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Registered number:
FOR THE YEAR ENDED 31 AUGUST 2025
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SPARROWHAWK 2 LIMITED
COMPANY INFORMATION
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SPARROWHAWK 2 LIMITED
CONTENTS
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SPARROWHAWK 2 LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 AUGUST 2025
The Directors present their Strategic Report for Sparrowhawk 2 Limited (''the Company'') and its subsidiary undertakings (together “the Group”) for the year ended 31 August 2025.
The Company is the holding company of the Oxford International Education Group (“OIEG”) which provides a range of international education services to domestic and international students.
During the year, the decision has been taken to present the Group as 3 pillars, in order to make performance clearer to both internal and external stakeholders. As a result, the Group now comprises of the following:
°Academic Partnerships:
°These are partnerships with UK universities to provide on-campus embedded colleges which allow international students to study academic foundation, undergraduate and postgraduate courses.
°Educational Services:
°Direct recruitment services providing student recruitment to higher education providers;
°Provision of enrolment services for universities and other educational establishments.
°Owned Establishments:
°Independent pathways college (“OIPC”), providing remote pathways courses which allow international students to study academic foundation, undergraduate and postgraduate courses;
°Digital services including providing potential higher education students with high quality online English Language testing and other pre-sessional courses; and year round academic language courses for adults;
°Academic and vocational based English courses to juniors principally during Easter and Summer holidays across numerous centres in the UK and North America, as well as year round English language programmes based in the UK and North America:
°Provision of English Language courses in Australia.
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SPARROWHAWK 2 LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2025
During the year, the Group has executed its strategic plan to grow its capability across its range of academic activities. The Group continues to invest in its global student recruitment capability which has helped significantly grow its academic student numbers.
The Group's embedded Academic Partnership colleges at De Montfort University, Bangor University,University of Dundee, University of Greenwich, University of Bradford, Edinburgh Napier University and University of Kent continued to provide excellent academic support to international students helping in the context of changing political circumstances, which restricted the UK international education market, resulting in a small decline in year-on-year revenues (£39.0m vs £41.7m in FY24) and delivering a consistent gross margin of 47.4%. The International College at Edinburgh Napier University has been particularly successful, generating almost 3 times the prior year levels of revenue. Educational Services saw significant growth in the year, from £17.6m to £23.7m, driven by increased demand for direct student recruitment. Growth of existing partnerships alongside new partnerships helped to drive this growth as the Group continues to support UK universities to attract international students in a challenging political and economic climate. Our independent pathways college, OIPC, saw significant growth of 33.9%, as student numbers increased, with a slight margin decrease from 34.4% to 29.8%. Our Juniors business also continued to grow by 5% with a stable margin of 20.9% (2024: 21.9%), demonstrating the efficiencies that the Group has managed to deliver. Digital services revenue grew significantly during the year from £5.1m to £9.6m. Major contributors to this growth included the success of our English Language Level Test (“ELLT”) product, significant revenue from Online Pre-Sessional English (“OPSE”) and the launch of our digital International Year 1 (“IY1”) university pathway programme, which was well received. Our businesses in the USA and Canada saw an increase of 20.4% year on year as we increased our offering and further developed our career colleges. This was well received in what has been a particularly challenging environment. Universal Higher Education and Universal Education, Australian businesses acquired in FY24, did not show any growth, however performed well in a very difficult Australian political climate. The Group believes that there are encouraging signs that this will ease and therefore these businesses will be well placed to trade strongly going forwards. In addition, the Group was engaged in developing a campus for the University of Southampton in Delhi. The first intake for these students was in September 2025.
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SPARROWHAWK 2 LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2025
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SPARROWHAWK 2 LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2025
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SPARROWHAWK 2 LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2025
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SPARROWHAWK 2 LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2025
The principal risk facing the business is around the continued recruitment of new students, which is influenced by certain external factors such as visa regulations and macro-economic conditions. Whilst the UK education market has been growing and remains strong, the Group does monitor and react to any weakness in the market to minimise its exposure. Following recent economic events which have triggered significant inflation, a recession and a fall in value of GBP, the Group’s management have been closely evaluating the impact on trade. Although the cost of overseas suppliers has risen as a result of this, demand from overseas students has increased, in part due to exchange rates being favourable to them.
