CFY CF Energy Corp

CF Energy Corp. (TSX-V: CFY) (“CF Energy” or the “Company”, together with its subsidiaries, the “Group”), an energy provider in the People’s Republic of China (the ”PRC” or “China”), announces that the Company has filed its unaudited condensed interim consolidated financial results for the three-month and nine-month periods ended September 30, 2022 (“Q3 2022” and “Nine Months in 2022” respectively).  

Q3 2022 financial highlights

Continuing Operations

In millions	Q3 2022		Q3 2021		Change		%		Q3 2022		Q3 2021		Change
(except for % figures)	RMB		RMB		RMB				CAD		CAD		CAD
Continuing Operations
Revenue	61.6		82.6		(21.0)		-25	%	12.0		16.0		(4.0)
Gross Profit	17.9		33.8		(15.9)		-47	%	3.5		6.5		(3.0)
Gross Profit Margin	29.0%		40.9%		-11.9%				29.0%		40.9%		-11.9%
Net Profit (Loss)	(0.4)		9.5		(9.9)		-104	%	(0.1)		1.8		(1.9)
Adjusted Net Profit (Loss)	(2.3)		7.0		(9.3)		-132	%	(0.4)		1.3		(1.7)
EBITDA	14.9		21.9		(7.0)		-32	%	2.9		4.2		(1.3)
Adjusted EBITDA	13.0		19.4		(6.4)		-33	%	2.6		3.7		(1.1)

Revenue in Q3 2022 was RMB61.6 million (approx. CAD12.0 million), a decrease of RMB21.0 million (approx. CAD4.0 million), or 25%, from RMB82.6 million (approx. CAD16.0 million) for the three-month period ended September 30, 2021 (“Q3 2021”). To stem the outbreak of COVID-19 in August 2022, Sanya City was under static management from 6 August 2022 to September 16, 2022. Public transportation was suspended, people’s movements inside the city were restricted to emergency services, and transport links were halted. These factors have resulted in the decrease in demand of natural gas across all revenue segments of the Company.

Gross profit in Q3 2022 was RMB17.9 million (approx. CAD3.5 million), a decrease of RMB15.9 million (CAD3.0 million) or 47% from RMB33.8 million (approx. CAD6.5 million) in Q3 2021.   Overall Gross margin in Q3 2022 was 29.0%, a decrease of 11.9 percentage point from 40.9% in Q3 2021.

In millions	Q3 2022		Q3 2021		Change		%		Q3 2022		Q3 2021		Change
(except for % figures)	RMB		RMB		RMB				CAD		CAD		CAD
Continuing Operations
Net profit (loss) for the period	(0.4)		9.5		(9.9)		-104	%	(0.1)		1.8		(1.9)
Non-recurring items
Fair value change on derivative financial instrument	(2.1)		(3.0)		0.9		-30	%	(0.4)		(0.6)		0.2
Recognition of share-based payment expenses	0.2		0.5		(0.3)		-60	%	0.1		0.1		0.0
Adjusted net profit (loss) for the period (non-IFRS)	(2.3)		7.0		(9.3)		-132	%	(0.4)		1.3		(1.7)

 

Net loss in Q3 2022 was RMB0.4 million (approx. CAD0.1 million), a decrease of RMB9.9 million (approx. CAD1.9 million), or 104%, from net profit of RMB9.5 million (approx. CAD1.8 million) in Q3 2021. Net loss in Q3 2022 included non-recurring items. On a comparable basis, after excluding the non-recurring items: the fair value change on derivative financial instrument of RMB2.1 million (approx. CAD0.4 million) and the recognition of share-based payments of RMB0.2 million (approx. CAD0.1 million), the adjusted net loss in Q3 2022 (non-IFRS) was RMB2.3 million (approx. CAD0.4 million), a decrease of RMB9.3 million (approx. CAD1.7 million) or 132% from adjusted net profit of RMB7.0 million (approx. CAD1.3 million) in Q3 2021.

Basic earnings per share (“EPS”) in Q3 2022 was RMB0.03 (CAD0.01) per share. Adjusted loss per share in Q3 2022 was RMB0.04 (CAD0.01) per share (non-IFRS).

