Just Energy Group Inc. (Canada) T.JE

RE: RE: RE: RE: RE: RE: RE: RE: What am I missing

[tesh]

A couple of points:

1. JE announced it intention to make a normal course issuer bid back in December/11. Curious if this share price is low enough to start defending it? In the past JE has been fairly quick to put out some sort of press release when the price did this sort of thing so I would think that they will do so again.

2. Whoever the researcher is they are undoubtedly looking at JE's policy of adding back "marketing expense to add new gross margin" ($81 million in fiscal 2012) when calculating "Adjusted EBITDA" and "Adjusted Funds from Operations". Calculating AFO this way gives them a 70% of AFO payout ratio in fiscal 2012 (40% in Q4). JE would appear to differentiate between marketing costs to maintain gross margin and marketing to increase future "imbedded gross margin" (i.e. future gross margin locked in via their multi-year contracts) and is almost treating these costs as a non-maintenance capital expenditure. According to their fiscal 2012 year end MD&A the $81 million was spent on increasing this future imbedded gross margin from $1.726 billion to $1.977 billion during fiscal 2012 (a 15% increase). It is an interesting way to look at this type of expenditure but they have been doing it for awhile now so, if it is causing an issue now not sure why.

3. I have had telephone conversations with JE's CFO, Beth Summers, in the past and she acknowledges that the complexity of the accounting for their operations has caused some confusion in the past. Hopefully this is all that is happening again.