AWE NUCLEAR SECURITY TECHNOLOGIES AWE PLC Annual Report and Accounts 31 March 2025 Registered number 02763902 January 2026 CP 1483 Government of the United Kingdom AWE NUCLEAR SECURITY TECHNOLOGIES AWE PLC Annual Report and Accounts 31 March 2025 Presented to Parliament by the Secretary of State for Defence by Command of His Majesty January 2026 CP 1483 OGL © Crown copyright 2026 This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3. Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned. This publication is available at www.gov.uk/official-documents. Any enquiries regarding this publication should be sent to us at: Room 20 Building F161.2 Atomic Weapons Establishment Aldermaston Reading England RG7 4PR [email protected] ISBN 978-1-5286-6015-0 E03306613 01/26 Printed on paper containing 40% recycled fibre content minimum. Printed in the UK by HH Associates Ltd. on behalf of the Controller of His Majesty's Stationery Office. AWE plc Annual report and financial statements 31 March 2025 Table of Contents Strategic Report 5 Chair's Statement 5 Chief Executive's Statement 7 AWE and our Mission 9 Financial Review 11 Performance and KPIs 13 Key Performance Indicators (KPIs) 15 Principal Risks 20 Environmental Sustainability Report 27 Section 172(1) Statement 53 Corporate Governance Report 56 Directors' Report 56 Statement of Directors' Responsibilities 61 Governance Statement 63 The AWE board 63 Remuneration Report 81 People Report 86 Independent Auditor's Report to the Members of AWE plc 97 Financial Statements 104 Income Statement 104 Statement of Other Comprehensive Income 105 Balance Sheet 106 Statement of Changes in Shareholder's Equity 108 Cash Flow Statement 110 Notes to the Financial Statements 111 Glossary of Terms and Abbreviations 148 Strategic Report Chair's Statement I am pleased to introduce the AWE plc Annual Report & Accounts for the year ending 31 March 2025. In the context of current geopolitical environment and turbulence, the UK's nuclear deterrent is more important than ever. At AWE, our contribution is crucial in ensuring the Continuous at Sea Deterrent (CASD) remains effective – protecting our country and our allies. This involves not only continuing to support the current capability but also developing enhanced capabilities in a world of rapid technological advancement. This past year has been a significant period of growth, achievement, and transformation for our organisation. One of these key milestones is our Aldermaston site returning to a routine level of regulatory attention. This is a testament to the dedication and commitment of our teams. In parallel with this progress, we launched our rebrand of AWE Nuclear Security Technologies, a change that reflects both our evolution and the expanding scope of our impact. This transformation is not just in name – it is a symbol of our strengthened role in national security, innovation, and cutting-edge technology. As part of our mission to push boundaries and extend our reach, our national expansion is well underway and our partnerships with catapult centres and universities have been strengthened. This strategic move reinforces our commitment to pioneering advancements that will both shape the future of national security and provide new opportunities for collaboration and innovation on a broader scale. Our commitment to research and development has driven us to undertake several critical trials over the past year, including some that have not been performed for over a decade. These efforts highlight our dedication to progress, resilience, and the pursuit of technical excellence. Moreover, our support for academic advancement is stronger than ever, with an increased focus on sponsoring PhD candidates. By fostering new talent and encouraging groundbreaking research, we are investing in the next generation of experts who will propel the industry forward. At the heart of our operations, we are also placing greater emphasis on our Nuclear Threat Reduction work. Our engagement with the Home Office and other government agencies is instrumental in ensuring that we continue to provide vital expertise and support in protecting national interests. Each of these accomplishments represents not just progress, but a collective effort of passion, expertise, and a drive to excel. As we look ahead, we remain committed to innovation, security, and strengthening our contributions to the nation. I would like to say a personal thank you to every single person who works for AWE in any capacity – we could not succeed without you. The plc Board will continue to offer its strongest support to the Defence Nuclear Enterprise (DNE), the Executive and all our people and partners in support of our mission. Sam Laidlaw, Chair Chief Executive's Statement It is a privilege to lead AWE plc in the 75th anniversary year of work commencing on the UK's strategic deterrence programme at our Aldermaston site. Seventy-five years on and AWE is at another vitally important stage of its history as we deliver a once in a generation challenge – to maintain our current in-service warhead whilst also designing, testing and building a new future warhead. This, together with providing the nuclear threat reduction services to protect vital national interests and maintaining an enduring national capability in nuclear science and technology, gives AWE a critical role to play in the defence of the UK, our allies and our democratic way of life. This year we have focused on growing productivity and efficiency and on building the foundations to transform the business through a major recapitalisation and development of our infrastructure, processes, systems, and workforce. We are accelerating high-performance and delivering a major transformational change programme focussed on people, organisation, infrastructure, and technology. We have once again improved our delivery performance and, as a safety critical business, we are proud to have delivered world class levels of safety. In March 2025 our Aldermaston site was returned to a routine level of regulatory attention by the Office of Nuclear Regulation (ONR). This reflected the major progress we have made in the effective management of our ageing facilities through a programme of improvement, maintenance, and decommissioning. Our science, technology and engineering capability is a strategic national asset and the quality and commitment of our people is key to our success. We have actively expanded our footprint across the UK with a mix of new permanent locations and a strong focus on industrial and academic outreach. This year we sponsored around 100 science and engineering PhDs across the UK. Aided by our new brand, launched in April 2024, and a comprehensive communication and recruitment programme, we have achieved record levels of recruitment across the organisation with significant hiring of apprentice and graduate early careers in particular. Our percentage of female hires has increased to industry leading levels. We are committed to building purposeful and effective relationships, based on trust and collaboration. We are working in close partnership with our Ministry of Defence (MOD) shareholder, our main defence customer, the Defence Nuclear Organisation (DNO), as well as across the wider DNE with industry, academia and international allies. The ongoing support of our trade unions, Prospect and Unite, is essential and I am pleased to see the ongoing collaboration between us focussed on building a truly high-performing business. At AWE, we are all incredibly proud of our purpose to protect the UK through nuclear science and technology and we are committed to meeting this purpose as effectively and efficiently as we can in what will be a transformational 75th year for the company. I would like to thank everyone who has supported the impressive progress that has been made over the past year, and I look forward to building on this momentum in the year ahead. Nick Elliott, Chief Executive Officer (CEO) AWE and our Mission AWE's purpose is to protect the UK through nuclear science and technology. Its mission is to design and manufacture warheads and provide nuclear services to meet the needs of defence. Since 1945, the people of the United Kingdom have elected Governments that have maintained a policy to have a nuclear deterrent. AWE is proud to play its part in the DNE, delivering its product for the DNO, and working in partnership with the DNO Warhead Group (WHG). The success of a CASD requires a stockpile of UK-manufactured warheads of sufficient quantity, reliability, safety, and