Given the volume of overseas trading, the Group considers foreign exchange risk to be a principal risk, however, the Group continues to monitor foreign exchange movements and has not experienced any significant impacts during the period as the result of changes in exchange rate. Management pro-actively manages the risks associated with liquidity. These are managed by implementing effective financial policies and procedures and working capital management. In addition, and including post the balance sheet date, management continues to rigorously monitor the performance of the Group, controlling and minimising costs and preserving cashflow where possible. Were a pandemic such as, or similar to Covid-19 to arise again, this would have an impact on the Easter, Summer and Winter English Language programmes due to students being unable to travel. Management considers this not only to be remote, but also considered the Group to have sufficiently diversified its trade to minimise the impact at Group level.
The Directors have considered the going concern status of the Group for a period to 31 August 2027.
Trading post period end is forecast to be strong and demonstrate considerable growth. With this, significant cash conversion is projected. This has been tested with reference to our required covenants and significant headroom is generated. The directors have considered scenario and sensitivity analysis on these projections and when considering worst case scenarios, including a scenario whereby travel restrictions such as those experienced under Covid return. This continues to support the cash, net current assets and covenant compliance of the business going forward for the period under consideration. The Directors have reviewed the balance sheet for the period ended 31 August 2025 noting that, while the net current liabilities shown on the balance sheet total £24,166k, adjusting this to take account of £5,347k deferred income and £24,299k payments on account, which are non-cash current liabilities, leaves adjusted net current assets of £5,480k. Payments on account comprise non-refundable payments for language courses, while deferred income is reflecting the prepaid tuition and accommodation fees. The Group made a loss of £10,197k. Adjusting this for non-cash items such as £8,211k of amortisation and £499k of depreciation, means that the Group made an underlying loss of £1,487k. This is forecast to improve going forwards as market conditions improve. On this basis the Directors consider the Group to be a going concern.
Section 172(1) of the Companies Act 2006 requires the Directors to act in a way that they consider, in good faith, would be most likely to promote the success of the Group for the benefit of its shareholders, having regard to (amongst other things) the following:
°The likely long term consequences of decisions;
°The interests of employees;
°The need to foster relationships with suppliers, customers and others;
°The impact of the Group’s operations on the community and the environment; and
°The desirability to maintain a reputation for high standards of business conduct.
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SPARROWHAWK 2 LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2025
The Group is jointly owned by its founders, members of the senior leadership team and THI Holdings GmbH.
The Group is a unique accredited education provider dedicated to creating life-enhancing experiences for students worldwide. The Group’s extensive portfolio covers academic short courses, university partnership programmes, English language courses for adult and junior students in the UK, Canada and USA and a comprehensive range of online academic courses through the Group’s OI Digital Institute.
The Group is focussed on quality and academic outcomes, with a strong desire to lead in its chosen market sectors. The Group’s workforce is dedicated, enthusiastic and like-minded, with a genuine interest in what it does.
These include the following:
°Pupils, students and their respective fee payers;
°Employees of the Group;
°Certain suppliers;
°Lenders; and
°Office for Students.
The Board regularly discusses proposals for new business opportunities, capital expenditure investment and various efficiency initiatives. Whilst financial benefit and shareholder return is one of the key decision criteria, the long-term effect on the Group’s going concern, the quality of the learning environment, job security and staff satisfaction, the quality of student academic outcomes, value and service for key stakeholders and fair trading terms for suppliers are also key considerations.
The Group has its own internal governance processes and is also regulated by a number of external bodies including The Office for Students, Independent Schools Inspectorate and the British Council. External regulatory bodies regularly inspect the Group’s activities/sites to ensure regulatory standards are, as a minimum, being met.