In millions	Q3 2022		Q3 2021		Change		%		Q3 2022		Q3 2021		Change
(except for % figures)	RMB		RMB		RMB				CAD		CAD		CAD
Continuing Operations
EBITDA for the period	14.9		21.9		(7.0)		-32	%	2.9		4.2		(1.3)
Non-recurring items
Fair value change on derivative financial instrument	(2.1)		(3.0)		0.9		-30	%	(0.4)		(0.6)		0.2
Recognition of share-based payment expenses	0.2		0.5		(0.3)		-60	%	0.1		0.1		0.0
Adjusted EBITDA for the period	13.0		19.4		(6.4)		-33	%	2.6		3.7		(1.1)

EBITDA (Non-IFRS measure) in Q3 2022 was RMB14.9 million (approx. CAD2.9 million), a decrease of RMB7.0 million (approx. CAD1.3 million), or 32%, from RMB21.9 million (approx. CAD4.2 million) in Q3 2021. EBITDA in Q3 2022 included non-recurring items. On a comparable basis, after excluding the non-recurring items: the fair value change on derivative financial instrument of RMB2.1 million (approx. CAD0.4 million) and the recognition of share-based payments of RMB0.2 million (approx. CAD0.1 million), the adjusted EBITDA in Q3 2022 (non-IFRS) was RMB13.0 million (approx. CAD2.6 million), a decrease of RMB6.4 million (approx. CAD1.1 million), or 33%, from RMB19.4 million (approx. CAD3.7 million) in Q3 2021.

Nine Months 2022 financial highlights

Continuing Operations

In millions	1-9 2022		1-9 2021		Change		%		1-9 2022		1-9 2021		Change
(except for % figures)	RMB		RMB		RMB				CAD		CAD		CAD
Continuing Operations
Revenue	241.0		250.0		(9.0)		-4	%	46.8		48.3		(1.5)
Gross Profit	78.4		101.9		(23.5)		-23	%	15.2		19.7		(4.5)
Gross Profit Margin	32.5%		40.7%		-8.2%				32.5%		40.7%		-8.2%
Net Profit	11.0		27.4		(16.4)		-60	%	2.1		5.3		(3.2)
Adjusted Net Profit (Loss)	(1.3)		28.9		(30.2)		-104	%	(0.3)		5.6		(5.9)
EBITDA	61.9		64.8		(2.9)		-4	%	12.0		12.5		(0.5)
Adjusted EBITDA	49.6		66.3		(16.7)		-25	%	9.6		12.8		(3.2)

Revenue of Nine Months in 2022 was RMB241.0 million (approx. CAD46.8 million), a decrease of RMB9.0 million (approx. CAD1.5 million), or 4%, from RMB250.0 million (approx. CAD48.3 million) for the nine-month period ended September 30, 2021 (“Nine Months in 2021”). Restriction and lockdown measures came at the height of the summer tourism season which have heavily affected the demand for natural gas in the Sanya City. Despite demand for natural gas in Sanya City from commercial customers gradually recovered in the month of July 2022 after the first outbreak in April/May 2022 but demand got hit again in the month of August 2022 with the second city lockdown. The increase in total revenue for the Nine Months in 2022 was mainly attributed to the increase in revenue from residential customers of pipeline installation and connection as the activities of construction of temporary housing under activation of city redevelopment plan was not affected during the static management period in the Sanya City.

Gross profit for the Nine Months in 2022 was RMB78.4 million (approx. CAD15.2 million), a decrease of RMB23.5 million (CAD4.5 million) or 23% from RMB101.9 million (approx. CAD19.7 million) for the Nine Months in 2021. Overall Gross margin for the Nine Months in 2022 was 32.5%, a decrease of 8.2 percentage point from 40.7% for the Nine Months in 2021.