effectiveness to achieve deterrence – AWE delivers this mission through its expertise in science, technology, and manufacturing. For a generation, the UK warhead capability has been based on a single sovereign warhead. Under Operation Relentless, at least one Vanguard-class submersible ship ballistic nuclear (SSBN) submarine is always at sea, carrying Trident II ballistic missiles, on which the current Mk4A warheads sits. With the announcement of the Astraea replacement warhead in February 2020, AWE has been working with the DNO to move to managing a stockpile that integrates the existing Mk4A with the future Astraea warheads. SWEs Purpose and Mission are underpinned by the six commitments we have made to defence, which align to the DNO Warhead Group Strategic Objectives. These commitments are: 1. Provide enough warheads 2. Possess the science and technology to maintain and design warheads 3. Support counter terrorism and non-proliferation 4. Build and maintain fit for purpose infrastructure 5. Enable our people and transform AWE 6. Support the DNO's Strategic Warhead Plan These commitments are AWE's unique offering to defence, and as we move into the next generation of warhead production we will continue to generate and sustain the capabilities that deliver our mission outputs and fulfil our purpose to protect the UK through nuclear science and technology. We will ensure stability, consistency, and discipline across the portfolio; invest heavily into the future of our people, plants and processes; and commit to a cultural and operational transformation that ensures we are a world class, modern business. AWE Business Model & Organisational Structure The MOD owns the AWE sites. AWE is responsible under a contract with the MOD for operating the sites safely and securely as well as delivering a safe, effective, and efficient nuclear warhead programme. AWE employs the workforce, holds the nuclear site licences, environmental permits, and other regulatory permissions. The Non-Departmental Public Body (NDPB) structure was selected by the Government to strengthen alignment, simplify the relationship with AWE, and improve value for money. Financial Review Company financial performance for the year ended 31 March 2025 The financial statements for the year ended 31 March 2025 show the following: • Revenue of £2,148.6 million (31 March 2024: £1,818.2 million). • Gross loss of £58.4 million (31 March 2024: gross loss of £33.0 million). • Net loss for the year of £30.3 million (31 March 2024: net loss of £11 million). • Net liabilities of £97 million (31 March 2024: net liabilities of £201.1 million). • Capital contribution of £7.5m (31 March 2024: £30 million) received in relation to an equity contribution from the owner of the Company equal to the amounts paid by the Company to the pension scheme in respect of the deficit funding of the scheme and permanent capital contributions). The majority of revenue (98%) (31 March 2024: 99%) came from AWE's core operations, primarily the Management & Operations (M&O) contract with the MOD. This contract covers the operation of AWE sites and delivery of the UK's nuclear warhead programme. The increase in revenue reflects higher activity levels, particularly investment in infrastructure for current and future facilities. Revenue from the M&O contract includes reimbursement of costs and fees related to Trident and replacement warhead commitments. These costs cover site operations, workforce expenses, and infrastructure projects at Aldermaston, Burghfield, and Blacknest. Since the MOD owns the infrastructure, related investments are correctly recorded as programme costs in AWE's Income Statement rather than capital assets in AWE's balance sheet. The recording of the assets on the MOD's balance sheet is a matter for the MOD. The gross loss for the year ended 31 March 2025 of £58.4 million (31 March 2024 £33.0 million) is due to a fee earned on M&O and other contracts of £2.2 million (31 March 2024: £2.5 million), RDEC repayments for prior year claims of £33.4million (31 March 2024: £nil). Being offset by a £43.6 million Research and Development Expenditure Credit (RDEC) returned to the MOD, and £14 million (31 March 2024: £15million) in pension-related costs. These pension costs are part of the cost of sales. The net loss of £30.3 million (31 March 2024: £11 million) results from the gross loss, partially offset by RDEC income of £43.6 million (31 March 2024: £20.5 million), and further impacted by administrative and finance expenses, and corporation tax. Net liabilities principally arise as a result of the net liability in respect of the defined benefit pension scheme. The net liability of the defined pension scheme has decreased to £97 million (31 March 2024: £209 million). This included the £nil deficit repair payment for the current financial year (31 March 2024 £30 million). Further details are provided in note 15 in the financial statements. A full breakdown of AWE's finances is available in the financial statements (pages 104 to 110). Note that land and properties used by AWE are owned by the MOD and are not included in AWE's accounts. Going concern The financial statements are prepared on the basis that AWE continues as a going concern. Further details regarding this assessment are set out in the Directors' Report on page 56. Performance and KPIs Performance and Key Performance Indicators (KPIs) This section outlines the performance of the company as measured through KPIs, for the year ended 31 March 2025. Summary AWE's overall performance continues to improve. We are seeing that reflected in more consistent outcomes and the reconstitution of capabilities that have not been in place for considerable time. We have more effective planning and management of the business against a clear set of objectives and outcomes, aligned to an agreed plan with the DNO; the Strategic Warhead Enterprise Plan (SWEP). AWE's alignment to the SWEP continues to drive focus into our delivery through improved understanding of dependencies across the enterprise. This insight enables us to make prioritisation decisions in the delivery of AWE's critical activities that best support the outcomes required. Our safety performance is world class, and the Aldermaston site has recently moved to a routine level of regulatory attention by the Office of Nuclear Regulation (ONR) after more than 10 years at an enhanced level. This year, which is our 75th year in Aldermaston, we have undertaken a major re-branding and outreach campaign that has resulted in record levels of recruitment including around 500 early career graduates, apprentices and mid-degree placements at levels of diversity above sector norms. We have embarked on a location strategy that will relocate large numbers of staff away from our nuclear licenced sites to new facilities in Reading and around the country. However, there is still more to do if we are to become a truly high performing business. We must continue to strive for the highest standards of delivery, underpinned by a world class approach to safety, quality and efficiency. The historic lack of investment not only requires the ongoing re-capitalisation of outdated and failing infrastructure, but also a major transformation of our processes, systems and organisation. We must think differently, improve productivity, deliver more efficiently and demonstrate greater agility to meet the challenging and changing demands of the UK's deterrent requirements. This year we have focused on that transformation, and we are well into the journey to become a truly high-performing business. Key Performance Indicators the (KPIs) At Board level, performance against the approved 24/25 Business Plan was measured through a suite of 18 Tier 1 KPIs include safety, milestone delivery, stockpile availability, quality, financial performance and people metrics. Two of these KPIs report on specific activities which are restricted for security reasons but the remaining 16 are included in this report. These Tier 1 KPIs, and the underpinning milestones, represent the top-tier metrics that the AWE Board considers most effective in assessing progress towards objectives and strategy, in monitoring principal risks, and in measuring the performance and development of the organisation. To drive future strategic alignment, as well as ensuring ongoing operational delivery, AWE's KPIs and milestones focus both on mission delivery outputs and activities which contribute to improving long-term sustainable business performance. AWE's KPIs are set out in five