CAPITAL

 

 

 

Common shares

 

  

 

 

Common shares, beginning of period

 

11

$

1,537,863

$

1,099,864

Issuance of shares-September 2020 Recapitalization

438,642

Issuance cost associated with September 2020 Recapitalization

(1,572)

Share-based units exercised

 

 

 

176

Common shares, end of period

 

  

$

1,537,863

$

1,537,110

Preferred shares

 

 

 

Preferred shares, beginning of period

 

11

$

$

146,965

Settled with common shares

(146,965)

Preferred shares, end of period

 

  

$

$

SHAREHOLDERS’ CAPITAL

 

  

$

1,537,863

$

1,537,110

EQUITY COMPONENT OF CONVERTIBLE DEBENTURES

 

  

 

 

Balance, beginning of period

 

  

$

$

13,029

Settled with common share

(13,029)

Balance, end of period

 

  

$

$

CONTRIBUTED DEFICIT

 

  

 

 

Balance, beginning of period

 

  

$

(11,634)

$

(29,826)

Add: Share-based compensation expense

 

12(a)

 

1,027

 

4,122

Transferred from equity component

13,029

Less: Share-based units exercised

(176)

Non-cash deferred share grants

 

  

 

 

23

Balance, end of period

 

  

$

(10,607)

$

(12,828)

NON-CONTROLLING INTEREST

 

  

 

 

Balance, beginning of period

 

  

$

(392)

$

(414)

Foreign exchange impact on non-controlling interest

 

  

 

62

 

112

Loss attributable to non-controlling interest

 

  

 

(60)

 

(113)

Balance, end of period

 

  

$

(390)

$

(415)

TOTAL SHAREHOLDERS’ EQUITY (DEFICIT)

 

  

$

12,576

$

(170,749)

See accompanying notes to the Interim Condensed Consolidated Financial Statements

4

JUST ENERGY GROUP INC.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited in thousands of Canadian dollars)

    

Six months ended September 30, 

Notes

2021

    

2020

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

OPERATING

 

  

 

  

 

  

Profit from continuing operations before income taxes

 

  

$

600,136

$

33,249

Loss from discontinued operations before income taxes

 

  

 

 

(4,158)

Profit before income taxes

 

  

 

600,136

 

29,091

Items not affecting cash

 

  

 

 

Amortization and depreciation

 

12(a)

 

9,239

 

13,071

Share-based compensation expense

 

12(a)

 

1,027

 

4,122

Financing charges, non-cash portion

 

  

 

4,316

 

16,576

Unrealized (gain) loss in fair value of derivative instruments and other

 

6

 

(579,652)

 

7,619

Gain from September 2020 Recapitalization transaction

(76,972)

Unrealized gain on investment

16(a)

(29,000)

Net change in working capital balances

 

  

 

9,466

 

36,123

Liabilities subject to compromise

9,020

Adjustment for discontinued operations, net

 

  

 

 

931

Income taxes paid

 

  

 

(2,176)

 

(7,763)

Cash inflow from operating activities

 

  

 

22,376

 

22,798

INVESTING

 

  

 

 

Purchase of property and equipment

 

  

 

(383)

 

(44)

Purchase of intangible assets

 

  

 

(4,454)

 

(4,629)

Cash outflow from investing activities

 

  

 

(4,837)

 

(4,673)

FINANCING

 

  

 

 

Proceeds from DIP Facility

 

8

 

31,425

 

Repayment of long-term debt

 

8

 

(1,585)

 

(3,252)

Leased asset payments

 

 

(1,361)

 

(2,085)

Debt issuance costs

(6,625)

Share swap payout

(21,488)

Credit facilities payments

 

8

 

(63,261)

 

(30,093)

Proceeds from issuance of common stock, net

100,969

Cash inflow (outflow) from financing activities

 

  

 

(34,782)

 

37,426

Effect of foreign currency translation on cash balances

 

  

 

1,206

 

(3,679)

Net cash inflow (outflow)

 

  

 

(16,037)

 

51,872

Cash and cash equivalents, beginning of period

 

  

 

215,989

 

26,093

Cash and cash equivalents, end of period

 

  

$

199,952

$

77,965

Supplemental cash flow information:

 

  

 

 

Interest paid

 

  

$

20,492

$

43,880

See accompanying notes to the Interim Condensed Consolidated Financial Statements

5

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

1.   ORGANIZATION

Just Energy Group Inc. (“Just Energy” or the “Company”) is a corporation established under the laws of Canada to hold securities 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 November 9, 2021.

