YEAR ENDED JUNE 2005

INTRODUCTION
We planned to stabilise the company during the financial year ending 30th June 2005 and to prepare it for the future. To this end we succeeded in resolving the dispute with the South African Revenue Services (SARS) over the trademarks and raised R160 million by means of a rights offer, which was 52% oversubscribed. The rights offer strengthened our balance sheet and working capital, enabling us to conclude our empowerment transaction with Gijima Info Technologies (Gijima). Gijima, the result of the merger between the listed AST Group and Gijima Info Technologies in April 2005, is a company with excellent credentials:

    * A large, competent and extensive delivery capacity and capability which is engaged by an extensive and loyal customer base   all our key clients have been with us for longer than three years.
    * A reputation as a company with an enviable service track record.
    * A leading set of industry solutions that support our key clients in financial services, retail, mining, manufacturing, government and telecommunications.
    * An increased geographic footprint now with more than 70 service centres across South Africa, which, we believe, is unparalleled in the market.
    * A workforce of more than 3 000 people consisting of many of the most sought-after staff and skills in the industry.
    * A 32% black owned company, with a board of directors that is 43% black, supported by company-wide transformation initiatives, which are already aligned with the proposed ICT (Information and Communication Technology) Charter.

Gijima is structured - financially, technologically and strategically - to deliver value to our clients, staff, shareholders and our communities.

MARKET CONDITIONS
Market conditions have not changed significantly in the last six months and trading conditions continue to be challenging. Whilst the anticipated improvement in demand is materialising in some sectors, others continue to lag. The demand for resourcing skills has again increased and this is an early indicator of better markets ahead. Large companies are also starting to replace the hardware infrastructure acquired in anticipation of Y2K (Year 2000) at the end of 1999 which provides further evidence of increasing demand in the sector.

The client environment is still characterised by the need for cost reduction in increasingly competitive markets.  Clients are seeking differentiators - and technology often provides the vehicle. As a result, service providers are required to propose more cost-effective innovative solutions than ever before.

OPERATIONAL UPDATE
We completed the Business Improvement Programme in December 2004, and the benefits and cost savings exceeded our initial targets. The merger with Gijima has introduced further opportunities for internal consolidation and efficiency enhancement.
In the current services marketplace, which is becoming increasingly commoditised, we have maintained our competitive advantages with high quality service delivery, cost effective solutions and specialist industry knowledge:

    * We have identified opportunities to extend economies of scale in our infrastructure businesses by integrating the activities of the merged companies. We are also in the process of evaluating enhancements that will accrue from the introduction of new tools for remote management, problem solving, logistics and inventory as well as training our human resources to be multi-skilled.
    * Our focus on understanding our clients’ industry segments through our Industry Solutions continues to be a tangible differentiator. We are seeing the strongest demand in the financial services and retail environments, with rapid technological convergence between the sectors. Demand for large implementations in mining and manufacturing is still dampened by Rand strength and economic activity. Our positioning in the public sector continues to be a high priority and as a Black Economic Empowerment  (BEE) company we are now making better inroads into the sector. As an approved and accredited service provider for State Information Technology Agency (SITA) on the Seat Management Services, Tender 285, and an accredited services provider on SITA Tender 348, we are well positioned to participate in government spend.

Our Networks business performed satisfactorily and its product and service offerings continue to be suited to the current environment. Although revenues were lower than anticipated, profitability was in line with expectations as the division placed a higher focus on services. Networks made inroads into the market with its data products. During the year, both Mittal SA and Kumba Resources renewed their managed services agreements and Voice Over IP (VOIP) solutions were sold to large corporates and the public sector. Our Virtual Private Network offering, which was launched in February 2005, is showing real potential for growth.

The results of AST Distributed Technology Services (DTS) were also in line with our expectations despite revenue pressure resulting from lower product sales. The division’s focus on quality service delivery paid off. This is demonstrated by the achievement of an average of 97.5% of the more than 1300 Service Level Agreements we manage. This focus on service excellence has resulted in stronger client relationships.