sections, aligned to our key principles of performance: • Are we safe and secure? • Are we delivering? • Do we have the right people? • Are we using our resources effectively? • Is the portfolio under control? Business Transformation We are undergoing major transformational change to organise ourselves more effectively and improve efficiency. Following the completion of six core Task Force transformation initiatives earlier in the year we are taking the outputs forward through a refreshed transformation portfolio grouped into four key themes (Workforce, Organisation, Infrastructure and Technology). In April 2024, we launched our re-brand to AWE Nuclear Security Technologies, with a purpose to protect the UK through nuclear science and technology. The brand, which has been well received by our staff and stakeholders, has been widely advertised enabling us to connect with a greater pool of potential candidates and suppliers with over 14m individuals reached to date. We are focusing heavily on technology transformation through a major project to digitise our engineering systems and processes from the dated, in some cases, analogue, systems used today. We are also pursuing the implementation of numerous AI initiatives in the areas of both product development and business effectiveness. Table 1: Financial Year 2025 KPI performance | Category | KPI | FY25 Target | FY25 Achieved | |---|---|---|---| | Are we safe and secure? | US Occupational Safety and Health Administration (OSHA) Rate | ≤ 0.3 | 0.224 | | Are we safe and secure? | Environmental Sustainability & Climate Change | ≥ 80% | 67% | | Are we safe and secure? | Regulatory Performance | Routine attention | Routine attention | | Are we safe and secure? | Security Incidents per 100,000 hours | ≤ 1.5 | 1.363 | | Are we delivering? | Order Book Performance | ≥ 85% | 63% | | Are we delivering? | Business Plan Milestone Delivery | 100% | 94% | | Do we have the right people? | Workforce Attrition | ≤ 8% | 6.38% | | Do we have the right people? | Diversity – Female Employees | ≥ 30% | 27.73% | | Do we have the right people? | Employee Engagement | ≥ 67% | 66.42% (trending) | | Are we using our resources effectively? | Workforce Demand | < 5% | -11.92% | | Are we using our resources effectively? | Enabling Functions Workforce Utilisation | ≥ 90% | 81% | | Are we using our resources effectively? | Equipment (Asset) Availability | ≥ 85% | 62% | | Is the Portfolio under control? | Actuals vs Budget End of Year forecast | ≤ 1% | -8.3% | | Is the Portfolio under control? | £ Efficiency - End of Year forecast | 100% | 131% | | Is the Portfolio under control? | SCM Delivery Performance | > 80% | 85% | The following commentary provides additional context to the data presented in Table 1. Are we safe and secure? OSHA Rate We monitor a range of input and output safety metrics, but the primary measure of safety used for reporting is the US Occupational Safety and Health Administration (OSHA) safety incident rate. This provides the best international benchmark and allows us to conduct comparison with similar facilities in the US. Our OSHA threshold of 0.300, aligns to a world class level of safety performance. We outperformed this threshold with an OSHA safety rate for a rolling 12-month period of 0.224 which was also an improvement on last year. We also monitor our safety using Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR), a more common metric in the UK. Our RIDDOR target is 0.08, the benchmark for outstanding safety performance. In the rolling 12 months to February, we are outperforming this threshold with a score of 0.052. Environmental Sustainability & Climate Change This year we set demanding environmental goals in our Climate Transition Plan which were not fully met. Going forward we need to more fully align agreed actions with our business priorities. As we gain new insights, adapt to external factors, and evolve our Climate Transition Plan, we must remain responsive to the realities of business operations and the wider climate landscape. Increased focus has been given to this KPI during FY26 through business unit governance and accountability, as outlined in the Environmental Sustainability Report. Regulatory Performance Our Aldermaston site had been in enhanced regulatory attention since 2013 due to issues resulting from ageing facilities and delays to the delivery of new build projects and decommissioning. However, we have now demonstrated to the ONR that we have the capability and capacity to deliver sustainable performance through various programmes of improvement, maintenance and decommissioning. On 06 March 2025, the ONR announced our formal move out of enhanced regulation. The accompanying ONR press release stated: “We are satisfied that the site has clearly demonstrated positive steps forward in terms of leadership, organisational capability, decision-making, and internal assurance and challenge which has allowed us to return them to routine regulatory attention.” Security Incidents AWE has a strong security culture, and we regularly review and test our cyber and physical security systems. We have had no major security incidents this year and were within target for security incidents on a 12-month rolling basis. We achieved the target maturity level of 3.0 (out of 4.0) in the Annual Cyber Compliance Framework audit, conducted by the MoD Cyber Defence & Risk Directorate (CyDR). Are we delivering? Priority Order Book Performance Total order book performance of over 1000 items was 95% with average on time delivery at 89% compared to 78% in the last financial year. Priority order book delivery performance, a key subset of order book items, was below target at 63%. Delivery was mainly impacted by operational pauses in ageing facilities resulting from infrastructure and maintenance issues. These pauses were used to focus on safety assurance and work control improvements giving greater confidence in future delivery. Business Plan Milestone Delivery & On Time Milestone Delivery Milestone delivery was strong this year with 94% delivery of those milestones baselined for delivery in year, of which 85% were delivered on time or early. This compares to 85% overall delivery and 77% on time or early delivery in the previous financial year. We delivered 10 out of 13 Anchor milestones, 39 out of 42 Strategic milestones and all 51 Project milestones. Those missed milestones mainly resulted from change or maturing requirements and have either been change controlled to reflect new requirements or re-scheduled for delivery in FY 25/26. Do we have the right people? Workforce Attrition Workforce attrition has remained stable throughout the year. It began the year at 6.66% and closed at 6.38% – below the 8% monthly average target. There have been no adverse gender attrition trends and attrition has reduced for those with 0 to 5 years length of service. Diversity This KPI measures female employees as a percentage of total AWE employees. AWE’s score of 27.73% is an improvement against our FY24 score of 25.80% and continues the upward trend towards an ambitious target of 30% (compared to sector averages). AWE continues to perform well in this measure against defence prime comparators, and gender specific attraction campaigns are increasing our talent pool reach. Broader diversity metrics are measured and reported at a level below this Tier 1 measure. Employee Engagement In September this year we launched a comprehensive new employee engagement survey which received a 75% response rate and an overall engagement score of 64%. Ongoing engagement measured through quarterly pulse surveys is positively trending, with latest scores at 66.42%. The move to a new survey provider prevents a direct comparison with FY24. The survey feedback has informed our new ‘cultural deal’ which is part of our people transformation programme. The deal focuses on AWE acting as a supportive and fair employer in return for our employees signing up to a high-performance culture where they are willing (and proud) to go above and beyond to deliver our mission. Are we using our resources effectively? Workforce demand The KPI shows an average 11.92% undersupply against the forecast demand requirement. However, in the context of overall business performance we achieved high levels of output with 94% milestone delivery in year. This indicates that the more robust demand challenge implemented in year is starting to have an effect. Enabling Functions Workforce Utilisation Workforce utilisation has remained stable throughout at a level at 81%, which