CF Energy Announces Q2 and 1H Result of 2024

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 six-month periods ended June 30, 2024 (“Q2 2024 and 1H 2024” respectively).  

Q2 2024 financial highlights

Continuing Operations 

In millions	Q2 2024		Q2 2023		Change		%		Q2 2024		Q2 2023		Change
(except for % figures)	RMB		RMB		RMB				CAD		CAD		CAD
Continuing Operations
Revenue	101.3		109.3		(8.0	)	-7	%	19.1		21.3		(2.2	)
Gross Profit	15.6		33.5		(17.9	)	-53	%	2.9		6.5		(3.6	)
Gross Profit Margin	15.4	%	30.6	%	-15.2	%
Net Profit (loss)	(8.4	)	16.5		(24.9	)	-151	%	(1.6	)	3.2		(4.8	)
Adjusted net Profit (loss) [Non-IFRS]	(8.4	)	13.8		(22.2	)	-161	%	(1.6	)	2.7		(4.3	)
EBITDA	9.1		32.0		(22.9	)	-71	%	1.7		6.2		(4.5	)
Adjusted EBITDA [Non-IFRS]	9.1		29.3		(20.2	)	-69	%	1.7		5.7		(4.0	)

Revenue in Q2 2024 was RMB101.3 million (approx. CAD19.1 million), a decrease of RMB8.0 million (approx. CAD2.2 million), or 7%, from RMB109.3 million (approx. CAD21.3 million) for the three-month period ended June 30, 2023 (“Q2 2023”).

Gross profit in Q2 2024 was RMB15.6 million (approx. CAD2.9 million), a decrease of RMB17.9 million (CAD3.6 million) or 53% from RMB33.5 million (approx. CAD6.5 million) in Q2 2023.   Overall Gross margin in Q2 2024 was 15.4%, a decrease of 15.2 percentage points from 30.6% in Q2 2023.   

In millions	Q2 2024		Q2 2023		Change		%		Q2 2024		Q2 2023		Change
(except for % figures)	RMB		RMB		RMB				CAD		CAD		CAD
Continuing Operations
Net profit (loss) for the period	(8.4	)	16.5		(24.9	)	-151	%	(1.6	)	3.2		(4.8	)
Non-recurring/non-operating items
Fair value change on derivative financial instrument	-		(2.7	)	2.7		-100	%	-		(0.5	)	0.5
Government financial assistance	-		-		-		0	%	-		-		-
Adjusted net profit (loss) for the period (Non-IFRS)	(8.4	)	13.8		(22.2	)	-161	%	(1.6	)	2.7		(4.3	)

Net loss in Q2 2024 was RMB8.4 million (approx. CAD1.6 million), a decrease of RMB24.9 million (approx. CAD4.8 million), or 151% from RMB16.5 million (approx. CAD3.2 million) in Q2 2023. Net loss in Q2 2024 did not include non-recurring items. On a comparable basis, after excluding the non-recurring items, the fair value change on derivative financial instrument of RMB2.7 million (approx. CAD0.5 million), the adjusted net profit in Q2 2023 (non-IFRS) was RMB13.8 million (approx. CAD2.7 million). Adjusted net loss in Q2 2024 remained at RMB8.4 million, a decrease of RMB22.2 million (approx. CAD4.3 million) or 161% from adjusted net profit of RMB13.8 million (approx. CAD2.7 million) in Q2 2023.

Loss per share (basic and diluted) in Q2 2024 was RMB0.09 (CAD0.02) per share, a decrease of RMB0.32 (CAD0.06), or 139% from earnings per share (basic and diluted) of RMB0.23 (CAD0.04) in Q2 2023. 

In millions	Q2 2024		Q2 2023		Change		%		Q2 2024		Q2 2023		Change
(except for % figures)	RMB		RMB		RMB				CAD		CAD		CAD
Continuing Operations
EBITDA for the period	9.1		32.0		(22.9	)	-71	%	1.7		6.2		(4.5	)
Non-recurring/non-operating items
Fair value change on derivative financial instrument	-		(2.7	)	2.7		-100	%	-		(0.5	)	0.5
Government financial assistance	-		-		-		0	%	-		-		-
Adjusted EBITDA for the period (Non-IFRS)	9.1		29.3		(20.2	)	-69	%	1.7		5.7		(3.9	)