The Group maintains its own internal Code of Ethical and Professional Conduct with which all employees are required to affirm compliance annually. The Board of Directors maintains a Risk Register to:
°Identify the nature and extent of significant risks facing the Group’s business;
°Advise the Board on the Group’s appetite and tolerance of the risks it is willing to take in achieving its strategic objectives; and
°To consider mitigation plans to address key risks and to present solutions for managing those which cannot be eliminated.
The Group continues to invest in its infrastructure, innovate its programme content and streamline operations to ensure it provides both a comprehensive as well as a quality driven educational experience to its students.
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SPARROWHAWK 2 LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2025
Through the financial year Directors engage with employees through various means. There is formal engagement via quarterly all employee Town Halls, Senior Leadership Team meetings, in person visits to offices and campuses, as well as continuous feedback and action through our employee survey that is conducted twice a year.
Directors give regard to employee interests when making business decisions with investment in the learning and development for people at all levels, wellbeing initiatives, and an increased focus on Equity, Diversity, and Inclusion practices. These decisions strengthen the organisation culture and improve the overall employee experience. This year external validation of our people practices has taken place through the Great Place to Work certification.
The Group is firmly committed to equality and diversity in all areas of its activities. As part of its responsibilities under the Equality Act 2010, the Company has a duty to promote equality of opportunity as well as tackling unlawful discrimination (whether direct and/or indirect and this also incorporates victimisation).
Under the Equality Act 2010, the Company ensures that characteristics such as age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation are protected. Recruitment is carried out on the sole basis of the applicant's abilities and suitability for the job not taking into account any of the above mentioned characteristics. The Company recognises that all employees have equal rights to training, promotion, and other aspects of career development based purely on their abilities. Promotion and training will be made accessible to disabled employees by such adjustments as are reasonable. The Group seeks to involve all employees through regular internal communication.
This report was approved by the board and signed on its behalf.
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SPARROWHAWK 2 LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 AUGUST 2025
The Directors present their report and the financial statements for the year ended 31 August 2025.
The loss for the year, after taxation, amounted to £10,197,861 (2024: restated loss £6,393,026).
The Directors have paid a dividend of £10,500,000 during the year (2024: £40,500,000).
The Directors who served during the year and up to the point of signing were:
Quantification and reporting methodology
We have followed the 2019 HM Government Environmental Reporting Guidelines. We have also used the GHG Reporting Protocol – Corporate Standard and have used the 2022 UK Government's Conversion Factors for Company Reporting. Intensity measurement The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per student, the recommended ratio for the sector.
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SPARROWHAWK 2 LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2025
Price risk
Future turnover remains sensitive to changes in overall market dynamics within the education sector. The group performs periodic market reviews to ensure that all rates remain competitive. Credit risk The Group ensures that appropriate credit checks are made on potential customers before sales are made. Management regularly reviews outstanding receivables and debtor recovery plans, together with credit limits across most of our largest customers. The Group’s policy is to deposit surplus cash with internally approved banks. These banks are reviewed at least annually to ensure that appropriate credit ratings are maintained. Cash flow/liquidity risk The Group has sufficient funds to service the annual cost of its financing. The Group has access to a £5m revolving credit facility. As at 31 August 2025, the facility was undrawn.
The auditors, BDO LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
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SPARROWHAWK 2 LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2025
This report was approved by the board and signed on its behalf.
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SPARROWHAWK 2 LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 AUGUST 2025
The Directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the Directors are required to:
°select suitable accounting policies for the Group's financial statements and then apply them consistently,
°make judgements and accounting estimates that are reasonable and prudent,
°state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements and
°prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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SPARROWHAWK 2 LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SPARROWHAWK 2 LIMITED
In our opinion:
°the financial statements give a true and fair view of the state of the Group's and of the Parent Company's affairs as at 31 August 2025 and of the Group's loss for the year then ended;
°the financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
°the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Sparrowhawk 2 Limited ("the Parent Company") and its subsidiaries ("the Group") for the year ended 31 August 2025, which comprise the Consolidated statement of comprehensive income, the Consolidated statement of financial position, the Company statement of financial position, the Consolidated statement of changes in equity, the Company statement of changes in equity, the Consolidated statement of cash flows, and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
Independence
We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group or Parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
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SPARROWHAWK 2 LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SPARROWHAWK 2 LIMITED (CONTINUED)
The Directors are responsible for the other information. The other information comprises the information included in the Annual report and financial statements, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
°the information given in the Strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
°the Strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors' report.
