Canadian Solar Infrastructure Fund : Summary of Financial Results for Fiscal Period Ended December 31, 2021 (Infrastructure Fund)

Summary of Financial Results for Fiscal Period Ended December 31, 2021 (Infrastructure Fund)

Infrastructure Fund Issuer

SecuritiesCode

Representative

Asset Management Company

Representative

Contact

Scheduled filing date of securities report

Supplementary materials for financial results

Financial results briefing session

					February 14, 2022
Canadian Solar Infrastructure Fund, Inc.		Listed	Stock	Tokyo Stock
	Exchange	Exchange
9284		URL	https://www.canadiansolarinfra.com/
(Title)	Executive Director	(Name)	Hiroshi Yanagisawa
Canadian Solar Asset Management K.K.
(Title)	CEO and Representative	(Name)	Hiroshi Yanagisawa
Director
	Financial Planning
(Title)	Department	(Name)	Yoshie Yoshioka
	Accounting Manager
Tel.	03(6279)0311
		Scheduled date of
March 30, 2022	commencement of cash	March 15, 2022
		distribution payment

YES

YES (For institutional investors and analysts)

(Amounts are rounded down to million yen)

1. Status of Management and Assets for Fiscal Period Ended December 31, 2021 (from July 1, 2021 to December 31, 2021)

(1) Management Status								(Percentage figures are the rate of period-on-period change)
			Operating revenues	Operating income		Ordinary income	Net income
Fiscal period ended		Million yen		%	Million yen		%		Million yen		%		Million yen	%
		3,587		4.7	1,344		(7.8)		1,123		4.5		1,122	4.5
Dec. 2021
Fiscal period ended			3,425		41.9	1,459		69.9		1,074		49.7		1,073	49.8
Jun. 2021
			Profit per unit	Rate of return on equity		Ordinary profit	Ordinary profit to
				to total assets ratio	operating revenue ratio
Fiscal period ended					yen			%				%				%
				2,902			2.8				1.4				31.3
Dec. 2021
Fiscal period ended					3,234			3.5				1.6				31.4
Jun. 2021
(2) Status of Cash Distributions
	Distributions per	Total distributions					Total	Distributions per			Total
		unit		(excluding		Distributions in			unit (including	distributions				Ratio of
	(excluding			distributions in		(including		Payout ratio
	distributions in	distributions in		excess of	excess of	distributions in	distributions in		distributions to
	excess of		earnings per unit		excess of				net assets
	excess of				earnings			excess of
		earnings)						earnings)
	earnings)										earnings)
Fiscal period			Yen	Million yen		Yen		Million yen		Yen		Million yen		%		%
	2,902			1,122		848		327	3,750		1,449		100.0		2.8
ended Dec. 2021
Fiscal period		2,776			1,073		924		357	3,700		1,430		100.0		2.8
ended Jun. 2021

(Note 1) The payout ratio is calculated according to the following formula.

Payout ratio = distributions per unit (excluding distributions in excess of earnings) / profit per unit x 100 (Note 2) The payout ratio and the ratio of distributions to net assets are calculated based on the numerical data excluding

distributions in excess of earnings.

(Note 3) Total distributions in excess of earnings are all refunds of investments that constitute distributions on the decrease of capital contribution under the tax law.

(Note 4) The ratio of the decrease in net assets upon distributions in excess of earnings (refunds of investments that constitute distributions on decrease of capital contribution under the tax law) is 0.010 for the fiscal period ended June 30, 2021 and 0.009 for the fiscal period ended December 31, 2021. In this regard, the ratio of the decrease in net assets is calculated according to Item 4, Paragraph 1, Article 23 of the Ordinance for Enforcement of the Corporation Tax Act.

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(3) Financial Position

	Total assets	Net assets	Equity ratio	Net assets per unit
Fiscal period ended	Million yen	Million yen	%	yen
80,633	40,082	49.7	103,665
Dec. 2021
Fiscal period ended	84,299	40,391	47.9	104,463
Jun. 2021
(4) Status of Cash Flows
	Cash flows from	Cash flows from	Cash flows from	Cash and cash equivalents
	at the end of the fiscal
	operating activities	investing activities	financing activities
	period
Fiscal period ended	Million yen	Million yen	Million yen	Million yen
5,588	(229)	(4,870)	5,101
Dec. 2021
Fiscal period ended	(1,067)	(31,017)	33,867	4,611
Jun. 2021