In February 2021, the State of Texas experienced extremely cold weather (the “Weather Event”). The Weather Event led to increased electricity demand and sustained high prices from February 13, 2021 through February 20, 2021. As a result of the losses sustained and without sufficient liquidity to pay the corresponding invoices from the Electric Reliability Council of Texas, Inc. (“ERCOT”) when due, and accordingly, on March 9, 2021, Just Energy applied for and received creditor protection under the Companies’ Creditors Arrangement Act (Canada) (“CCAA”) from the Ontario Superior Court of Justice (Commercial List) (the “Ontario Court”) and under Chapter 15 (“Chapter 15”) of the Bankruptcy Code in the United States from the Bankruptcy Court of the Southern District of Texas, Houston Division (the “Court Orders” or “CCAA Proceedings”). Protection under the Court Orders allows Just Energy to operate while it restructures its capital structure.

As part of the CCAA filing, the Company entered into a USD $125 million Debtor-In-Possession (“DIP Facility”) financing with certain affiliates of Pacific Investment Management Company (“PIMCO”). The Company entered into Qualifying Support Agreements with its largest commodity supplier and ISO services provider. The Company entered a Lender Support Agreement with the lenders under its Credit Facility (refer to Note 8(c)). The filings and associated USD $125 million DIP Facility arranged by the Company, enabled Just Energy to continue all operations without interruption throughout the United States(“U.S.”) and Canada and to continue making payments required by ERCOT and satisfy other regulatory obligations.

On September 15, 2021, the stay period under the CCAA Proceedings was extended by the Ontario Court to December 17, 2021.

In connection with the CCAA Proceedings, the Company identified the following obligations that are subject to compromise:

    

Amounts in 000's

Trade and other payables

$

551,076

Other non-current liabilities

 

9,815

Current portion of long-term debt

 

471,542

Total liabilities subject to compromise

$

1,032,433

On September 15, 2021, the Ontario Court approved the Company’s request to establish a claims process to identify and determine claims against the Company and its subsidiaries that are subject to the ongoing CCAA Proceedings. As a result of the establishment of the claims process, additional claims may be made against the Company and ultimately determined that are not currently reflected in the Interim Condensed Financial Statements.

The common shares of the Company are listed on the TSX Venture Exchange, under the symbol “JE” and on the OTC Pink Market under the symbol “JENGQ”.

6

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

On June 16, 2021, Texas House Bill 4492 (“HB 4492”) became law in Texas.  HB 4492 provides a mechanism for recovery of (i) ancillary service charges above USD $9,000/MWh during the Weather Event; (ii) reliability deployment price adders charged by the ERCOT during the Weather Event; and (iii) amounts owed to ERCOT due to defaults of competitive market participants, which were subsequently “short–paid” to market participants, including Just Energy, (collectively, the “Costs”), incurred by various parties, including the Company, during the Weather Event, through certain securitization structures.

On July 16, 2021, ERCOT filed the request with the Public Utility Commission of Texas (the “Commission”) and on October 13, 2021, the Commission issued its final order (the “PUCT Order”). The ultimate amount of proceeds that Just Energy will receive has not been fully determined, as entities eligible to opt-out have until November 29, 2021 to decide pursuant to the PUCT Order. However, Just Energy anticipates that it will recover at least USD $100 million of Costs with such proceeds expected to be received in the fourth quarter of fiscal year 2022. The total amount that the Company may recover through the PUCT Order may change materially based on a number of factors, including the entities that decide to opt-out, the outcome of the dispute resolution process initiated by the Company with ERCOT, and any potential challenges to the PUCT Order. There is no assurance that the Company will be able to recover all of the Costs.