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SPARROWHAWK 2 LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SPARROWHAWK 2 LIMITED (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Non-compliance with laws and regulations
Based on:
°Our understanding of the Group and the industry in which it operates;
°Discussion with management and those charged with governance; and
°Obtaining an understanding of the Group’s policies and procedures regarding compliance with laws and regulations;
We considered the significant laws and regulations to be Companies Act 2006, UK Accounting standards and UK tax legislation, and Office for Students (OfS) regulations.
The Group is also subject to laws and regulations where the consequence of non-compliance could have a material effect on the amount or disclosures in the financial statements, for example through the imposition of fines or litigations. We identified such laws and regulations to be education, child protection, and data protection legislation. Our procedures in respect of the above included:
°Review of minutes of meetings of those charged with governance for any instances of non-compliance with laws and regulations;
°Review of correspondence with tax authorities for any instances of non-compliance with laws and regulations;
°Review of financial statement disclosures and agreeing to supporting documentation;
°Involvement of tax specialists in the audit; and
°Review of legal expenditure accounts to understand the nature of expenditure incurred.
Fraud
We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included:
°Enquiry with management and those charged with governance regarding any known or suspected instances of fraud;
°Obtaining an understanding of the Group’s policies and procedures relating to:
°Detecting and responding to the risks of fraud; and
°Internal controls established to mitigate risks related to fraud.
°Review of minutes of meetings of those charged with governance for any known or suspected instances of fraud;
°Discussion amongst the engagement team as to how and where fraud might occur in the financial statements;
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SPARROWHAWK 2 LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SPARROWHAWK 2 LIMITED (CONTINUED)
°Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud; and
°Considering remuneration incentive schemes and performance targets and the related financial statement areas impacted by these.
Based on our risk assessment, we considered the areas most susceptible to fraud to be fraudulent journal postings to revenue and management override of controls.
Our procedures in respect of the above included:
°Obtaining a list of journal entries to revenue and testing postings considered to be unusual or outside of normal course of business;
°Performing analytical procedures to identify unusual or unexpected relationships in journals posted that may indicate a risk of material misstatements due to fraud; and
°Testing a sample of journal entries throughout the year, which met defined risk criteria, by agreeing to supporting documentation. We have also selected a sample of journals on an unpredictability basis which are not meeting the defined risk criteria and agreed these back to supporting documentation.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
This report is made solely to the Parent Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
For and on behalf of BDO LLP, Statutory Auditor
London, UK
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
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SPARROWHAWK 2 LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 AUGUST 2025
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SPARROWHAWK 2 LIMITED
REGISTERED NUMBER: 13246693
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 AUGUST 2025
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SPARROWHAWK 2 LIMITED
REGISTERED NUMBER: 13246693
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 AUGUST 2025
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 25 to 53 form part of these financial statements.
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SPARROWHAWK 2 LIMITED
REGISTERED NUMBER: 13246693
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 AUGUST 2025
As permitted by Section 408 of the Companies Act 2006, the income statement of the parent company is not presented as part of these financial statements. The loss in the financial statements of the parent company for the year ended 31 August 2025 was £189,683 (2024: £137,000 loss).
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 25 to 53 form part of these financial statements.
Page 20
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SPARROWHAWK 2 LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 AUGUST 2025
Page 21
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SPARROWHAWK 2 LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 AUGUST 2025
Page 22
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SPARROWHAWK 2 LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 AUGUST 2025
Page 23
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SPARROWHAWK 2 LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2025
Page 24
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SPARROWHAWK 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
Sparrowhawk 2 Limited is a private company limited by shares and incorporated, domiciled and registered in England and Wales in the United Kingdom. The registered number is 13246693 and the registered address is 17 Grosvenor Street, London, W1K 4QG, United Kingdom.