2. Forecasts of Management Status for Fiscal Period Ending June 30, 2022 (from January 1, 2022 to June 30, 2022), Fiscal Period Ending December 31, 2022 (from July 1, 2022 to December 31, 2022) and Fiscal Period Ending June 30, 2023 (from January 1, 2023 to June 30, 2023)

(Percentage figures are the rate of period-on-period change)

									Distributions per		Distributions per
									unit (excluding	Distributions in	unit (including
	Operating revenues	Operating income	Ordinary income	Net income	distributions in	excess of earnings	distributions in
									excess of	per unit	excess of
									earnings)		earnings)
	Million	%	Million	%	Million	%	Million	%	yen	yen	yen
	yen	yen	yen	yen
Fiscal period
ending Jun.	3,704	3.3	1,388	3.3	1,174	4.6	1,174	4.6	3,036	714	3,750
2022
Fiscal period
ending Dec.	3,722	0.5	1,401	1.0	1,188	1.1	1,187	1.1	3,070	680	3,750
2022
Fiscal period
ending Jun.	3,672	(1.4)	1,381	(1.4)	1,178	(0.8)	1,177	(0.8)	3,045	705	3,750
2023

(Reference)

Fiscal period ending June 30, 2022 (181 days): Forecast total number of investment units issued and outstanding at end of

the period: 386,656 units, Forecast profit per unit: 3,036 yen

Fiscal period ending December 31, 2022 (184 days): Forecast total number of investment units issued and outstanding at end

of the period: 386,656 units, Forecast profit per unit: 3,070 yen

Fiscal period ending June 30, 2023 (181 days): Forecast total number of investment units issued and outstanding at end of

the period: 386,656 units, Forecast profit per unit: 3,045 yen

• Other
• 1. Changes in Accounting Policies, Changes in Accounting Estimates and Retrospective Restatement

(i) Changes in accounting policies associated with amendments to accounting standards, etc.: Yes

(ii) Changes in accounting policies other than (i):			No
(iii) Changes in accounting estimates:			No
(iv) Retrospective restatement			No
(2) Total number of investment units issued and outstanding
(i) Total number of investment units issued and outstanding	Fiscal period	386,656	Fiscal period	386,656
(including treasury units) at end of period	Dec. 2021	Jun. 2021
(ii) Number of treasury units at end of period	Fiscal period	0	Fiscal period	0
Dec. 2021	Jun. 2021

(Note) For the number of investment units based on which profit per unit is calculated, please refer to "Notes on regarding per unit information" on page 32 below.

* Summary of Financial Results is out of scope from the audit by chartered accountant or corporate auditor.

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• Explanation of Appropriate Use of Forecast of Management Status and Other Matters of Special Note
  Forecast of management status and other forward-looking statements contained in this document are based on information that is currently available and certain assumptions that are deemed reasonable by Canadian Solar Infrastructure Fund. Accordingly, the actual management status, etc. may differ materially due to various factors. In addition, the forecast is not a guarantee of the amount of cash distributions. For details of the assumptions underlying the forecast of management status, please refer to "Assumptions Underlying Forecast of Management Status for Fiscal Period Ending June 30, 2022 (January 1, 2022 to June 30, 2022), Fiscal Period Ending December 31, 2022 (July 1, 2022 to December 31, 2022) and Fiscal Period Ending June 30, 2023 (January 1, 2023 to June 30, 2023)," described on or after page 13 below.

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1. Management Policy and Management Status

(1) Management Status

I. Overview of the Fiscal Period under Review

a. Brief History of Canadian Solar Infrastructure Fund

Canadian Solar Infrastructure Fund, Inc. (hereinafter referred to as "CSIF") was established on May 18, 2017 with money invested of 150 million yen (1,500 units) by Canadian Solar Asset Management K.K. (hereafter referred to as the "Asset Manager") as the founder under the Act on Investment Trusts and Investment Corporations (Act No. 198 of 1951 including subsequent amendments; hereinafter referred to as the "Investment Trusts Act"). Registration with the Kanto Local Finance Bureau was completed on June 9, 2017 (registration number 127, filed with the Director of the Kanto Local Finance Bureau).

CSIF issued additional investment units (177,800 units) through a public offering on October 27, 2017, listed its investment units on Tokyo Stock Exchange Inc.'s (hereinafter referred to as the "Tokyo Stock Exchange") Infrastructure Fund Market on October 30, 2017 (security code: 9284), and issued new investment units (2,890 units) through third-party allotment on November 28, 2017.

