Spirit Telecom : 2016-10-28 ST1 September 2016 Quarterly Activities and Cashflow Reports

28th October 2016 SEPTEMBER QUARTERLY ACTIVITIES REPORT 2016

ASX Symbol: ST1 REGISTERED OFFICE Level 4, 100 Albert Road South Melbourne VIC AUS 3205 PRINCIPAL PLACE OF BUSINESS Level 2 240 Chapel Street Prahran VIC AUS 3181 CONTACT P 1300 007 001 F 1300 887 813 www.spirit.com.au BOARD OF DIRECTORS Mr James Joughin (Chairman) Mr Terry Gray (Director) Mr Geoff Neate (Managing Director) ISSUED CAPITAL Shares on Issue: 836,844,216

Spirit is pleased to provide its first Quarterly activity report to our shareholders. After re-listing on ASX on 26th June 2016 the Board and Managements focus has been to grow Spirit's core operation, whilst also seeking new acquisition opportunities. And, we continued to build out our corporate structure with the recruitment of Matthew Hobbs as Chief Operations Office and Catherine Bolch as Chief Marketing Officer. Spirit finished the quarter with a cash balance of $2.1 million and a total debt of $2.19 million, meaning a net debt position of $90,000 The Cash from operations finished the quarter up $108,000. Capital expenditure of $239,000 for the period was shared mainly across the 24 new commercial and residential buildings added for the period, as well as the commencement of fit outs for Q2 buildings. To that end significant progress has been made toward the expected launch of a number of major residential building sites expected to go live with Spirit across Quarter 2/ 3 this financial period. Such buildings will include Southport Central, in Coolangatta and Vogue apartments in South Yarra - both represent a large potential customer base. Spirit conducted a benchmark study for Net Promoter Score and received an encouraging rating of 21. This benchmark now forms part of every staff members Key Performance Indicator, from the Managing Director, down. Throughout the quarter a significant level of industry, media and government discussion was held surrounding the margin impact experienced by Telco's pertaining reselling of the NBN. The following forms a summary of the key difference between Spirit's business model and that of re-selling NBN: Internet Service Providers (ISPs) pay a monthly 'Connectivity Virtual Circuit' (CVC) fee to connect their network to the NBN. Note CVC (sometimes known as AGVC) is usually payable when ISPs connect their networks to third party networks (such as the NBN) on a wholesale basis. The more subscribers an ISP has and the more data those subscribers consume; the more CVC capacity an ISP would need to buy. NBN-based ISPs are left in a 'catch 22' situation, as too much oversubscription causes poor network performance and hence customer complaints. Too little oversubscription and the ISP's margin is severely eroded. Spirits' main product offering is UFi (which stands for 'Ultra-Fast internet'). Spirit does not incur a CVC cost when offering UFi services, because the network is managed by Spirit end-to-end (as opposed by being managed by NBN and reseller). This allows for much higher margins than currently possible on the NBN. It also means Spirit can offer a much faster service!

Appendix 4C

+Rule 4.7B

Quarterly report for entities subject to Listing Rule 4.7B

Introduced 31/03/00 Amended 30/09/01, 24/10/05, 17/12/10, 01/09/16

Name of entity
Spirit Telecom Limited
ABN	Quarter ended ("current quarter")
73 089 224 402	30 September 2016

Consolidated statement of cash flows		Current quarter $A'000	Year to Date (3 Months) $A'000
1.	Cash flows from operating activities	2,712	2,712
1.1	Receipts from customers
1.2	Payments for	-	-
(a) research and development
(b) product manufacturing and operating costs		-	-
(c) advertising and marketing		(86)	(86)
(d) leased assets		(366)	(366)
(e) staff costs
(f) administration and corporate costs		(2,121)	(2,121)
1.3	Dividends received (see note 3)	-	-
1.4	Interest received	4	4
1.5	Interest and other costs of finance paid	(35)	(35)
1.6	Income taxes paid	-	-
1.7	Government grants and tax incentives	-	-
1.8	Other (provide details if material)	-	-
1.9	Net cash from / (used in) operating activities	108	108

1. Cash flows from investing activities

2. Payments to acquire:

3. property, plant and equipment

   (239) (239)

4. businesses (see item 10) - -

5. investments - -

6. Consolidated statement of cash flows	Current quarter $A'000	Year to Date (3 Months) $A'000
   (d) intellectual property	-	-
   (e) other non-current assets	-	-
   2.2 Proceeds from disposal of:
   (a) property, plant and equipment	-	-
   (b) businesses (see item 10)	-	-
   (c) investments	-	-
   (d) intellectual property	-	-
   (e) other non-current assets	-	-
   2.3 Cash flows from loans to other entities	-	-
   2.4 Dividends received (see note 3)	-	-
   2.5 Other (provide details if material)	-	-
   2.6 Net cash from / (used in) investing	(239)	(239)
   activities

7. Cash flows from financing activities

8. Proceeds from issues of shares

9. Proceeds from issue of convertible notes

10. Proceeds from exercise of share options

11. Transaction costs related to issues of shares, convertible notes or options

12. Proceeds from borrowings

13. Repayment of borrowings

14. Transaction costs related to loans and borrowings

15. Dividends paid

16. Other (provide details if material)

17. 3.10 Net cash from / (used in) financing activities

-

-

-

-

- (16)

-

-

-

-

-

-

-

- (16)

-

-

-

(16)

(16)

1. Net increase / (decrease) in cash and cash equivalents for the period

2. Cash and cash equivalents at beginning of quarter/year to date

3. Net cash from / (used in) operating activities (item 1.9 above)

4. Net cash from / (used in) investing activities (item 2.6 above)

5. Net cash from / (used in) financing activities (item 3.10 above)

6. 2,254 2,254

   108 108

   (239) (239)

   (16) (16)

   Consolidated statement of cash flows		Current quarter $A'000	Year to Date (3 Months) $A'000
   4.5	Effect of movement in exchange rates on cash held	-	-
   4.6	Cash and cash equivalents at end of quarter	2,107	2,107

   5.	Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts	Current quarter $A'000	Previous quarter $A'000
   5.1	Bank balances	1,357	1,504
   5.2	Call deposits	750	750
   5.3	Bank overdrafts	-	-
   5.4	Other (provide details)	-	-
   5.5	Cash and cash equivalents at end of quarter (should equal item 4.6 above)	2,107	2,254

   Current quarter $A'000

   25

   -
7. Payments to directors of the entity and their associates

8. Aggregate amount of payments to these parties included in item 1.2

9. Aggregate amount of cash flow from loans to these parties included in item 2.3

10. Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2

    Our Chairman James Joughin receives remuneration of $5,000 per month and Director Terry Gray

    $2,500 per month.

    Current quarter $A'000

    8

    -

11. Payments to related entities of the entity and their associates

12. Aggregate amount of payments to these parties included in item 1.2

13. Aggregate amount of cash flow from loans to these parties included in item 2.3

14. Include below any explanation necessary to understand the transactions included in items 7.1 and 7.2

15. 7.1 - Total payments to Lodge Corporate Advisory services are $8,250. Terry Gray is a consultant with Lodge and a Director of Spirit Telecom Ltd.