Our Solutions business underperformed significantly despite stringent cost containment. Strategies and new management have been put in place to address the problems encountered. Resource Solutions was the star performer of the division as a result of the increased demand for resources. Our mining software unit GMSI’s results were also in line with expectations, despite the impact of the strong Rand. This demonstrates the quality of our mining product and services offering. During the year, large opportunities were eroded by clients who were under pressure to contain their own costs and risk which resulted in us being awarded smaller contracts.

We successfully protected our client base during the year under review although pressure to reduce spend is ongoing from key clients. Notable deals have been rare, but we have been awarded a number of smaller engagements.  We see opportunities to grow these into significant engagements.

GOVERNANCE
Our commitment to the Code of Corporate Practice and Conduct as recommended by King II is steadfast and during the year we delivered on our intention to introduce a balanced and strategically strong board of directors. We now have 14 board members, six of whom are black and four are executive directors. We welcome as Executive Directors Robert Gumede as Executive Deputy Chairman and Carlos Ferreira as Financial Director from Gijima. They were both instrumental in concluding the merger. We also welcome our new independent non-executive directors Nhlanhla Mhlongo, Judy Dlamini, Andrew Mthembu, Kalaa Mpinga and Cheslyn Mostert. The diverse experience and leadership offered by all our directors will stand us in good stead for the future and we are already seeing the benefits from the new board level leadership.

BROAD BASED TRANSFORMATION
We have made significant progress with all the elements of transformation, which positions us to meet the requirements of the ICT Charter when it is finalised.

The BEE transaction which led to the formation of Gijima resulted in a 32% black ownership. The transaction was based on the independently assessed underlying value of Gijima’s IT subsidiaries and AST Group. It was a unique BEE transaction in the ICT sector in that it entailed no funding structures, preferential shares or special voting rights. Gijima’s holding in Gijima is unencumbered.

Our stated intent has been to transform our board of directors to a 40% black representation by the end of this calendar year. We exceeded this target with the recent appointments, and 43%, (6 out of 14) of our board members as at the end of June 2005 are from previously disadvantaged backgrounds.

Our employment equity statistics have improved and are in line with our plan submitted to the Department of Labour. In addition, the demographics of our top management are now more representative, having achieved our target of 25% by year end.

Our firm commitment to transformation ensures that we will continue to make changes internally and in partnership with our clients, suppliers and the communities that we serve.

DIVIDEND POLICY
There will be no dividend payments for the 2005 financial year. This will be reviewed in future in the light of operating performance and the capital requirements of the business.

PROSPECTS
Our restructuring has given us the flexibility to reposition ourselves as the market evolves. We believe that we are very well positioned in our chosen markets – we have strong partnerships with suppliers, our human capital is powerful and well trained, our services and products are well priced and our client relationships robust.

Our growth will be driven through our sales initiatives. We have the cost effective solutions to continue delivering effective solutions to our infrastructure clients. We will focus heavily on increasing market share in the solutions environment supported by our specialised industry knowledge.

During the 2006 financial year, we will focus on leveraging the benefits of the recent merger. We will continue integrating the operations of Gijima and AST and further strengthen our sales capability. By maintaining the efficiency gains and increasing market share, we will deliver value to stakeholders.

ACKNOWLEDGEMENTS
I wish to thank all our stakeholders for the value which they added during the turnaround project and merger with Gijima. In particular, I wish to thank:

    * Our shareholders whose confidence in the future of our organisation was reflected in their support of the rights offer;
    * Our advisors and funders without whose support we would not have been able to achieve our successful restructuring;
    * My fellow directors, for their time, contribution and commitment;
    * Our clients who continued to support AST throughout the turnaround phase; and
    * Our employees who put in the extra effort to ensure that we now have the ability to deliver on our vision for the future.

We have created a well positioned company based on a solid foundation and have every reason to look forward to the exciting future of Gijima.

John E Miller
CEO