although below the start of year target, has been proven, through ongoing review over the year, to be more reflective of the realistic optimal workforce utilisation required to support the operational business. The target has been adjusted for 2025/26 to 80% to reflect this. Asset availability Whilst the facilities are safe, secure, and capable, the age of many of the assets presents some challenges in maintaining full operational capability. This KPI measures the availability of the ten most sensitive major pieces of equipment and is updated annually as we systematically maintain and replace the equipment. Availability of this year’s top ten has fluctuated throughout the year averaging 62%. This has been driven by a range of issues including furnace repairs and coolant problems. It was also affected by a safety pause on operations taken in one of the facilities to deal with an emerging work control issue. Of the ten items referred to, five of them will be replaced with new equipment within the coming financial year. Is the Portfolio under control? Actuals vs Budget End of Year Forecast Main Programme expenditure was £2,105m against a start of year budget of £2,295m (-8.3%) and a mid-year reforecast of £2,067m (+1.8%). The mid-year reforecast was principally driven by decisions to pause some work in our capital programme in order to pursue emerging efficiency opportunities in schedule and cost. Efficiency - End of Year forecast Cash efficiencies are delivered through a company-wide programme in which all staff are asked to identify opportunities for efficiency in their areas. This year’s target of around £26m was exceeded some £8m with total validated efficiencies of some £34m (131% of target). SCM Delivery Performance This KPI measures the monthly average on-time delivery of new contracts and contract renewals over the course of the year. In this financial year around 600 contracts were awarded of which on average 85% were delivered to the required baselined business requirement date. Principal Risks This section outlines the principal risks that AWE plc has identified and is actively managing as of the date of this report. The Board has reviewed the key risks and uncertainties facing the company, assessed their potential impact and likelihood, and considered how these risks have changed over the year. Each risk is assigned to a member of the Executive Committee, who is responsible for managing it. The effectiveness of the actions taken to reduce these risks is regularly reviewed through AWE’s governance processes. These risks are managed to reduce their impact on AWE’s ability to achieve its strategic objectives. AWE’s risk appetite is built into how risks are assessed and addressed across the organisation. AWE’s principal risks are set out in Table 2 below. Table 2: AWE Principal Risks 1. AWE Current Capabilities (Risk Owner: Chief Operating Officer) • Risk: Unavailability of current plant, facilities and enabling infrastructure to support the programme. AWE has a large and complex operation across multiple sites with some ageing plant and supporting infrastructure. Failure to manage risks associated with ageing and obsolescence has potential to result in delays and increased potential of a serious safety incident. • Potential Impact: Delays to operations and resource management inefficiencies; Increase in frequency &/or significance of Environment, Safety, Health & Quality (ESH&Q) events; Increased costs through extra maintenance and monitoring to keep current facilities operational; Resource management inefficiencies. • Mitigating actions: Delivery of re-kit programmes delivering projects to replace equipment and upgrade facilities to required standards; Delivery of Estates strategy and asset management plans; Robust risk-based asset through life management plans implemented; Single points of failure prioritised for investment; Continued focus on managing operations safely and securely, maintain Licence to Operate controls; Robust on-site emergency response and business resilience capability. 2. AWE Future Capabilities (Risk Owner: Chief Operating Officer) • Risk: Unavailability of future plant, facilities and critical infrastructure to support the programme. As above, the large and complex operations across multiple sites require the right capabilities to be in place at the right time to deliver the long term and future programmes. Failure to manage risks associated with these uncertainties over future capability has the potential to result in delays and increased potential of a serious safety incident through continued use of aged facilities. • Potential Impact: Delays to operations; Increase in frequency &/or significance of ESH&Q events; Financial penalties arising from fines, legal action and project delay / prolongation and increased costs; Resource management inefficiencies. • Mitigating actions: Delivery of new Capital builds and re-kit programmes; Delivery of Estates Strategy and Master Plan; Robust risk-based asset through life management plans implemented; Single points of failure prioritised for investment; Investment in utilities through the Infrastructure Capability Plan; Continued focus on managing operations safely and securely, maintain Licence to Operate. 3. AWE Sites (Risk Owner: Executive Director Estate & Liabilities) • Risk: Impediment to the use of AWE sites preventing operations to continue for more than 1 day. AWE sites and operations are subject to a variety of external threats that require close management. These include pandemic, protestor action natural disaster or extreme weather events. • Potential impact: Restriction or delays to operations on some or all AWE sites; Increased cost resulting from recovery of operations and/or project delay / prolongation. • Mitigating actions: Business resilience and continuity capability with established routine exercising of continuity plans; Security controls, including physical and personnel security; Robust on-site emergency response capability in place and regularly exercised; Commercial horizon scanning activities. 4. People & Places (Risk Owner: Chief People Officer) • Risk: Inability to attract, develop, positively engage, retain, and appropriately manage resourcing can impact on both our current and future capacity and capability to deliver against our mission. AWE’s employees are critical to its current and future performance. AWE needs to identify, recruit, engage, develop and retain the right people with the right skills, experience and behaviours to ensure current and future delivery. • Potential impact: Adverse effect on delivery of AWE’s business objectives; Damage to AWE’s brand and reputation as an effective member of the Nuclear Enterprise and Employer of Choice; Potential Regulatory and legal compliance issues due to lack of SQEP resource; Wellbeing issues including overwork, stress and absence; Additional cost for higher-than-expected recruitment activity; Deterioration in safety performance impacting safety and regulatory compliance; Potential damage to AWE’s employee engagement, climate, and culture. • Mitigating actions: Strategic & Operational Workforce Planning Gap Analysis; Location Strategy to promote inclusivity and unlock innovation, diversity and access to talent increase resilience in the capability; Reward framework to ensure pay and conditions remain fair, competitive and appropriate; Strive to maintain an effective and inclusive work environment and culture; Investment in Leadership and SQEP skills development; Focussed engagement and employee experience strategy; Wellbeing – Mental Health focus action plan; Continue to offer development and growth through training, job progression, career and learning pathways; Talent Pipeline and Programmes; Staff & capability STEM development outreach programme; Partnering with industry through enduring relationships. 5. Supply Chain (Risk Owner: Chief Financial Officer) • Risk: Insufficient capability and capacity within the supply chain to fully support the complexity and risk within AWE’s programmes of work. AWE relies on its supply chain for delivery of its programmes and projects. Maintaining close and effective working relationships with the supply chain is a priority for AWE. With the significant increase in future procurement activity required by AWE, supplier fragility and the global supply chain challenges remain a concern. • Potential impact: Reduced ability to set up longer term agreements and foster collaborative supplier relationships focussed on proactively pre-empting issues; Unavailability of critical goods and services impacting on delivery delays and increased costs; Conducting existing business becomes increasingly challenging, with increased cost of materials and supplies; Damage to relationships with critical suppliers. • Mitigating actions: Provide a robust forward looking demand plan and procurement pipeline; Develop and maintain long-term strategic relationships with critical and high-risk category supply chain partners and sub-contractors through an industrial strategy across the business; Support delivery focussed contract management in all areas. 