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 audited consolidated financial results for the year ended December 31, 2020.

Results for the year ended December 31, 2020

In millions	2020		2019		Change		%		2020		2019		Change		%
(except for % figures)	RMB		RMB		RMB				CAD		CAD		CAD
Revenue	368.2		438.0		(69.8	)	-16	%	71.6		84.2		(12.6	)	-15	%
Gross Profit	140.1		174.7		(34.6	)	-20	%	27.2		33.6		(6.4	)	-19	%
Gross Profit Margin	38.1	%	39.9	%	-1.8	%			38.1	%	39.9	%	-1.8	%
Net Profit	45.6		47.2		(1.6	)	-3	%	8.9		9.1		(0.2	)	-2	%
Adjusted net Profit	36.2		45.8		(9.6	)	-21	%	7.2		8.9		(1.7	)	-19	%
EBITDA	91.5		96.4		(4.9	)	-5	%	17.7		18.4		(0.7	)	-4	%
Adjusted EBITDA	82.1		95.0		(12.9	)	-14	%	16.0		18.2		(2.2	)	-12	%

Revenue in 2020 was RMB368.2 million (approx. CAD71.6 million), a decrease of RMB69.8 million (approx. CAD12.6 million), or 16%, from RMB438.0 million (approx. CAD84.2 million) for in 2019. The drop in revenue mainly reflected the negative impact of COVID-19 pandemic on our core businesses in 2020.

Gross profit in 2020 was RMB140.1 million (approx. CAD27.2 million), a decrease of RMB34.6 million (approx. CAD6.4 million), or 20%, from RMB174.7 million (approx. CAD33.6 million) in 2019. Gross margin in 2020 was 38.1%, a slight decrease of 1.8 percentage points as compared to 39.9% in 2019. Lower gross profit and margin in 2020 were mainly attributable to the higher mix of revenue from residential customers with lower margin than commercial customers with higher margin and the lowering of gas selling price as a result of price control imposed by the Sanya government which commenced from August 1, 2020, and these were partially offset by the decrease in consumption of LNG with relatively higher cost than PNG for our gas distribution business.

In millions	2020		2019		Change		%		2020		2019		Change		%
(except for % figures)	RMB		RMB		RMB				CAD		CAD		CAD
Net profit for the year	45.6		47.2		(1.6	)	-3	%	8.9		9.1		(0.2	)	-2	%
Non-recurring items
Fair value change on derivative financial instrument	(11.4	)	(0.5	)	(10.9	)	>999	%	(2.2	)	(0.1	)	(2.1	)	>999	%
Government grant	(5.2	)	-		(5.2	)	100	%	(1.0	)	-		(1.0	)	100	%
Recognition (reversal) of share-based payment expenses	1.7		(3.3	)	5.0		-150	%	0.4		(0.6	)	1.0		-151	%
Impairment loss recognized on termination of operation of a subsidiary	5.5		-		5.5		100	%	1.1		-		1.1		100	%
Listing expenses	-		2.4		(2.4	)	-100	%	-		0.5		(0.5	)	-100	%
Adjusted net profit for the year (non-IFRS)	36.2		45.8		(9.6	)	-21	%	7.2		8.9		(1.7	)	-19	%

Net profit in 2020 was RMB45.6 million (approx. CAD8.9 million), a slight decrease of RMB1.6 million (approx. CAD0.2 million), or 3%, from RMB47.2 million (approx. CAD9.1 million) in 2019. Net profit in 2020 included non-recurring items. On a comparable basis, after excluding the gain in fair value change on derivative financial instrument of RMB11.4 million (approx. CAD2.2 million) 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), the non-recurring government relief of RMB5.2 million (approx. CAD1.0 million), share-based payment charges of RMB1.7 million (approx. CAD0.4 million), impairment loss on termination of operation of a subsidiary of RMB5.5 million (approx. CAD1.1 million), the Company reported a comparatively respectable adjusted net profit of RMB36.2 million (approx. CAD7.2 million) in 2020, a decrease of RMB9.6 million (approx. CAD1.7 million), or 21% from to that of RMB45.8 million (approx. CAD8.9 million) reported in 2019.

In millions	2020		2019		Change		%		2020		2019		Change		%
(except for % figures)	RMB		RMB		RMB				CAD		CAD		CAD
EBITDA for the year	91.5		96.4		(4.9	)	-5	%	17.7		18.4		(0.7	)	-4	%
Non-recurring items
Fair value change on derivative financial instrument	(11.4	)	(0.5	)	(10.9	)	>999	%	(2.2	)	(0.1	)	(2.1	)	>999	%
Government grant	(5.2	)	-		(5.2	)	100	%	(1.0	)	-		(1.0	)	100	%
Recognition (reversal) of share-based payment expenses	1.7		(3.3	)	5.0		-150	%	0.4		(0.6	)	1.0		-151	%
Impairment loss recognized on termination of operation of a subsidiary	5.5		-		5.5		100	%	1.1		-		1.1		100	%
Listing expenses	-		2.4		(2.4	)	-100	%			0.5		(0.5	)	-100	%
Adjusted EBITDA for the year	82.1		95.0		(12.9	)	-14	%	16.0		18.2		(2.2	)	-12	%

EBITDA in 2020 was RMB91.5 million (approx. CAD17.8 million), a decrease of RMB4.9 million (approx. CAD0.7 million), or 5% from RMB96.4 million (approx. CAD18.5 million) in 2019.

On a comparable basis, the adjusted EBITDA in 2020 was RMB82.1 million (approx. CAD16.0 million), a decrease of RMB12.9 million (approx. CAD2.2 million), or 14%, from RMB95.0 million (approx. CAD18.2 million) in 2019.

Chairman statement

Ann Siyin Lin, CEO and Chair of the Board, states that:

We are very encouraged to see the momentum of economic recovery continuing to pick up following the successful abatement of COVID-19 pandemic which affected all industries in China in the early part of the 2020 year. With the lifting of restrictions and quarantine measures in China which saw recovery of revenue from our core businesses from being 26% down in the first half of 2020 to a recovered level of only 16% down overall for the year. Despite the negative impact of the pandemic and the compulsory price reduction in gas sales price on the top line, we have maintained respectable adjusted bottom line profit as compared with that for the 2019 year.

On the smart energy front, we saw the Meishan Project officially commence operation in March 2021 after it successfully completed its earlier test run before the Chinese New Year holidays, and the Haitang Bay Integrated Smart Energy Project expecting to commence commercial operation in early Q3 2021. Our EV battery swap business made its debut in the 2020 year with the first station beginning operations in July 2020 followed by another one in Haitang Bay.

Going forward, we expect to be under more pressure with further gas sales price reductions and the implementation of the new policy to adjust and/or eliminate certain meter upgrade fees and non-contracted individual customer’s connection fees in Hainan effective from March 1, 2021 which will impact on our traditional profitable pipeline construction business. In the long run, while our integrated smart energy and EV battery swap businesses will help to lessen the Group’s sole reliance on the natural gas market, which is highly susceptible to impact of the pandemic and government regulatory and policy changes, they will also be the main drivers for growth and profitability going forward. We will continue to take proactive actions to mitigate potential challenges which the Company may face for sustained long-term growth and enhancement of return to our shareholders.

The audited 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.

TELE-CONFERENCE

A tele-conference will be held following the release of this press release and the results of the Group, details of which will be provided by way of a separate press release in due course.

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. 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 markets. Readers are cautioned that all Forward-Looking Statements involve risks and uncertainties, including those risks and uncertainties detailed in the Corporation’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.

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.