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Title page 1

Contents 5

Performance Report 7

Foreword by Secretary of State for Defence 8

Introduction from the Permanent Secretary 10

Defence Purpose 11

The Strategic Defence Review 2025 12

Defence Reform 15

Summary of Principal Risks 16

Financial Performance Summary 17

Performance Analysis 25

A warfighting force ready and able to win today and in the future and a resilient nuclear deterrent 26

An organisation that takes a NATO first approach by stepping up our commitments for European security, and extends our influence... 37

A thriving UK defence industry that is resilient and scalable - an engine for growth, jobs and innovation across every region and nation of the UK 47

An organisation that delivers value for money for the UK taxpayer, delivers capabilities faster and is adaptable to future change 57

A highly engaged organisation that recognises people are fundamental to UK Defence, enables everyone to fulfil their potential and... 62

The Climate and Environment 72

Task Force on Climate-related Financial Disclosures (TCFD) 78

Accountability Report 93

Corporate Governance Report 94

The Remuneration and Staff Report 117

The Parliamentary Accountability and Audit Report 144

The Certificate and Report of the Comptroller and Auditor General to the House of Commons 164

Financial Statements 177

Financial Statements 178

Notes to the Accounts 185

1. Statement of Accounting Policies 185

2. Income 202

3. Expenditure 203

4. Consolidated Departmental Group - Intangible Assets 207

5. Consolidated Departmental Group - Property, Plant and Equipment 210

6. Financial Instruments and Investments 213

7. Departmental Group - Inventories 215

8. Trade Receivables and Other Assets 216

9. Cash and Cash Equivalents 216

10. Trade Payables and Other Liabilities 218

11. Provisions for Liabilities and Charges 219

12. Retirement Benefit Schemes 225

13. Departmental Group - Capital Commitments 231

14. Departmental Group - Other Financial Commitments 231

15. Departmental Group - Leases 232

16. Departmental Group - Commitments under Service Concession Arrangements 235

17. Departmental Group - Contingent Liabilities and Contingent Assets Disclosed under IAS 37 236

18. Related Party Transactions 238

19. Entities within the Departmental Boundary 239

20. Events After the Reporting Date 239

21. Prior Period Adjustments 240

Annex A: Statement of Approved Maximum Armed Forces Numbers 252

Annex B: Sponsorship Arrangements over £5,000 255

Annex C: Core Tables 257

Annex D: Greenhouse Gas Emissions 260

Annex E: Water, Waste and Carbon Credits Data 261

Annex F: Arm's Length Bodies - Additional Information 263

Annex G: Reconciliation of contingent liabilities included in the Supply Estimate to the accounts 264