6. Funding (Risk Owner: Chief Financial Officer) • Risk: Insufficient funding available to AWE from MoD or an inability for AWE to react to changing demands in a timely manner, all whilst facing affordability challenges, can prevent us from achieving the short-, medium- and long-term funding requirements to deliver our mission. • Potential impact: Inability to invest sufficiently in both people and capability, adversely affecting delivery of AWE’s business objectives; Cessation of some or all operations in the short/medium term; Conducting existing business (programmes and projects) becomes increasingly difficult; Loss of confidence by key stakeholders. • Mitigating actions: Business Case Assurance capability within AWE to improve the effectiveness of Business Cases and work with the DNO and MOD as appropriate to secure funding in appropriate timelines; Build and maintain strong relationships with MoD, and DNO to ensure appropriate prioritisation to AWE’s programme requirements and governance of programme change; Maintain processes to escalate and prioritise funding for safe and critical operations. 7. Environment, Safety & Health (Risk Owner: Director ESH&Q) • Risk: Failure to maintain safe and sustainable operational environment and prevent a major incident. AWE operations sites are inherently complex with many and varied hazardous operations and significant legacy issues that require continuous management of environmental, health, safety and sustainability issues. • Potential Impact: Restriction or delays to operations; Worker fatality, serious injury or environmental release; Increased cost resulting from fines or prosecution, recovery of operations; Restriction to, or suspension of operations on some or all AWE sites. • Mitigating actions: Maintain Licence to operate controls; Business continuity and emergency response capabilities established and exercised; Continuing process of Periodic Review of Safety (PRS) across critical hazardous facilities; Continuing programme of decommissioning plans to reduce net hazard of legacy facilities; ESH&Q strategy delivery, including leadership behaviours, Culture of Care and Safety culture. 8. Quality (Risk Owner: Director ESH&Q) • Risk: Inadequate quality and process control and quality control assurance systems could lead to a failure to produce a product or output. Quality is a critical enabler to mission success and to Nuclear Safety, Security and Environmental Performance. • Potential impact: Quality assurance and quality control failures; Production-focused failure and defects, re-work, lost production time and reputational damage; Restriction of some or all operations; Erosion in the MOD confidence in products delivered by AWE. • Mitigating actions: AWE engagement survey actions plans driving changes in behaviour; Maintain Quality training; Supply Chain Quality Requirements for Suppliers; Learning Organisation Approach; Auditing compliance with quality processes/procedures/standards. 9. External Shock (Risk Owner: Executive Director Corporate Assurance & General Counsel) • Risk: Increased volatility in previously stable markets, uncertainties that follow political change or serious accidents, and changing views of Nuclear deterrence or nuclear operators. Views and opinions related to Nuclear deterrence programmes and Nuclear operators are changing and potential impacts arising from major events need to be understood and potential consequences managed. • Potential impact: Significant change to the funding and scope of work; Significant change to the requirement, schedule and programme of work; Politically motivated regulatory change and increasing regulatory burden. • Mitigating actions: Undertake geopolitical risk assessments as part of regular due diligence; Established crisis-response and business resilience capabilities; Strategy, PR, and government-relations teams. 10. Cyber Security – Data Loss & Loss of Information Services (Risk Owner: Chief Information Officer and Executive Director, Security) • Risk: AWE is exposed to cyber-attack leading to denial of IS services and loss of data. Failure to keep up to date with the cyber-attack landscape as well as protecting from current conventional cyber risks could cause denial of IS services and loss of control of sensitive data. • Potential impact: Breach of IT security, denial or interruption of services; Escape of sensitive information to the public domain; Financial penalties from ICO for personal data breach; Reputational damage to AWE. • Mitigating actions: Continual programme of upgrades to technology to respond to changing threats; Effective IT and cyber controls; Routine cyber monitoring and analysis for potential anomalous activity; IT Business Resilience and incident response. 11. Sustainability and Climate Change (Risk Owner: Director ESH&Q) • Risk: Failure to mitigate, adapt and respond to the transitional consequences and evolving nature and scale of climate change, including exposure to more frequent extreme weather events, impacts on both our operating environment and our longer-term strategy including achieving net zero carbon. Insufficient identification and adaption to climate change and an inability to incorporate and implement changes restrict our transition to a low carbon way of working. • Potential impact: High cost of adapting to low carbon economy; Extreme weather disruption on operations, supply chain, resources and programme delivery; Environmental impact and regulatory non-compliance; Missed opportunities from not being an early adopter or pioneer; Global conflict, instability and civil unrest arising from climate migration. • Mitigating actions: Climate Transition Plan; Climate Change Risk Assessments and Adaptation Planning; Decarbonisation of Heat & Implementation of Heating Strategy; Sustainable Procurement Through Supply Chain Management. Environmental Sustainability Report The environmental data and associated financial costs presented is this section are consistent with the requirements of HM Treasury’s Sustainability Reporting Guidance 2024 to 2025 and includes the Taskforce on Climate Related Financial Disclosure (TCFD), performance against the Greening Government Commitments (GGC) and Streamlined and Energy Carbon Reporting (SECR). AWE introduced its first Environmental Sustainability Strategy (ESS) in 2019 with subsequent updates aligning to the MOD strategic approach to climate change and the GGC. It sets out AWE’s vision and goals for becoming a more sustainable organisation against three themes: reducing carbon and adapting to climate change, implementing a circular economy and enhancing biodiversity. During FY25 the ESS was reviewed and updated to take stock of AWE as a business, reflect on achievements and identify how AWE can build on successes. External benchmarking and workshops held with the AWE Senior Leadership Team and key stakeholders concluded that the three themes and related visions remain valid. The review has extended the scope of the ESS to include other AWE locations and refined key supporting activities. Underpinning the three themes are the UN Sustainable Development Goals (SDGs) which provide a blueprint to achieving a better and more sustainable future for all. AWE has identified and prioritised those key SDGs that it will contribute towards; SDG 12 responsible consumption, SDG 13 climate action and SDG 15 life on land. Task Force on Climate-related Financial Disclosures (TCFD) Introduction This disclosure summarises progress in implementing the TCFD recommendations, and planned actions for the year ended 31 March 2026. The TCFD was established in 2017 by the Financial Stability Board and set out eleven recommendations aligned to four pillars for climate reporting: Governance, Strategy, Risk Management, Metrics and Targets. The Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 amend sections 414C, 414CA and 414CB of the Companies Act 2006 to place requirements on certain publicly quoted companies and