EBITDA (Non-IFRS measure) in Q2 2024 was RMB9.1 million (approx. CAD1.7 million), a decrease of RMB22.9 million (approx. CAD4.5 million), or 71%, from RMB32.0 million (approx. CAD6.2 million) in Q2 2023. EBITDA in Q2 2024 did not include non-recurring items. On a comparable basis, after excluding the non-recurring items, the fair value change on derivative financial instrument of RMB2.7 million (approx. CAD0.5 million), the adjusted EBITDA in Q2 2023 (non-IFRS) was RMB29.3 million (approx. CAD5.7 million). Adjusted EBITDA in Q2 2024 remained at RMB9.1 million, a decrease of RMB20.2 million (approx. CAD3.9 million), or 69% from the adjusted EBITDA of RMB29.3 million (approx. CAD5.7 million) in Q2 2023.

1H 2024 financial highlights

Continuing Operations 

In millions	1H 2024		1H 2023		Change		%		1H 2024		1H 2023		Change
(except for % figures)	RMB		RMB		RMB				CAD		CAD		CAD
Continuing Operations
Revenue	250.4		203.1		47.3		23	%	47.1		39.5		7.6
Gross Profit	48.3		61.7		(13.4	)	-22	%	9.1		12.0		(2.9	)
Gross Profit Margin	19.3	%	30.4	%	-11.1	%
Net Profit	1.5		20.7		(19.2	)	-93	%	0.3		4.0		(3.7	)
Adjusted net Profit	1.5		15.2		(13.7	)	-69	%	0.3		3.0		(2.7	)
EBITDA	38.7		52.6		(13.9	)	-26	%	7.3		10.2		(2.9	)
Adjusted EBITDA	38.7		47.1		(8.4	)	-18	%	7.3		9.2		(1.9	)

Revenue in 1H 2024 was RMB250.4 million (approx. CAD47.1 million), an increase of RMB47.3 million (approx. CAD7.6 million), or 23%, from RMB203.1 million (approx. CAD39.5 million) for the six-month period ended June 30, 2023 (“1H 2023”).

Gross profit in 1H 2024 was RMB48.3 million (approx. CAD9.1 million), a decrease of RMB13.4 million (CAD2.9 million), or 22% from RMB61.7 million (approx. CAD12.0 million) in 1H 2023. Overall Gross margin in 1H 2024 was 19.3%, a decrease of 11.1 percentage points from 30.4% in 1H 2023. 

In millions	1H 2024		1H 2023		Change		%		1H 2024		1H 2023		Change
(except for % figures)	RMB		RMB		RMB				CAD		CAD		CAD
Continuing Operations
Net profit for the period	1.5		20.7		(19.2	)	-93	%	0.3		4.0		(3.7	)
Non-recurring items
Fair value change on derivative financial instrument	-		(4.7	)	4.7		-100	%	-		(0.9	)	0.9
Government financial assistance	-		(0.8	)	0.8		-100	%	-		(0.1	)	0.1
Adjusted net profit for the period (non-IFRS)	1.5		15.2		(13.7	)	-90	%	0.3		3.0		(2.7	)

Net profit in 1H 2024 was RMB1.5 million (approx. CAD0.3 million), a decrease of RMB19.2 million (approx. CAD3.7 million), or 93%, from RMB20.7 million (approx. CAD4.0 million) in 1H 2023. Net profit in 1H 2024 did not include non-recurring items. On a comparable basis, after excluding the non-recurring items, the fair value change on derivative financial instrument of RMB4.7 million (approx. CAD0.9 million) and government financial assistance of RMB0.8 million (approx. CAD0.1 million), the adjusted net profit in 1H 2023 (non-IFRS) was RMB15.2 million (approx. CAD3.0 million). Adjusted net profit in 1H 2024 remained at RMB1.5 million, a decrease of RMB13.7 million (approx. CAD2.7 million), or 90% from RMB15.2 million (approx. CAD3.0 million) in 1H 2023.

Earnings per share (basic and diluted) in 1H 2024 was RMB0.08 (CAD0.02) per share, a decrease of RMB0.24 (CAD0.04), or 75% from earnings per share (basic and diluted) of RMB0.32 (CAD0.06) in Q2 2023. 