In addition, CSIF issued new investment units (46,667 units) through public offering on September 5, 2018 and issued new investment units (2,333 units) through third-party allotment on October 4, 2018.

CSIF then issued new investment units (151,500 units) through public offering on March 5, 2021 and issued new investment units (3,966 units) through third-party allotment on April 7, 2021.

As a result of the above, the total units issued at the end of the fiscal period under review (as of December 31, 2021) were 386,656 units.

b. Investment Environment

Real GDP in July-September 2021 declined by 0.9% quarter on quarter (3.6% on an annualized basis), as consumer spending and capital expenditures slumped on the double whammy of the spread of the Delta variant and supply constraints in the automotive sector, pushing GDP growth well into negative territory. In October-December 2021, the pace of growth appears to have picked up again as Japan somewhat belatedly joined other nations in learning to live with COVID-19 and the supply constraints in the automotive sector also started to ease and, as of January 21, 2022, high growth is forecast, with real GDP estimated to have grown by 6.6% on an annualized basis. However, the pace of growth is expected to slow again in January- March 2022. The rapid spread of the Omicron variant led to sharp decline in the flow of people during January, and a decline in consumer spending in January-March 2022 is considered inevitable. However, the experiences of other nations indicate that the downward pressure from the Omicron variant is not only fast-spreading but also quick to subside and the adverse effects are expected to have diminished considerably by March.

On the stock market in Japan, the Nikkei Stock Average entered an adjustment phase after reaching ¥30,467 on February 16, 2021, a phase which lasted into the second half of the year. However, after hitting ¥27,013, its lowest level in all of 2021, on August 20, 2021, the Nikkei Stock Average rallied sharply on September 3 after then Prime Minister Yoshihide Suga announced that he planned to quit, reaching ¥30,670, its highest level since August 1990 and its highest level in all of 2021, on September

1. The benchmark index subsequently took a downturn after Fumio Kishida won the LDP presidential election on September

1. and, after seesawing through to the end of the year, closed at ¥28,791 on December 30, its highest year-end close since 1989. Meanwhile, the Infrastructure Fund Market saw growing interest among investors in the accelerated introduction of renewables as part of Japan's decarbonization measures and, as a result, the TSE Infrastructure Fund Index added to the significant gains made in the second half of 2020, continuing to climb through the first half of 2021 and reaching a record high of 1,201.71 points on June 9. However, in the second half of 2021, changes were more muted, with the index seesawing within a very narrow range. Then, at the beginning of November, the TSE Infrastructure Fund Index entered an adjustment phase, triggered by the announcement of public offerings by two infrastructure funds, standing at 1,117.22 points on December 30, which was slightly
   low compared with the end of the 2020.
   "Curtailment," which is implemented by an electricity transmission and distribution business operator (Note 1) to adjust the supply-demand balance, was implemented by Kyushu Electric Power Transmission and Distribution Co., Inc., with respect to "renewable energy power generation facilities" (Note 2) held by CSIF, for one day in July, four days in September, 11 days in October, five days in November, and one day in December, totaling 22 days during the period under review. This was much less frequent than in the previous period.
   Kyushu Electric Power Transmission and Distribution Co., Inc. revised its curtailment operation procedures from FY2021. When the number of days of curtailment for a business operator subject to the old rule (Note 3) is expected to exceed 30 days in any fiscal year, Kyushu Electric Power Transmission and Distribution Co., Inc. will now uniformly curtail (apply the same curtailment pattern (% curtailment of plant's rated output) to uniformly curtail by the hours and amount necessary) all business operators subject to the designated business operator rule (Note 3), whilst making full use of the maximum 30 days' curtailment
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for business operators subject to the old rule. However, under the current curtailment operation procedures, business operators subject to the old rule are subject to so-called offline curtailment (curtailment of photovoltaic power generation facilities which have not installed a system for online curtailment (curtailment of photovoltaic power generation facilities with a remote output controller installed; the same will apply below); the same will apply below) and, since under this curtailment arrangement, the curtailment percentage is higher than for online curtailment applied to business operators subject to the no time limit, no compensation rule (Note 3), CSIF is encouraging power plants of business operators subject to the old rule to also shift to the online curtailment arrangement. All power plants in the Kyushu Electric Power jurisdiction owned by CSIF are subject to the 30-day rule for curtailment but they are gradually shifting to the online curtailment arrangement, and nine power plants, with the exception of CS Hiji-machiDai-ni Power Plant, have completed the shift as of the end of the fiscal period under review.