large private companies to incorporate TCFD aligned climate disclosures in their annual reports. Alongside this, in December 2024, HM Treasury finalised “TCFD-aligned disclosure application guidance” in consultation with the Financial Reporting Advisory Board (FRAB), requiring UK Government departments and larger arms-length bodies (ALBs) to incorporate TCFD aligned climate disclosures in their annual reports. AWE’s disclosure has been prepared to align with both sets of requirements. Key Disclosure Milestones for FY25 Whilst activities are already underway to decarbonise the estate, understand risk and build climate resilience, it is recognised that a more structured approach is required to build upon this. To this end, a Climate Transition Plan (CTP) has been prepared in-line with Transition Plan Taskforce guidance. This provides a framework delivery plan for coordination across key areas of activity, clarifying delivery and accountability. It brings together management and coordination of both climate mitigation and adaptation activities within a single risk management plan. The CTP was developed through a series of workshops involving parts of the organisation that have the greatest influence on mitigating carbon emissions and managing climate risk. Identified actions have been categorised across eight climate transition themes: • Greening the site • Net zero operations • Net zero supply chain • Financing the transition • Building climate resilience • Governance and planning • Measurement and reporting • Sustainable behaviours The CTP is a ‘live’ document, which will be updated annually to ensure ongoing alignment with the ESS and wider AWE commitments; it feeds into the annualised targets used to track progress and delivery, with performance reported through Tier 1 and 2 KPIs which are reported at Executive and Board Level. Ownership and ongoing delivery for AWE’s sustainability commitments is assigned at Executive level. Key areas of focus for FY26 Over the next year work is planned on the following areas to continue to progress the maturity of AWE’s TCFD implementation including: • Expand awareness of climate related risks across the organisation • Coordinate delivery of the climate transition plan (CTP); through implementation of Sustainability Plans to embed sustainability and delivery across the business • Widen climate risk scenario analysis to further quantify physical and transition risks, including costs of inaction, drawing on qualitative risks already identified • Continue to evolve the climate risk register and further embed the climate risk identification process • Expand metrics and targets to monitor climate risks and opportunities beyond GHG reduction Governance AWE’s strong system of governance is essential to making progress against the ESS and implementation of the Climate Transition Plan. To meet its obligations the Board has established seven Board committees with advisory, scrutiny or decision-making delegated authority, of which two work closely on the monitoring and management of climate-related risks. Figure 1 shows AWE's Climate-related Risk Governance Structure: - Board oversight: AWE plc Board, Security, Environment, Safety, Health & Quality (ESH&Q) Committee, Audit and Risk Assurance (ARAC) Committee. - Management oversight: AWE plc Executive Committee, Safety, Sustainability, Health, Environment, & Quality (SHEQ) Committee, Environmental Sustainability Steering Group, Environment & Sustainability Team (E&S). Strategy Approach to defining climate risk: Climate change is a strategic risk for AWE. AWE must simultaneously decarbonise its operations to comply with UK net zero targets by 2050, minimise transition risks, and adapt to physical risks. Physical risk detail: Identified using the Defence Infrastructure Organisation (DIO) Climate Impact and Risk Assessment Methodology (CIRAM) under RCP2.6 and RCP8.5 scenarios. Transition risk detail: Regulatory changes such as UK ETS, carbon allowances, and taxation. Transition opportunities include sustainable building design, solar farm projects, and decarbonised supply chains. Risk Management Embedded in ERM processes using Active Risk Manager (ARM) and a dedicated climate risk register. Metrics and targets AWE has set a target to achieve Net Zero emissions across the value chain by 2050 and Net Zero for Scope 1 and 2 emissions by 2040 (supported by SBTi methodology). Table 3 – GHG Emissions for AWE Designated Sites (Scope 1, 2 and 3 GHG Emissions from Energy) | Non-Financial Indicators tCO2e | 2024/25 | 2023/24 | 2022/23 | 2021/22 | 2020/21 | Baseline 2017/18 | |---|---|---|---|---|---|---| | Total Scope 1 | 34,813 | 32,871 | 32,727 | 35,003 | 37,130 | 40,317 | | Natural Gas | 33,012 | 30,911 | 31,847 | 33,687 | 35,116 | 37,360 | | Other gaseous fuels | 2 | 2 | 2 | 1 | 1 | - | | Liquid fuels | 668 | 1,136 | 258 | 616 | 648 | 921 | | Fuel for AWE vehicles | 560 | 517 | 534 | - | - | - | | Fugitive Emissions | 570 | 305 | 87 | 699 | 1,366 | 2,036 | | Total Scope 2 – Purchased Electricity Location based | 29,568 | 27,069 | 26,352 | 28,645 | 31,061 | 43,282 | | Total Scope 2 – Purchased Electricity Market Based | 0 | 0 | 0 | 0 | 0 | 43,282 | | Total Scope 1 and 2 Location Based | 64,381 | 59,940 | 59,079 | 63,678 | 68,191 | 83,599 | | Total Scope 1 and 2 Market Based | 34,813 | 32,871 | 32,727 | 35,033 | 37,130 | 83,599 | | Scope 3 – T&D Losses Location Based | 2,558 | 2,342 | 2,411 | 2,535 | 2,671 | 4,047 | | Scope 3 – T&D Losses Market Based | 0 | 0 | 0 | 0 | 0 | 4,047 | Related Energy Consumption kWh (000s): • Natural Gas: 2024/25: 180,492 | 2023/24: 168,978 | 2022/23: 174,463 | 2021/22: 183,923 | 2020/21: 190,983 | Baseline: 202,860 • Purchased Electricity: 2024/25: 142,804 | 2023/24: 130,780 | 2022/23: 136,297 | 2021/22: 134,908 | 2020/21: 133,228 | Baseline: 123,115 • Other gaseous fuels: 2024/25: 9,722 | 2023/24: 8 | 2022/23: 8 | 2021/22: 6 • Liquid fuels: 2024/25: 2,650 • Fuel for AWE vehicles: 2024/25: 2,348 Gross Expenditure (£000): • Energy: 2024/25: 45,722 | 2023/24: 36,003 | 2022/23: 27,279 | 2021/22: 21,185 | 2020/21: 20,401 | Baseline: 16,338 • Off Sets: 0 across all years GHG Emissions Scope 3 from Business Travel (tCO2e): • UK Vehicle Hire: 2024/25: 166 | 2023/24: 284 | 2022/23: 245 | 2021/22: 137 • Private mileage claims: 2024/25: 183 | 2023/24: 199 | 2022/23: 159 | 2021/22: 99 • Rail: 2024/25: 62 | 2023/24: 50 | 2022/23: 27 | 2021/22: 11 • Domestic Air Travel: 2024/25: 249 | 2023/24: 217 | 2022/23: 155 | 2021/22: 46 • Domestic Air Travel Distance – km's: 2024/25: 912,182 | 2023/24: 795,155 • International Air Travel (Short Haul): 2024/25: 291 | 2023/24: 209 | 2022/23: 132 • International Air Travel (Short Haul) Distance – km's: 2024/25: 1,592,460 | 2023/24: 1,129,302 • International Air Travel (Long Haul): 2024/25: 9,133 | 2023/24: 8,543 | 2022/23: 5,377 • International Air Travel (Long Haul) Distance – km's: 2024/25: 30,905,495 | 2023/24: 26,674,099 • Gross Expenditure (£000) Business Travel: 2024/25: 13,058 | 2023/24: 11,775 | 2022/23: 8,888 | 2021/22: 2,077 SECR Intensity Measurements: • Total SECR kWh's '000s: 2024/25: 327,130 | 2023/24: 303,892 | 2022/23: 314,615 | 2021/22: 321,741 • Total SECR Emissions tCO2e - Location Based: 2024/25: 66,049 | 2023/24: 61,324 | 2022/23: 61,548 | 2021/22: 65,556 • Total SECR Emissions tCO2e - Market Based: 2024/25: 33,923 | 2023/24: 31,913 | 2022/23: 32,786 | 2021/22: 34,379 • Intensity Measurement m2 Floor Area: 2024/25: 568,999 | 2023/24: 568,999 | 2022/23: 569,531 | 2021/22: 593,620 • Intensity Ratio location based tCO2e/m2 Floor Area: 2024/25: 0.1161 | 2023/24: 0.1078 | 2022/23: 0.1081 | 2021/22: 0.1104 • Intensity Ratio market based tCO2e/m2 Floor Area: 2024/25: 0.0596 | 2023/24: 0.0561 | 2022/23: 0.0576 | 2021/22: 0.0579 Table 4 – GHG Emissions for AWE Upstream Leased Locations: • Total Scope 1 – Natural Gas: 0 across 2024/25, 2023/24, 2022/23 • Total Scope 2 – Purchased Electricity Location based (tCO2e): 2024/25: 133 | 2023/24: 12 | 2022/23: 5 • Total Scope 2 – Purchased Electricity Market Based (tCO2e): 2024/25: 104 | 2023/24: 7 | 2022/23: 5 • Total Scope 1 and 2 Location Based: 2024/25: 133 | 2023/24: 12 | 2022/23: 5 • Total Scope 1 and 2 Market Based: 2024/25: 104 | 2023/24: 7 | 2022/23: 5 • Scope 3 – T&D Losses Location Based: 2024/25: 12 | 2023/24: 1 | 2022/23: 0 • Scope 3 – T&D Losses Market Based: 2024/25: 9 | 2023/24: 1 | 2022/23: 0 • Total SECR kWh's '000s: 2024/25: 643 | 2023/24: 58 | 2022/23: 27 • Total SECR Emissions tCO2e - Location Based: 2024/25: 145 | 2023/24: 13 | 2022/23: 5 • Total