2.   OPERATIONS

Just Energy is a retail energy provider specializing in electricity and natural gas commodities and bringing energy efficient solutions, carbon offsets and renewable energy options to customers. Operating in the U.S. and Canada, Just Energy serves both 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, Filter Group Inc. (“Filter Group”), Hudson Energy, Interactive Energy Group, Tara Energy and Terrapass.

Just Energy’s current commodity product offerings include fixed, variable, index and flat rate options. By fixing the price of electricity or natural gas 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 flexibility while retaining the ability to lock into a fixed price at their discretion. Flat-bill products allow customers to pay a flat rate each month regardless of usage. Just Energy derives its gross margin 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 offers green products through Terrapass and its JustGreen program. Green products offered through Terrapass 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. 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, via power purchase agreements and renewable energy certificates. The JustGreen gas product offers carbon offset credits that allow customers to reduce or eliminate the carbon footprint of their homes or businesses. Through the Filter Group, Just Energy provides subscription-based home water filtration systems to residential customers, including under-counter and whole-home water filtration solutions. Just Energy markets its product offerings through multiple sales channels including digital, retail, door-to-door, brokers and affinity relationships.

7

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

3.    FINANCIAL STATEMENT PRESENTATION

(a)  Compliance with IFRS

These Interim Condensed Consolidated Financial Statements have been prepared in accordance with International Accounting Standard (“IAS”) 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”), utilizing the accounting policies Just Energy outlined in its March 31, 2021 annual audited consolidated financial statements, except the adoption of new International Financial Reporting Standards  (“IFRS”). Accordingly, certain informa­tion and footnote disclosures normally included in the March 31, 2021 annual audited consolidated financial statements prepared in accordance with IFRS, as issued by the IASB, have been omitted or condensed.

(b)  Basis of presentation and interim reporting

These 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 March 31, 2021 annual audited consolidated financial statements.

The comparative Interim Condensed Consolidated Financial Statements have been corrected from the interim statements previously presented to conform to the presentation of the current Interim Condensed Consolidated Financial Statements.

The Interim Condensed Consolidated Financial Statements are presented in Canadian dollars, the functional currency of Just Energy, and all values are rounded to the nearest thousands, except where otherwise indicated. The Interim Condensed Consolidated Financial Statements are prepared on a going concern basis under the historical cost convention, except for certain financial assets and liabilities that are stated at fair value.

The interim operating results are not necessarily indicative of the results that may be expected for the full fiscal year ending March 31, 2022, 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 and lowest in October through December and April through June.

Principles of consolidation

The Interim Condensed Consolidated Financial Statements include the accounts of Just Energy and its directly or indirectly owned subsidiaries and affiliates as at September 30, 2021. 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.

Going Concern

Due to the Weather Event and associated CCAA filing, the Company’s ability to continue as a going concern for the next 12 months is dependent on the Company emerging from CCAA protection, maintain liquidity, complying with DIP Facility covenants and extending the DIP Facility maturity. The material uncertainties arising from the CCAA filings cast substantial doubt upon the Company's ability to continue as a going concern and, accordingly the ultimate appropriateness of the use of accounting principles applicable to a going concern. These Interim Condensed Consolidated Financial Statements do not reflect the adjustments

8

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

to carrying values of assets and liabilities and the reported expenses and Interim Condensed Consolidated Statements of Financial Position classifications that would be necessary if the going concern assumption was deemed inappropriate. These adjustments could be material. There can be no assurance that the Company will be successful in emerging from CCAA as a going concern.

(c)  Significant accounting judgments, estimates, and assumptions

The preparation of the Interim Condensed Consolidated Financial Statements requires the use of estimates and assumptions to be made in applying the accounting policies that affect the reported amount of assets, liabilities, income and expenses. The estimates and related assumptions based on previous experience and other factors are 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. There have been no material changes from the disclosures from the March 31, 2021 annual audited consolidated financial statements and notes to the March 31, 2021 annual audited consolidated financial statements with respect to significant accounting judgments, estimates and assumptions.