In millions	1-9 2022		1-9 2021	Change		%		1-9 2022		1-9 2021	Change
(except for % figures)	RMB		RMB	RMB				CAD		CAD	CAD
Continuing Operations
Net profit for the period	11.0		27.4	(16.4)		-60	%	2.1		5.3	(3.2)
Non-recurring items
Fair value change on derivative financial instrument	(12.9)		-	(12.9)		100	%	(2.5)		-	(2.5)
Recognition of share-based payment expenses	0.6		1.5	(0.9)		-60	%	0.1		0.3	(0.2)
Adjusted net profit (loss) for the period (non-IFRS)	(1.3)		28.9	(30.2)		-104	%	(0.3)		5.6	(5.9)

Net profit for the Nine Months in 2022 was RMB11.0 million (approx. CAD2.1 million), a decrease of RMB16.4 million (approx. CAD3.2 million), or 60%, from RMB27.4 million (approx. CAD5.3 million) for the Nine Months in 2021. Net profit for the Nine Months in 2022 included non-recurring items. On a comparable basis, after excluding the non-recurring items: the fair value change on derivative financial instrument of RMB12.9 million (approx. CAD2.5 million) and the recognition of share-based payments of RMB0.6 million (approx. CAD0.1 million), the adjusted net loss in for the Nine Months in 2022 (non-IFRS) was RMB1.3 million (approx. CAD0.3 million), a decrease of RMB30.2 million (approx. CAD5.9 million) or 104% from adjusted net profit of RMB28.9 million (approx. CAD5.6 million) for the Nine Months in 2021.

EPS for the Nine Months in 2022 was RMB0.28 (CAD0.06) per share. Adjusted loss per share for the Nine Months in 2022 was RMB0.02 (CAD0.01) per share (non-IFRS).

In millions	1-9 2022		1-9 2021	Change		%		1-9 2022		1-9 2021	Change
(except for % figures)	RMB		RMB	RMB				CAD		CAD	CAD
Continuing Operations
EBITDA for the period	61.9		64.8	(2.9)		-4	%	12.0		12.5	(0.5)
Non-recurring items
Fair value change on derivative financial instrument	(12.9)		-	(12.9)		100	%	(2.5)		-	(2.5)
Recognition of share-based payment expenses	0.6		1.5	(0.9)		-60	%	0.1		0.3	(0.2)
Adjusted EBITDA for the period	49.6		66.3	(16.7)		-25	%	9.6		12.8	(3.2)

EBITDA (Non-IFRS measure) for the Nine Months in 2022 was RMB61.9 million (approx. CAD12.0 million), a decrease of RMB2.9 million (approx. CAD0.5 million), or 4%, from RMB64.8 million (approx. CAD12.5 million) for the Nine Months in 2022. EBITDA for the Nine Months in 2022 included non-recurring items. On a comparable basis, after excluding the effects of non-recurring items: the fair value change on derivative financial instrument of RMB12.9 million (approx. CAD2.5 million) and the recognition of share-based payments of RMB0.6 million (approx. CAD0.1 million), adjusted EBITDA for the Nine Months in 2022 was RMB49.6 million (approx. CAD9.6 million), a decrease of RMB16.7 million (approx. CAD3.2 million), or 25%, from RMB66.3 million (approx. CAD12.8 million) for the Nine Months in 2021.

As the Company forewarned when released its interim results for the six months ended June 30, 2022 that the citywide lockdown controls implemented by the government due to COVID-19 infections in the Hainan Province had extended their impact to the third quarter of 2022. The lockdown lasted for less than two months and residents were obligated to stay home for the entire lockdown period. This has negatively impacted all our business segments. The COVID-19 controls eased up near the end of September 2022 and we began to see recovery and our electric vehicle (“EV”) battery swap station in Sanya City had started construction immediately in order to serve the upcoming 119 BAIC EU5 taxis, which were expected to be operational starting by the end of 2022. We have also taken the initiative to expand our EV battery swap business footprint to Beihai City through acquisition. Despite the ever-changing and difficult operating environment experienced, the Company is determined to charter through such obstacles and remain on our strategic directions and development going forward.

The unaudited condensed interim consolidated financial results and Management’s Discussion and Analysis (MD&A) can be downloaded from www.SEDAR.com or from the Company's website at www.cfenergy.com.

About CF Energy Corp. (Previously known as: Changfeng Energy Inc.)