The financial statements of the Company have been prepared in compliance with United Kingdom
Accounting Standards, including Financial Reporting Standard 102, ‘The Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland’ (‘FRS 102’) and the Companies Act 2006.
3.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the Group's accounting policies.
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.
The Company has taken advantage of the exemption permitted by Section 33 'Related party disclosures' not to provide disclosures of transactions entered into with other wholly owned members of the Group.
The Company has taken the exemption not to prepare and present a cash flow statement or net debt reconciliation for the parent company.
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Significant judgements and key sources of estimation uncertainty Accounting estimates and assumptions are made concerning the future and, by their nature, will rarely equal the related actual outcome. There are no key assumptions and other sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows: Debtor recoverability Debtors are reviewed regularly by management based on value, age and other qualitative metrics in order to ascertain the risk of bad debt and therefore the level of provision required. As a result, this is considered to be an area of significant judgement.
Page 25
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SPARROWHAWK 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
3.Accounting policies (continued)
Impairment of goodwill and intangible assets
Goodwill arising on consolidation represents the excess of the fair value of consideration given over the fair value of the identifiable net assets acquired, including intangible assets identified. The Group tests annually whether goodwill and intangible assets have suffered any impairment, in accordance with the Group's accounting policy. Management uses judgement to assess whether any indicators of impairment exist as at year and whether an impairment review is required. Management reviews both internal and external impairment triggers as per the requirements of FRS 102. Fair value of deferred consideration In the prior year, deferred consideration was valued at par and discounted based on the Group’s WACC. This was determined with reference to internal and external economic factors and recognised within other creditors due within 1 year.
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.
At the date of approval of these financial statements, there are a number of amendments to FRS 102 that have been published but which are not yet effective. These include:
• a new model for revenue recognition which is broadly aligned to IFRS 15: Revenue from contracts with customers • on balance sheet accounting for leases which is broadly aligned to IFRS 16: Leases • other amendments including to fair value measurement, business combinations and intangible assets These amendments will become mandatory for the Group’s accounting period beginning 1 September 2026 as the Group has not adopted any of these amendments early. The Group has started an assessment of the impact on the Group of the revisions to the standard. With regards to revenue recognition, we expect that the standard may impact the timing of recognition of certain revenue streams, although this will not affect the Group’s cash flows. With regard to leases, we expect that the majority of the Group’s operating lease commitments which were £9,525,712 at 31 August 2025, (see note 28 to the accounts for further information) will be brought onto the balance sheet, with a lease liability based on the discounted value of future commitments and corresponding right of use assets. This will impact the profit and loss account by reducing operating lease expenses and adding depreciation charges in respect of the right of use assets and an interest charge on lease liabilities.
Page 26
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SPARROWHAWK 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
3.Accounting policies (continued)
The Directors have considered the going concern status of the Group for a period to 31 August 2027.
Trading post period end is forecast to be strong and demonstrate considerable growth. With this, significant cash conversion is projected. This has been tested with reference to our required covenants and significant headroom is generated. The directors have considered scenario and sensitivity analysis on these projections and when considering worst case scenarios, including a scenario whereby travel restrictions such as those experienced under Covid return. This continues to support the cash, net current assets and covenant compliance of the business going forward for the period under consideration. The Directors have reviewed the balance sheet for the period ended 31 August 2025 noting that, while the net current liabilities shown on the balance sheet total £24,166k, adjusting this to take account of £5,347k deferred income and £24,299k payments on account, which are non-cash current liabilities, leaves adjusted net current assets of £5,480k. Payments on account comprise non-refundable payments for language courses, while deferred income is reflecting the prepaid tuition and accommodation fees. The Group made a loss of £10,197k. Adjusting this for non-cash items such as £8,211k of amortisation and £499k of depreciation, means that the Group made an underlying loss of £1,487k. This is forecast to improve going forwards as market conditions improve. On this basis the Directors consider the Group to be a going concern.