SECR Emissions tCO2e - Market Based: 2024/25: 113 | 2023/24: 7 | 2022/23: 5 • Intensity Measurement m2 Floor Area: 2024/25: 8,950 | 2023/24: 903 | 2022/23: 103 • Intensity Ratio location based tCO2e/m2 Floor Area: 2024/25: 0.0162 | 2023/24: 0.0144 | 2022/23: 0.0533 • Intensity Ratio market based tCO2e/m2 Floor Area: 2024/25: 0.0126 | 2023/24: 0.0074 | 2022/23: 0.0486 Table 5 – Waste Management Performance (tonnes): • Controlled Waste: 2024/25: 1,947 | 2023/24: 1,689 | 2022/23: 3,446 | 2021/22: 1,662 | 2020/21: 1,425 | Baseline: 2,287 • Reused Waste: 2024/25: 229 | 2023/24: 161 | 2022/23: 131 | 2021/22: 57 | 2020/21: 99 | Baseline: 319 • Recycled Waste: 2024/25: 1,152 | 2023/24: 1,043 | 2022/23: 2,901 | 2021/22: 1,163 | 2020/21: 945 | Baseline: 1,270 • Recovered Waste: 2024/25: 39 | 2023/24: 38 | 2022/23: 334 | 2021/22: 352 | 2020/21: 304 | Baseline: 431 • Recovered (Energy from Waste): 2024/25: 370 | 2023/24: 3 • Disposed (Incineration): 2024/25: 155 | 2023/24: 103 • Disposed (Landfill/other): 2024/25: 3 | 2023/24: 1.5 | 2022/23: 80 | 2021/22: 90 | 2020/21: 77 | Baseline: 267 • ICT Waste: 2024/25: 26 | 2023/24: 27 | 2022/23: 27 | 2021/22: 15 | 2020/21: 16 | Baseline: 32 • Food Waste: 2024/25: 32 | 2023/24: 18 | 2022/23: 9 • Hazardous waste: 2024/25: 477 | 2023/24: 407 • Gross Expenditure (£000): 2024/25: 1,185 | 2023/24: 1,164 | 2022/23: 988 | 2021/22: 851 | 2020/21: 780 • Hazardous waste costs (£000): 2024/25: 311 | 2023/24: 27 Table 6 – Printer Paper Purchased: • A3 Paper (Reams): 2024/25: 769 | 2023/24: 444 | 2022/23: 488 | 2021/22: 1,490 | 2020/21: 1,790 • A3 Paper (Boxes): 2024/25: 154 | 2023/24: 89 | 2022/23: 98 | 2021/22: 298 | 2020/21: 358 • A4 Paper (Reams): 2024/25: 11,139 | 2023/24: 8,768 | 2022/23: 8,560 | 2021/22: 10,726 | 2020/21: 9,684 • A4 Paper (Boxes): 2024/25: 2,127 | 2023/24: 1,754 | 2022/23: 1,712 | 2021/22: 2,145 | 2020/21: 1,936 Table 7 – Water Consumption from AWE Designated Sites (m3): • Aldermaston Borehole Abstraction: 2024/25: 510,291 | 2023/24: 491,189 | 2022/23: 457,296 | 2021/22: 496,304 | 2020/21: 483,221 | Baseline: 603,826 • Burghfield Borehole Abstraction: 2024/25: 150,997 | 2023/24: 148,178 | 2022/23: 181,986 | 2021/22: 146,567 | 2020/21: 214,147 | Baseline: 165,706 • Aldermaston Main Water Supply: 2024/25: 55,047 | 2023/24: 112,896 | 2022/23: 178,840 | 2021/22: 129,713 | 2020/21: 116,333 | Baseline: 177,653 • Blacknest Main Water Supply: 2024/25: 8,268 | 2023/24: 7,560 | 2022/23: 7,310 | 2021/22: 6,034 | 2020/21: 4,739 | Baseline: 1,316 • Total m3: 2024/25: 724,603 | 2023/24: 759,823 | 2022/23: 825,432 | 2021/22: 778,618 | 2020/21: 818,440 | Baseline: 948,501 • Gross Expenditure (£) (Purchased Water): 2024/25: 117,717 | 2023/24: 193,283 | 2022/23: 244,883 | 2021/22: 189,005 | 2020/21: 163,631 | Baseline: 198,383 Section 172(1) Statement This is the section 172(1) statement of AWE, made pursuant to the Companies Act s414CZA. It sets out the way in which the directors of AWE have had regard to the matters set out in s172(1)(a) to (f) of that Act. The board of directors of AWE retains overall challenge to and oversight of the activity of the Company. It operates under AWE’s Articles of Association and Terms of Reference (TOR) which includes a statement of those decisions which are reserved to the board. For national security reasons, this statement does not discuss individual decisions in detail. The board’s main areas of focus in the reporting period have been oversight of the Company’s performance of its programme of work in alignment with the objectives and mission of MOD, and of the continued execution of the Company’s transformation programme. The board reviewed and approved the Company’s Business Plan; this Plan sets out among other matters the programme that the Company undertakes in support of the UK’s strategic deterrent and is developed through close working with DNO to ensure alignment with the wider defence nuclear programme. The board also reviewed the continued implementation of the Company’s strategy, including the delivery of eight key transformation initiatives. In taking such decisions, the board takes into account: • long term consequences • employee interests • supplier, customer, and other relationships • community and environment • reputation for high standards of business conduct • acting fairly as between members Approved and signed on behalf of the board on 20 November 2025 Nick Elliott, Chief Executive Officer Corporate Governance Report Directors’ Report Directors who have held office on the AWE board between 1 April 2024 and 31 March 2025 are: • Sam Laidlaw, Chairman – appointed 1 January 2025 • Sir John Manzoni, Chairman – resigned 31 December 2024 • Nick Elliott, CB MBE, CEO • Iain Stevenson, Deputy CEO- resigned 27 July 2024 • Barry Hunter, Deputy CEO and Chief Financial Officer • Richard Elsy, CBE, Non-Executive Director • Claire Flint, Non-Executive Director • Dame Sue Ion, Non-Executive Director – resigned 5 June 2025 • Richard Keys, Non-Executive Director • Henry Lloyd, Non-Executive Director (MOD appointed) • Bridget Rosewell, CBE, Non-Executive Director • Dr J Stephen Rottler, Non-Executive Director • Mark Wild, OBE, Non-Executive Director – appointed 12 September 2024 • Paul Howarth, Non-Executive Director - Appointed 4 August 2025 Directors' interests: • Henry Lloyd was an employee of UKGI, which works alongside the SoS for Defence, who is the sole shareholder of the Company. • Nick Elliott was a NED of Helsing Ltd. No conflicts have arisen with respect to these interests. External auditor: Comptroller and Auditor General / NAO. Pensions: Scheme deficit on 31 March 2025 was £97m (31 March 2024: £209m). Dividends: No dividends declared during the current year (2024: £nil). Personal data: No disclosures reportable to ICO during period; one minor breach reported post-period where ICO took no further action. Political donations and expenditure: £nil. Research & Development: Expenditure not capitalised as assets remain in government ownership. Overseas branch: The Company maintains a branch in France. Events after the reporting period: On 12 November 2025, announced a redundancy programme to change organisational structure (non-adjusting event). Going concern: Directors have a reasonable expectation that the Company will continue in operational existence for at least through to 30 November 2026. Approved and signed on behalf of the board on 20 November 2025 Nick Elliott, Chief Executive Officer Statement of Directors’ Responsibilities The directors are responsible for preparing the Annual Report and financial statements in accordance with applicable law and regulations and for ensuring that proper accounting records are maintained that disclose, with reasonable accuracy at any time, the financial position of AWE and 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 taking reasonable steps for the prevention and detection of fraud and other irregularities. The SoS for Defence has directed AWE to prepare financial statements in accordance with UK-adopted IFRS and FReM where compatible with Companies Act 2006. The Permanent Secretary of the MOD has designated the CEO of AWE plc as the Accounting Officer (AO) of AWE plc. Governance Statement The AWE board met eleven times this year. Board committees include: • Audit and Risk Assurance Committee (ARAC) - Chaired by Richard Keys • Engineering, Science and Technical Capability Assurance Committee (ESTAC) - Chaired by Dame Sue Ion • Infrastructure Committee - Chaired by Bridget Rosewell • Nominations Committee - Chaired by Sir John Manzoni / Sam Laidlaw • Production and Programme Committee (P&P) - Chaired by Richard Elsy • Security, Environment, Safety, Health, and Quality Committee (SESH&Q) - Chaired by Dr J Stephen Rottler • Remuneration Committee - Chaired by Claire Flint Internal Control and Head of Internal Audit Opinion: Overall opinion for 2024/25 remains Limited Assurance, reflecting ongoing transformation and public sector maturing processes, while noting positive direction of travel. Whistleblowing and Anti-Corruption: Zero-tolerance approach to bribery and corruption; Whistleblowing mechanisms in place with Safecall and internal channels. Remuneration Report Remuneration Policy and Directors' Contracts: Exemption granted from Civil Service Pay Remit to negotiate directly with Trade Unions. Table 4: Director's Remuneration (£'000): • Sam Laidlaw (Appointed 1 Jan 2025): 2024-25 Fees & Salary: 35-40 (FYE 150-155), Total: 35-40 • Sir John Manzoni (Stepped down 31 Dec 2024): 2024-25 Fees & Salary: 110-115 (FYE 150-155), Total: 