CF Energy Corp. is a Canadian public company currently traded on the Toronto Venture Exchange (“TSX-V”) under the stock symbol “CFY”. It is an integrated energy provider and natural gas distribution company (or natural gas utility) in the PRC. CF Energy strives to combine leading clean energy technology with natural gas usage to provide sustainable energy to its customer base in the PRC.

CONTACT INFORMATION

Corporate Investment RelationsInvestor.relations@changfengenergy.cn 647 313-0066

Charles Wang Executive Assistant to CEO & Chair of the Board zhaoyu.wang@changfengenergy.cn

Frederick Wong Director of the Board fred.wong@changfengenergy.cn 

Mike Liu VP Capital Market mike.liu@changfengenergy.cn

Forward-Looking Statements

Certain statements contained in this news release constitute forward-looking statements and forward-looking information (collectively, “Forward-Looking Statements”). All statements, other than statements of historical fact, included or incorporated by reference in this document are Forward-Looking Statements, including statements regarding activities, events or developments that the Company expects or anticipates may occur in the future (including, without limitation, no significant adjustments to the gas selling price and charges for related services imposed by the relevant PRC government, the tourism industry continues to recover from COVID-19 impact and no delay in the development of the electric vehicle battery swap stations or the Haitang Bay Integrated Smart Energy Project). These Forward-Looking Statements can be identified by the use of forward-looking words such as “will”, “expect”, “intend”, “plan”, “estimate”, “anticipate”, “believe” or “continue” or similar words or the negative thereof. No assurance can be given that the plans, intentions or expectations or assumptions upon which these Forward-Looking Statements are based will prove to be correct and such Forward-Looking Statements included in this news release should not be unduly relied upon. Although management believes that the expectations represented in such Forward-Looking Statements are reasonable, there can be no assurance that such expectations will prove to be correct. Such Forward-Looking Statements are not a guarantee of performance and involve known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, performance or achievements to differ materially from the anticipated results, performance or achievements or developments expressed or implied by such Forward-Looking Statements. These factors include, without limitation, no significant and continuing adverse changes in general economic conditions or conditions in the financial, tourism, and gas distribution and electric vehicle markets or delays in the development of key projects. Readers are cautioned that all Forward-Looking Statements involve risks and uncertainties, including those risks and uncertainties detailed in the Company’s filings with applicable Canadian securities regulatory authorities, copies of which are available at www.sedar.com. The Company urges readers to carefully consider those factors. The Forward-Looking Statements included in this news release are made as of the date of this document and the Company disclaims any intention or obligation to update or revise any Forward-Looking Statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities legislation. This news release does not constitute an offer to sell or solicitation of an offer to buy any of the securities described herein and accordingly undue reliance should not be put on such. This news release contains future oriented financial information and financial outlook information (collectively, "FOFI") (including, without limitation, statements regarding expected average production), and are subject to the same assumptions, risk factors, limitations and qualifications as set forth in the above paragraph. The FOFI has been prepared by management to provide an outlook of the Company's activities and results, and such information may not be appropriate for other purposes. The Company and management believe that the FOFI has been prepared on a reasonable basis, reflecting management's reasonable estimates and judgments, however, actual results of operations of the Company and the resulting financial results may vary from the amounts set forth herein. Any FOFI speaks only as of the date on which it is made, and the Company disclaims any intent or obligation to update any FOFI, whether as a result of new information, future events or results or otherwise, unless required by applicable laws.

Non-IFRS Financial Measures.

This news release contains financial terms that are not considered in the International Financial Reporting Standards ("IFRS"): EBITDA, Adjusted EBITDA and Adjusted Net Profit. These financial measures, together with measures prepared in accordance with IFRS, provide useful information to investors and shareholders, as management uses them to evaluate the operating performance of the Company. The Company's determination of these non-IFRS measures may differ from other reporting issuers, and therefore are unlikely to be comparable to similar measures presented by other companies. Further, these non-IFRS measures should not be considered in isolation or as a substitute for measures of performance or cash flows prepared in accordance with IFRS. These financial measures are included because management uses this information to analyze operating performance and liquidity. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release