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 period ended March 31, 2023.

Results for the three-month period ended March 31, 2023 (“Q1 2023”) 

In millions	Q1 2023	Q1 2022	Change	%	Q1 2023	Q1 2022	Change
(except for % figures)	RMB	RMB	RMB		CAD	CAD	CAD
Continuing Operations
Revenue	100.1	95.4	4.7	5%	19.8	19.0	0.8
Gross Profit	28.5	37.3	(8.8)	-24%	5.6	7.4	(1.8)
Gross Profit Margin	28.5%	39.2%	-10.7%		28.5%	39.2%	-10.7%
Net Profit	3.5	11.3	(7.8)	-69%	0.7	2.3	(1.6)
Adjusted Net Profit	0.7	5.3	(4.6)	-86%	0.1	1.1	(1.0)
EBITDA	20.0	30.5	(10.6)	-35%	4.0	6.1	(2.1)
Adjusted EBITDA	17.2	24.6	(7.4)	-30%	3.4	4.9	(1.5)

Revenue in Q1 2023 was RMB100.1 million (approx. CAD19.8 million), an increase of RMB4.7 million (approx. CAD0.8 million), or 5%, from RMB95.4 million (approx. CAD19.0 million) for the three-month period ended March 31, 2022 (“Q1 2022”). Signs of recovery of business in Sanya City were evidenced by the breaking of the decreasing trend in sales volume and revenue from commercial customers in the gas supply segment in Q1 2023. Revenue from residential customers recorded a slight decrease in terms of volume and sales amount in Q1 2023 which was attributed to less time spent at homestay during Q1 2023 following the release of COVID restrictions and policy at the end of 2022.

Gross profit in Q1 2023 was RMB28.5 million (approx. CAD5.6 million), a decrease of RMB8.8 million (approx. CAD1.8 million), or 24%, from RMB37.3 million (approx. CAD7.4 million) in Q1 2022. Gross margin in Q1 2023 was 28.5%, a decrease of 10.7 percentage points as compared to 39.2% in Q1 2022. Lower gross profit and margin in Q1 2023 were mainly attributable to high purchase price of LNG in Q1 2023 which could not be fully transferred to our customers in Sanya CNG vehicle station and the increase in the purchase price of pipeline gas which attributed to the renewal of the two-year gas purchase contracts which became effective from April 1, 2022, alongside the negative margin for the Integrated Smart Energy segment while continuing with the effort to procure further hotel users to achieve critical mass.

In millions	Q1 2023	Q1 2022	Change	%	Q1 2023	Q1 2022	Change
(except for % figures)	RMB	RMB	RMB		CAD	CAD	CAD
Continuing Operations
Net profit for the period	3.5	11.3	(7.8)	-69%	0.7	2.3	(1.6)
Non-recurring items
Fair value change on derivative financial instrument	(2.0)	(6.2)	4.2	-68%	(0.4)	(1.2)	0.8
Recognition of share-based payment expenses	-	0.2	(0.2)	-100%	-	0.0	(0.0)
Government financial assistance	(0.8)	-	(0.8)	100%	(0.2)	-	(0.2)
Adjusted net profit for the period (non-IFRS)	0.7	5.3	(4.6)	-86%	0.1	1.1	(1.0)

Net profit in Q1 2023 was RMB3.5 million (approx. CAD0.7 million), a decrease of RMB7.8 million (approx. CAD1.6 million), or 69%, from RMB11.3 million (approx. CAD2.3 million) in Q1 2022. Net profit in Q1 2023 included certain adjusting items. On a comparable basis, after excluding the gain of RMB2.0 million (approx. CAD0.4 million) in fair value change on derivative financial instrument of loan discharge agreement in respect of the commitment by the estate of Mr. Lin to subscribe for common shares under a related party loan (please refer to the Related Party Transaction section of the MD&A for more details), recognition of share-based payment expenses of RMB Nil (Q1 2022: RMB0.2 million) and the non-recurring government financial assistance of RMB0.8 million (approx. CAD0.2 million) (Q1 2022: RMB Nil), the Company reported an adjusted net profit of RMB0.7 million (approx. CAD0.1 million) in Q1 2023, a decrease of RMB4.6 million (approx. CAD1.0 million), or 86% from an adjusted net profit of RMB5.3 million (approx. CAD1.1 million) reported in Q1 2022.

In millions	Q1 2023	Q1 2022	Change	%	Q1 2023	Q1 2022	Change
(except for % figures)	RMB	RMB	RMB		CAD	CAD	CAD
Continuing Operations
EBITDA for the period	20.0	30.5	(10.6)	-35%	4.0	6.1	(2.1)
Non-recurring items
Fair value change on derivative financial instrument	(2.0)	(6.2)	4.2	-68	(0.4)	(1.2)	0.8
Recognition of share-based payment expenses	-	0.2	(0.2)	-100	-	0.0	(0.0)
Government financial assistance	(0.8)	-	(0.8)	100%	(0.2)	-	(0.2)
Adjusted EBITDA for the period	17.2	24.6	(7.4)	-30	3.4	4.9	(1.5)

EBITDA in Q1 2023 was RMB20.0 million (approx. CAD4.0 million), a decrease of RMB10.6 million (approx. CAD2.1 million), or 35% from RMB30.6 million (approx. CAD6.1 million) in Q1 2022.

On a comparable basis, the adjusted EBITDA in Q1 2023 was RMB17.2 million (approx. CAD3.4 million), a decrease of RMB7.4 million (approx. CAD1.5 million), or 30%, from RMB24.6 million (approx. CAD4.9 million) in Q1 2022.

Basic earnings per share (“EPS”) in Q1 2023 was RMB0.09 (CAD0.01) per share. Adjusted EPS in Q1 2023 was RMB0.01 (CAD0.00) per share (non-IFRS).

The continuing recovery of business and economic activities with the relaxation of COVID-19 restriction policy in China is very encouraging and we see our Group returning back to business-as-usual stage and strive for gradual improvement in our financial performance going forward in the coming years. In line with our development plan as an integrated energy player, we will continue to focus on the integrated smart energy segment and the smart mobility segment and expand our businesses in China. This will be achieved via cooperating with our strategic partners and valuable resources in the related sector.

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.

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. In 2009, CF Energy was recognized as being one of China’s the Top Ten Most Influential Brands in the Natural Gas Industry and in 2019, ranked amongst the 2019 TSX Venture 50 top performers on the TSXV for the 2018 year.

CONTACT INFORMATION

Corporate Investment RelationsInvestor.relations@changfengenergy.cn

Charles WangExecutive Assistant to CEO & Chair of the BoardZhaoyu.wang@changfengenergy.cn

Frederick WongDirector of the Boardfred.wong@changfengenergy.cn

Mike LiuVP Capital Marketmike.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 (Loss). 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.