Although some electric power companies in other regions have also disclosed policies relating to renewable energy curtailment, as of the end of the fiscal period under review, no further curtailments have been instituted.

On October 26, 2020, at the 203rd extraordinary session of the Diet, then Prime Minister Yoshihide Suga declared the goal of achieving overall zero emissions of greenhouse gases by 2050, that is the creation of a carbon neutral, decarbonized society. Since this declaration, activities for the realization of a decarbonized society have picked up pace, and with countries announcing their targets for slashing greenhouse gas emissions at a global climate summit held in April 2021, Japan also set a new 2030 reduction target of 46% compared with 2013 levels and announced that it would continue its challenge towards a 50% reduction. This represents a drastic increase from Japan's previous target of a 26% reduction.

Then, in June 2021, the Ministry of Economy, Trade and Industry published the FY2020 Annual Report on Energy (Japan's Energy White Paper 2021). This report includes an analysis under the heading "Changes in the situation concerning energy" to the effect that while more and more countries, including Japan, are declaring that they will become carbon neutral, private-sector enterprises are also stepping up initiatives for decarbonization, with an increase in ESG investment and diversification of investment strategies in the financial services sector and an increasing number of non-financial corporations signing up to the RE100 initiative or otherwise declaring that they will become carbon neutral. In some cases, companies are not only reducing greenhouse gas emissions associated with their own energy consumption but are also seeking to reduce the carbon footprint in their supply chains (and using carbon trading to achieve targets) and low-carbon energy access will affect competitiveness as a location for industry in the future (in competition between countries and competition between cities and regions). Under the heading "Path to becoming carbon neutral by 2050," the report also stresses that to realize a carbon neutral society, it is necessary to pursue decarbonization through expansion of low carbon resources in the electricity sector and through electrification, use of hydrogen for heating where electrification is impossible, and capture and reuse of any remaining CO2 (conversion to methane or synthetic fuel, etc.) in non-electricity sectors (industrial, consumer and transport sectors).

Furthermore, on October 22, 2021, the Cabinet approved the 6th Strategic Energy Plan. The 6th Strategic Energy Plan indicates the direction of energy policies for achievement of carbon neutrality by 2050 (goal declared in October 2020) along with the new target of reducing greenhouse gas emissions by 46% by FY2030 and trying to push the reduction as high as 50% (targets declared in April 2021) (Note 5). It positioned "overcoming issues in Japan's energy supply-and-demand structure" as an important theme (Note 5) and committed to maximizing efforts to realize Japan's goal of "S+3E" (the conventional three E's of energy security, economic efficiency, and environmental protection, plus safety) (Note 5).

It states that a crucial part of energy policies for 2030 (Note 5) is to ensure, with "S+3E" as the basic premise, that renewables become a major power source and to focus on renewables as an overriding principle, encouraging maximum adoption whilst reducing the impact on Japanese people and seeking co-existence with local communities (Note 5). It goes on to list as specific initiatives (i) ensuring renewables are developed in the right places, coexisting with local communities, (ii) tightening project discipline, (iii) reducing costs and integrating renewables into the energy market, (iv) overcoming grid constraints, (v) rationalizing regulation and (vi) promoting the development of technologies (Note 5).

The ambitious new power-source composition for 2030 would be 36-38% for renewable energies (up from 22-24% in the current projected mix), 20-22% for nuclear power (unchanged), 20% for LNG (down from 27%); 19% for coal (down from 26%), and 2% for oil (down from 3%). The renewable energy mix would be 14-16% for solar power, 5% for wind power, 1% for geothermal power, 11% for hydroelectric power, and 5% for biomass.

Regarding legislation to promote the introduction of renewables, detailed designs (detailed design of FIP system, detailed design of system for nullifying approvals, reserve of demolishing costs for solar power generation facilities) of amendments to the Act on Special Measures Concerning Procurement of Electricity from Renewable Energy Sources by Electricity Utilities (hereinafter referred to as the "2020 Amendment to the Renewable Energy Special Measures Act") included in the Act to Partially Amend the Electricity Business Act and other Acts to Establish a Resilient and Sustainable Electricity Supply System (hereinafter referred to as the "Act for Establishing Energy Supply Resilience") have been examined by METI's various subcommittees and working groups, and progress has been made on the task of revising government and ministerial ordinances and METI notices based on the results of these examinations, in anticipation of enforcement in April 2022. For details of the risks which might

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