CIG04 CIG05 CIG10 CIG11 CIG12 CIG06 CIG07 201711280065A
CIG- Moody's downgrades CIG's ratings to Ba3/Baa1.za

Consolidated Infrastructure Group Limited

28 November 2017

Rating Action:
Moody's downgrades CIG's ratings to Ba3/Baa1.za, outlook under review for downgrade
Global Credit Research - 24 Nov 2017

DIFC - Dubai, November 24, 2017 -- Moody's Investors Service, ("Moody's") has today downgraded Consolidated
Infrastructure Group Limited (CIG or Group) long term corporate family rating to Ba3 from Ba2 and long and short
term national scale ratings to Baa1.za and P-2.za from A1.za and P-1.za. Additionally, the short term issuer rating
has been affirmed at NP. This follows the trading announcements from CIG on 8 and 14 November 2017 indicating
weak trading performance for the full year ending 31 August 2017, which in Moody's view will have a negative impact
on its current credit metrics beyond our expectations for a Ba2 rating. The ratings are under review for further
downgrade.

RATINGS RATIONALE

The downgrade to Ba3 reflects Moody's expectation that leverage (adjusted debt/EBITDA) of 2.7x and interest cover
(adjusted EBIT/interest expense) of 2.9x (as of 28 February 2017) will exceed our rating guidance of 3.0x and that in
the current macro-economic environment performance is likely to remain under pressure. In addition, the uncertainty
around the profit and loss recognition on 3 large multi-year engineering contracts as well as future recoveries of
additional work done, will likely lead to lower operating cash flows and put pressure on CIG's liquidity profile as well
as covenant levels. This is in contrast to the strong performance for the six months to 28 February 2017 whereby
revenue and EBITDA grew 29% and 20% respectively, which translated into moderate leverage and interest cover at
the time.

The rating under review for downgrade reflects the limited disclosure needed for Moody's to dimension the full credit
impact on the ratings. Management has indicated the FY2017 results will be made public by 30 November 2017, after
which we will look to conclude on the rating.

The review will focus on (1) the extent of the weak performance and accounting treatment on profitability; (2)
operating and credit metrics relative to ratings guidance; CIG's liquidity profile notably its covenant levels and its
ability to have continued access to ZAR741 million undrawn bank facilities; (4) CIG's ability to manage its working
capital, in particular customer accounts receivables which reached ZAR3.5 billion as of 28 February 2017; and (5) the
extent the current operating challenges will continue over the next 12 to 18 months.

Liquidity as of 28 February 2017 was adequate with cash balances of ZAR560 million, ZAR200 million of undrawn
revolving credit facilities and ZAR571 million of undrawn trade financing and bank overdraft facilities. Covenants were
within trigger levels, with the tightest being EBITDA/interest expense at 4.8x compared to the 4.0x trigger level. CIG
has debt repayment obligations of ZAR204 million and ZAR204 million during 2018 and 2019.

Consolidated Infrastructure Group Limited has been in existence as a listed company on the Johannesburg Stock
Exchange since 2007. It currently operates through four divisions across 22 sub-Saharan African countries: (1)
Consolidated Power Projects (Pty) Ltd (Conco), a leading provider in South Africa and the African continent of
turnkey solutions in the power and electrical industry; (2) Building Materials, comprising two businesses: West End
Claybrick (Pty) Limited, a manufacturer of clay bricks and roof tiles; and Drift Supersand (Pty) Limited, a Gauteng-
based supplier of aggregates (sand, gravel and stone) to various sectors in the construction industry; (3) Tension
Overhead Electrification Pty Ltd (Tractionel), specialises in electrification of railways and overhead traction
equipment; and (4) Angolan Environmental Services Ltd (AES), a service provider to the oil and gas rigs located off
the coast of Angola.

CIG reported consolidated revenues of ZAR5.1 billion (US$360 million) with adjusted EBITDA of ZAR590 million
(US$41 million) as of 28 February 2017

The principal methodology used in these ratings was Construction Industry published in March 2017. Please see the
Rating Methodologies page on www.moodys.com for a copy of this methodology.

Moody's National Scale Credit Ratings (NSRs) are intended as relative measures of creditworthiness among debt
issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from
Moody's global scale credit ratings in that they are not globally comparable with the full universe of Moody's rated
entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by
a ".nn" country modifier signifying the relevant country, as in ".za" for South Africa. For further information on Moody's
approach to national scale credit ratings, please refer to Moody's Credit rating Methodology published in May 2016
entitled "Mapping National Scale Ratings from Global Scale Ratings". While NSRs have no inherent absolute
meaning in terms of default risk or expected loss, a historical probability of default consistent with a given NSR can
be inferred from the GSR to which it maps back at that particular point in time. For information on the historical default
rates associated with different global scale rating categories over different investment horizons, please
see https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1060333 .

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory
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each credit rating.

Dion Bate
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service Middle East Limited
Gate Precinct 3, Level 3
P.O. Box 506845
DIFC - Dubai
UAE
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
David G. Staples
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
Releasing Office:
Moody's Investors Service Middle East Limited
Gate Precinct 3, Level 3
P.O. Box 506845
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UAE
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