Functional and presentation currency
Transactions and balances
Page 27
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SPARROWHAWK 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
3.Accounting policies (continued)
- Academic Partnerships - revenue recognised over the period of these courses are provided to the students - Educational services - revenue is recognised once the student information is full processed and they have commenced their course - Owned Establishments - revenue recognised over the period these courses are provided to the students - University Partnerships and Independent Pathways - revenue recognised over the period these courses are provided to the students - Digital Services - revenue recognised over the period these courses are provided to the students - Direct Recruitment and Enrolment Services - revenue is recognised once student information is fully processed and they have commenced their course - International English Language Tests - revenue recognised over the period these courses are provided to the students - Other English Language Courses - revenue recognised over the period these courses are provided to the students
Page 28
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SPARROWHAWK 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
3.Accounting policies (continued)
Page 29
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SPARROWHAWK 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
3.Accounting policies (continued)
Goodwill
Other intangible assets
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
Internally generated software costs if it can be demonstrated that:
°It is technically feasible to develop the software;
°The software will generate future economic benefits;
°Expenditure on the software can be measured reliably.
Page 30
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SPARROWHAWK 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
3.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Provisions are measured as the best estimate of the amount required to settle the obligation, taking into account the related risks and uncertainties.
Page 31
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SPARROWHAWK 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
3.Accounting policies (continued)
The Group has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the Group's Statement of financial position when the Group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include trade and other debtors, cash and bank balances, are initially measured at their transaction price (adjusted for transaction costs except in the initial measurement of financial assets that are subsequently measured at fair value through profit and loss) and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Discounting is omitted where the effect of discounting is immaterial. The Group's cash and cash equivalents, trade and most other debtors due with the operating cycle fall into this category of financial instruments.
Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
Impairment of financial assets
At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. If an asset is impaired the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the Statement of Comprehensive Income.
Page 32
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SPARROWHAWK 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
3.Accounting policies (continued)
Basic financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other creditors, bank loans, other loans and loans due to fellow group companies are initially measured at their transaction price (adjusting for transaction costs except in the initial measurement of financial liabilities that are subsequently measured at fair value through profit and loss). When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future payments discounted at a market rate of interest, discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade creditors are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade creditors are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Group transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Group will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Group's contractual obligations expire or are discharged or cancelled.
Finance costs are charged to profit and loss over the term of the debt using the effective interest rate method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
Page 33
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SPARROWHAWK 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
Analysis of turnover by country of destination:
Page 34
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SPARROWHAWK 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
Page 35
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SPARROWHAWK 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
Page 36
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SPARROWHAWK 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
Page 37
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SPARROWHAWK 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
12.Taxation (continued)
Page 38
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SPARROWHAWK 2 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2025
12.Taxation (continued)
The Group operates in a number of jurisdictions and its future tax charge is subject to various factors outside of the Group's control as outlined above with changes in statutory tax rates and legislative alterations.
The Group has carried forward gross tax losses of £6,726,771 (FY24: £5,078,635) in respect of overseas entities in the USA and Canada. No deferred tax asset is recognised on these losses due to significant uncertainty regarding future taxable profits within the relevant entities against which these losses may be utilised. Total losses of £4,464,000 in relation US Federal losses and the £2,262,771 of Canadian losses can be carried forward indefinitely. The US losses are also subject to local state and city tax returns and the related losses have a 20-year expiry period: £479,358 for FY20 will expire by 2040, £350,967 for FY21 by 2041, £958,707 for FY22 by 2042 and £653,978 for FY23 by 2043. The Group has carried forward gross tax losses of approximately £5,164,000 (FY24: £2,800,000) in respect of overseas entities in Australia. No deferred tax asset is recognised on these losses due to significant uncertainty regarding future taxable profits within the relevant entities against which these losses may be carried forward indefinitely.
Page 39
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