In millions	1H 2024		1H 2023		Change		%		1H 2024		1H 2023		Change
(except for % figures)	RMB		RMB		RMB				CAD		CAD		CAD
Continuing Operations
EBITDA for the period	38.7		52.6		(13.9	)	-26	%	7.3		10.2		(2.9	)
Non-recurring items
Fair value change on derivative financial instrument	-		(4.7	)	4.7		-100	%	-		(0.9	)	0.9
Government financial assistance	-		(0.8	)	0.8		-100	%	-		(0.1	)	0.1
Adjusted EBITDA for the period	38.7		47.1		(8.4	)	-18	%	7.3		9.2		(1.9	)

EBITDA (Non-IFRS measure) in 1H 2024 was RMB38.7 million (approx. CAD7.3 million), a decrease of RMB13.9 million (approx. CAD2.9 million), or 26%, from RMB52.6 million (approx. CAD10.2 million) in 1H 2023. EBITDA in 1H 2024 did not include non-recurring items. On a comparable basis, after excluding the effects of non-recurring items, the fair value change on derivative financial instrument of RMB4.7 million (approx. CAD0.9 million) and government financial assistance of RMB0.8 million (approx. CAD0.1 million), adjusted EBITDA in 1H 2023 was RMB47.1 million (approx. CAD9.2 million). Adjusted EBITDA in 1H 2024 remained at RMB38.7 million, a decrease of RMB8.4 million (approx. CAD1.9 million), or 18%, from RMB47.1 million (approx. CAD9.2 million) in 1H 2023.

Company Outlook

The natural gas industry faces a variety of challenges ranging from regulatory impacts to market dynamics, and in the competitive and shifting landscape, we must evolve to embrace the changes and plan ahead.

Distributed Smart Energy Ecosystem – What We Achieved:

CF Energy Corp. has developed from a traditional natural gas company into a comprehensive energy solutions provider that aims to incorporate its smart energy system and battery swapping network via energy storage technology to create a highly integrated and efficient framework for sustainable energy management.

CF Energy’s Haitang Bay integrated smart energy project and Meishan project are examples of standalone distributed energy system with advanced grid technologies that enable real-time monitoring and responsive energy distribution based on demand and supply conditions. Through ice storage technology, the Haitang Bay integrated smart energy system was founded.

We have entered the field of electrochemical energy storage for cost reduction and energy conservation through the mode of battery swapping in new energy vehicles. The CF Energy battery swap station network in Sanya already successfully provides an energy storage and distribution network for the EV taxis in Sanya city.

Distributed Smart Energy Ecosystem – What We Are Currently Doing:

The company is working with partners in the IoT (internet of things), and cloud services field to create an efficient EMS (energy management system) that connects the standalone distributed smart energy systems with various energy storage technologies (including battery storage). - IoT Devices and Sensors are deployed across all components of the energy system—solar panels, energy storage units, battery swapping stations, and consumer endpoints. They collect real-time data on energy production, storage levels, battery health, and consumption patterns. Using historical data and machine learning models, the EMS can predict demand spikes, potential system disruptions, and optimal energy production schedules. This helps in preemptive management, reducing wastage, and increasing system reliability.

Distributed Smart Energy Ecosystem – Vision Moving Forward:

The Company envisions the smart energy centralized cooling for hotels, battery swap stations, and operates as a virtual power plant with active end user participation. The combined energy capacity from the cooling system, battery swap stations, and possibly additional storage units, can act as a virtual power plant, providing grid services such as peak shaving, load balancing, and frequency regulation.

The Company is working to integrate a demand response system where hotels and other end users can opt-in to adjust their energy usage during peak periods in response to incentives. For example, shifting non-essential power usage to off-peak hours. EV owners can charge their vehicles during off-peak hours to benefit from lower rates and reduce grid strain during high-demand periods. Alternatively, V2G (Vehicle to Grid) concept allows EVs to return energy to the grid during peak times, effectively using the vehicle’s battery as a grid resource. Furthermore, utilizing a platform for energy trading that allows surplus energy (from renewable sources and stored energy) to be sold back to the grid or shared among participants will add additional revenue stream and encouraging sustainable practices. The integration must connect all components through a smart grid that enables two-way communication between the energy providers and consumers.

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 [e-mail]

Charles WangExecutive Assistant to CEO & Chair of the [e-mail]

Frederick WongDirector of the [e-mail]

Mike LiuVP Capital [e-mail]

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.