4.   TRADE AND OTHER RECEIVABLES, NET

(a)  Trade and other receivables, net

As at

As at

    

September 30, 2021

    

March 31, 2021

Trade account receivables, net

$

192,502

$

189,250

Unbilled revenue, net

 

108,499

 

103,986

Accrued gas receivable

 

 

833

Other

 

100,632

 

46,132

$

401,633

$

340,201

(b)  Aging of accounts receivable

Customer credit risk

The lifetime expected credit loss (“ECL”) reflects Just Energy’s best estimate of losses on the accounts receivable and unbilled revenue balances. Just Energy determines the ECL by using historical loss rates and forward-looking factors, if applicable. Just Energy is exposed to customer credit risk on its continuing operations in Alberta, Texas, Illinois (gas), California (gas) and Ohio (electricity) and for certain Commercial customers in dual-billing markets including Illinois (power), Pennsylvania (power), Massachusetts (power), New York and New Jersey. 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 of the above markets.

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 that is recorded in cost of goods sold. Although there is no assurance that the LDCs providing these services will continue to do so in the future, management believes that the risk of the LDCs failing to deliver payment to Just Energy is minimal.

9

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The aging of the trade accounts receivable from the markets where the Company bears customer credit risk was as follows:

As at

As at

    

September 30, 2021

    

March 31, 2021

Current

$

95,831

$

58,737

1–30 days

 

16,023

 

19,415

31–60 days

 

5,218

 

3,794

61–90 days

 

3,539

 

2,144

Over 90 days

 

9,300

 

10,446

$

129,911

$

94,536

The unbilled revenue subject to customer credit risk is $96.6 million as at September 30, 2021 (March 31, 2021-$87.1 million).

(c)  Allowance for doubtful accounts

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

    

As at

    

As at

September 30, 2021

March 31, 2021

Balance, beginning of period

$

23,363

$

45,832

Provision for doubtful accounts

 

11,110

 

34,260

Bad debts written off

 

(19,110)

 

(62,529)

Foreign exchange

 

5,007

 

5,800

Balance, end of period

$

20,370

$

23,363

5.   OTHER CURRENT AND NON-CURRENT ASSETS

    

As at

As at

(a)

Other current assets

    

September 30, 2021

    

March 31, 2021

Prepaid expenses and deposits

$

55,905

$

52,216

Customer acquisition costs

 

42,120

 

45,681

Green certificates assets

 

48,126

 

61,467

Gas delivered in excess of consumption

 

8,001

 

650

Inventory

 

1,703

 

3,391

$

155,855

$

163,405

    

As at

As at

(b)

Other non-current assets

    

September 30, 2021

    

March 31, 2021

Customer acquisition costs

$

31,283

$

27,318

Other long-term assets

 

10,223

 

7,944

$

41,506

$

35,262

10

JUST ENERGY GROUP INC.

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

6.   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 offsets and renewable energy certificates ("RECs"), 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 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 and green power options have been valued using the Black option pricing model using the applicable market forward curves and the implied volatility from other market traded options. Management periodically uses non-exchange-traded swap agreements based on cooling degree days (“CDDs”) and heating degree days (“HDDs”) measured in its utility service territories to reduce the impact of weather volatility on Just Energy’s electricity and natural gas volumes, commonly referred to as “weather derivatives”. The fair value of these swaps on a given measurement station indicated in the derivative contract is determined by calculating the difference between the agreed strike and expected variable observed at the same station.

The following table illustrates unrealized gains (losses) related to Just Energy’s derivative financial instruments classified as fair value through profit or loss and recorded on the Interim Condensed 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 unrealized gain (loss) in fair value of derivative instruments and other on the Interim Condensed Consolidated Statements of Income.

Three months ended September 30, 

Six months ended September 30, 

2021

    

2020

    

2021

    

2020

Physical forward contracts and options (i)

$

133,822

$

(115,147)

$

359,128

$

(66,767)

Financial swap contracts and options (ii)

 

155,093

 

42,544

 

221,487

 

70,665

Foreign exchange forward contracts

 

597

 

(3,028)

 

1,702

 

(9,079)

Unrealized foreign exchange on Term Loan

(6,393)

(2,245)

Unrealized foreign exchange on the 6.5% convertible bond and 8.75% loan transferred to realized foreign exchange resulting from the September 2020 Recapitalization

(12,218)

Weather derivatives (iii)

 

(192)

 

1,769

 

(1,896)

 

(612)

Other derivative options