110-115 | 2023-24 Total: 150-155 • Nick Elliott (CEO): 2024-25 Fees & Salary: 450-455, Benefits in kind: £600, Total: 450-455 | 2023-24 Total: 30-35 (FYE 450-455) • Iain Stevenson (Stepped down 27 June 2024): 2024-25 Fees & Salary: 140-145 (FYE 435-440), Total: 140-145 | 2023-24 Total: 360-365 (FYE 440-445) • Barry Hunter (Deputy CEO & CFO): 2024-25 Fees & Salary: 315-320, Bonus: 70-75, Benefits in kind: £2,500, Total: 390-395 | 2023-24 Total: 390-395 • Richard Elsy: 2024-25 Total: 25-30 | 2023-24 Total: 25-30 • Claire Flint: 2024-25 Total: 25-30 | 2023-24 Total: 25-30 • Dame Sue Ion: 2024-25 Total: 25-30 | 2023-24 Total: 25-30 • Richard Keys: 2024-25 Total: 25-30 | 2023-24 Total: 25-30 • Henry Lloyd: Unremunerated by AWE • Dr J Stephen Rottler: 2024-25 Total: 25-30 | 2023-24 Total: 25-30 • Bridget Rosewell: 2024-25 Total: 25-30 | 2023-24 Total: 10-15 (FYE 25-30) • Mark Wild: 2024-25 Total: 15-20 (FYE 25-30) Fair Pay Disclosures (Table 5): • Highest paid director salary & allowances: £452,500 (0% change) • Average for employees: £54,598 (0.5% change) • Performance pay & bonuses highest paid director: £0 | Average for employees: £2,378 (40.4% change) Pay Ratios vs Highest Paid Director (Table 6 & 7): • 25th percentile pay ratio: 11:1 (Staff pay & benefits: £40,994, Salary only: £37,031) • Median pay ratio: 9:1 (Staff pay & benefits: £52,813, Salary only: £46,690) • 75th percentile pay ratio: 6:1 (Staff pay & benefits: £69,578, Salary only: £63,694) People Report • Sickness absence rate: 2.5% to 3.4%. • Trade Union facility time: 53 relevant officials (49.3 FTE), Total facility time cost £628,972 (0.12% of total pay bill of £525,399,000). • Gender diversity: 27.6% female employees across total FTE workforce. • Staff numbers (Table 17): Science (1,394 FTE), Engineering and manufacturing (4,088 FTE), Business services (3,756 FTE) -> Total: 9,238 FTE (8,854 permanent, 272 agency, 112 secondees). • Exit Packages (Table 18): Total 50 packages in 2024/25 amounting to £1,883,086 (all non-compulsory / agreed departures). • Consultancy expenditure: £39.5 million in 2024/25 (2023/24: £29.7 million). Independent Auditor’s Report to the Members of AWE plc Opinion on financial statements: Unqualified opinion that financial statements give a true and fair view of the state of AWE plc's affairs as at 31 March 2025 and of its loss for the year then ended. Conclusions relating to going concern: No material uncertainties identified. Signed by Hilary Lower (Senior Statutory Auditor) on 26 November 2025 on behalf of Comptroller and Auditor General, National Audit Office. Income Statement for Year ended 31 March 2025 | Item | Note | Year ended 31 March 2025 (£'000) | Year ended 31 March 2024 (£'000) | |---|---|---|---| | Revenue | 3 | 2,148,615 | 1,818,236 | | Cost of sales | 5 | (2,207,048) | (1,851,260) | | Gross loss | | (58,433) | (33,024) | | Other operating income | 4 | 43,550 | 20,596 | | Administrative expenses | | (124) | (1,157) | | Operating loss | | (15,007) | (13,585) | | Financial income | | 878 | - | | Financial expenses | 8 | (883) | (33) | | Net financing expenses | | (5) | (33) | | Loss before tax | | (15,012) | (13,618) | | Taxation | 9 | (15,331) | 2,571 | | (Loss) for the year | | (30,343) | (11,047) | Statement of Other Comprehensive Income for Year ended 31 March 2025 | Item | Note | Year ended 31 March 2025 (£'000) | Year ended 31 March 2024 (£'000) | |---|---|---|---| | (Loss) for the year | | (30,343) | (11,047) | | Other comprehensive income/(loss): Actuarial movement in relation to pension fund | 15 | 126,000 | 14,000 | | Other comprehensive income/(loss) for the year | | 126,000 | 14,000 | | Total comprehensive income for the year | | 95,657 | 2,953 | Balance Sheet at 31 March 2025 | Item | Note | 31 March 2025 (£'000) | 31 March 2024 (£'000) | |---|---|---|---| | Non-current assets | | | | | Investments in group companies | 10 | 1 | 1 | | Other financial assets | 18 | - | - | | Deferred tax assets | 11 | 2,142 | 8,475 | | Right-of-use assets | 19 | 20,701 | 1,504 | | Total non-current assets | | 22,844 | 9,980 | | Current assets | | | | | Contract assets | 3 | 82,890 | 130,334 | | Other financial assets | 18 | - | 3 | | Trade and other receivables | 12 | 126,722 | 95,273 | | Deferred tax assets | 11 | 1,700 | - | | Cash and cash equivalents | 13 | 143,099 | 107,782 | | Total current assets | | 354,411 | 333,392 | | Total assets | | 377,255 | 343,372 | | Current liabilities | | | | | Lease liabilities | 19 | 4,638 | 660 | | Trade and other payables | 14 | 350,491 | 317,393 | | Contract liabilities | 3 | 3,508 | 14,735 | | Provisions | 16 | 91 | 279 | | Total current liabilities | | 358,729 | 333,067 | | Non-current liabilities | | | | | Lease liabilities | 19 | 18,121 | 832 | | Trade and other payables | 14 | 1,376 | 1,508 | | Employee benefits | 15 | 97,000 | 209,000 | | Provisions | 16 | 0 | 83 | | Total non-current liabilities | | 116,497 | 211,423 | | Total liabilities | | 475,226 | 544,490 | | Net liabilities | | (97,972) | (201,118) | | Equity | | | | | Share capital | 17 | 50 | 50 | | Retained earnings | | (198,511) | (294,168) | | Capital reserves | 17 | 100,489 | 93,000 | | Total equity | | (97,972) | (201,118) | Statement of Changes in Shareholder’s Equity • Balance at 1 April 2023: Share capital £50k, Retained earnings £(297,121)k, Capital reserves £63,000k, Total equity £(234,071)k. • Total comprehensive income 2023/24: Profit £(11,047)k, Other comprehensive income £14,000k -> Total £2,953k. • Capital contributions: £30,000k. • Balance at 31 March 2024: Share capital £50k, Retained earnings £(294,168)k, Capital reserves £93,000k, Total equity £(201,118)k. • Total comprehensive income 2024/25: Profit £(30,343)k, Other comprehensive income £126,000k -> Total £95,657k. • Capital contributions: £7,489k. • Balance at 31 March 2025: Share capital £50k, Retained earnings £(198,511)k, Capital reserves £100,489k, Total equity £(97,972)k. Cash Flow Statement for Year ended 31 March 2025 • Net cash from operating activities: £30,179k (2023/24: £(44,957)k) • Net cash from financing activities: £5,138k (2023/24: £29,368k) [Capital contribution £7,489k, Principal lease repayments £(1,468)k, Interest on leases £(883)k] • Net increase in cash and cash equivalents: £35,317k (2023/24: £(15,589)k) • Cash and cash equivalents at 1 April: £107,782k | at 31 March: £143,099k (held with Government Banking). Key Notes Summary: • Note 1: Accounting Policies - Prepared under UK-adopted IFRS and FReM. Registered company in England (02763902). MOD owns site assets. • Note 2: Segmental Analysis - M&O Revenue £2,089,194k (Mission Delivery £263,734k, Operations £157,039k, Infrastructure Programme Delivery £1,085,937k, Enabling/Corporate £582,484k), Non-M&O Revenue £102,971k, RDEC £(43,550)k -> Total Revenue £2,148,615k. • Note 3: Revenue - MOD £2,100,655k, Non-MOD £47,960k. • Note 4: Other operating income - RDEC tax relief £43,550k. • Note 5: Expenses & Auditor's Remuneration - Audit fee £230k. • Note 6: Staff costs - £608,244k total aggregate payroll costs; Average FTE employees 8,566. • Note 7: Directors' Remuneration - £1,686k total remuneration. • Note 9: Taxation - Total tax charge £15,331k. • Note 10: Investment in subsidiaries - AWE Pension Trustees Limited (100% owned, dormant). • Note 11: Deferred tax assets - £3,842k total (£2,142k non-current, £1,700k current). • Note 12: Trade and other receivables - £126,722k. • Note 13: Cash and cash equivalents - £143,099k. • Note 14: Trade and other payables - Current £350,492k, Non-current £1,376k. • Note 15: Employee Benefits - Defined benefit pension deficit decreased to £97.0m. Total obligation £1,335.0m, Plan assets £1,238.0m. • Note 16: Provisions - ACP provision £91k. • Note 17: Capital and reserves - Share capital £50,001 (50,001 ordinary £1 shares); Capital reserves £100,489k. • Note 19: Leases - Right-of-use assets £20,701k; Lease liabilities £22,759k (£4,638k current, £18,121k non-current). • Note 22: Related Parties - Controlling party MOD. Sales £2,644m. • Note 24: Events after the reporting period - Redundancy programme announced 12 November 2025. Glossary includes definitions of key terms used throughout the report: AASH, ACP, AO, BAT, BEIS, BNG, CAL, CASD, CEO, CFO, DESA, DNE, DNIC, DNO, DREAM, DSTL, ECL, ENEI, ESH&Q, ESS, ETS, FReM, FTE, FVTPL, GAAP, GBS, GGC, GHG, HMG, HPC, IAC, IBP, IBR, ICO, ICT, IFRS, IR35, ISO, LPG, M&O, MOD, NAO, NDPB, NNC, ONR, OSHA, PMO, PMS, PRS, RBG, RDEC, REGO, RIDDOR, RSG, SDS, SECR, SESH&Q, SET, SoS, SOX, SQEP, SRO, STAR, STEM, T&D, TCFD, TOR, TU, ULEV.