Review of Business

Overview of Chair

These audited financial reports for the year ending 31st March 2025 cover a year of increased activity in key areas promoting high quality design in transport, regeneration and placemaking, the completion of national guidance on renewable energy and effective pattern of hybrid working, enabling us to pursue core strategic objectives.

We value our constructive relationship with the Welsh Government which facilitates our work as we respond to the framework they set us in addition to our company objects. The working relationship we share with colleagues in the Planning Directorate and in the transport, regeneration and place teams, is productive and the whole benefits from the drive and ambition of Rebecca Evans MS, her cabinet colleagues and officials.

As Directors of a limited company, this context is a supportive one, which help us as we execute our duties and responsibilities in governance and strategic direction. We are also fortunate to have a strong staff team and Commissioners on the Board to whom I extend my thanks and appreciation for all their commitment, expertise and enthusiasm. This context is important as we face increasing financial challenges and carry out strategic planning for coming years, considering strategic direction, human and financial resources.

Our financial reports reflect the accrued impact of IFRS accounting policy with regard to our leasing arrangements, the impact annual actuarial calculations related to the Local Government Pension Scheme to which we are an admitted body, and any changes to revenue and capital funding, as well as usual movement reflecting our work programmes. These items are closely monitored by the Board of Directors. Our continuing work, major projects and our strategic relationships are noted in our Framework Letter and Funding Agreement for the Term of Government 2021-2025 which is in place along with our annual remit letter which accompanies them. These have been considered by Directors and our auditors in relation to assessment of going concern and basis of opinion.

The Design Commission promotes good design across the built environment, viewing it as a critical factor in addressing climate and nature imperatives, securing efficient land and resource use, and in creating an environment that offers people quality and choice in their neighbourhoods, transport, healthcare and well-being.

Our already substantial role in several nationally strategic initiatives continues to include our specialist support and input into the place-led planning policy agenda - which identifies the critical role of good design in sound place-making. We continue to work toward the objectives of the Wellbeing of Future Generations Act alongside responding to decarbonisation and climate change imperatives.

Some highlights of the year include:

• Significant contributions to the Affordable Housing Task Force chaired by Lee Waters MS

• The Transforming Towns Agenda through which we delivered on our full scope for the accounting period and expect to be successful in further stages

• The roll out of new design guidance on Designing for Renewable Energy in Wales, on behalf of Welsh Government, as well as new guidance on best practice with Placemaking Plans – following their development and publication in the prior year

• Among other large scale projects, providing specialist strategic review and client support to the team delivering the £500m Velindre International Cancer Centre Project, Cardiff – now under construction

• Providing strategic design review and specialist input to Transport for Wales, local authorities, private practice and other stakeholders across Wales

• Refining and developing scope for Strategic placemaking support for local authorities

• Our Chief Executive’s continued chairing of the Welsh School of Architecture External Advisory Board

• Supporting key officials at senior levels in the Welsh Government and delivering a range of events for multi-disciplinary stakeholders

• Completing a successful public appointments process which will see four strong new appointments to our Board

We continue to focus on outcomes that lead to greater public value and to strengthen our collaboration and influence with decision makers across national and local government. Positive impact from regeneration and renewal depends upon excellence in built environment design and development ,especially for good quality homes, well-connected places and more walkable, greener neighbourhoods.

We have made strong new appointments to complement Board team which will be valuable in steering our course through detailed and strategic planning examining the next five years. I continue to value the work of all our Commissioners, staff and the team of dedicated inter-disciplinary design, development and construction professionals who give voluntarily of their time and expertise to support our nationwide services.

The Design Commission continues to pursue a commitment to quality and the importance of design, which must be made explicit and must be accelerated in delivery. We will continue to exercise leadership in our field, and to build capability and a culture of quality in practice and across sectors, that attends excellence, every day.

By order of the board

Review of Business

Overview of Chair

These audited financial reports for the year ending 31st March 2025 cover a year of increased activity in key areas promoting high quality design in transport, regeneration and placemaking, the completion of national guidance on renewable energy and effective pattern of hybrid working, enabling us to pursue core strategic objectives.

We value our constructive relationship with the Welsh Government which facilitates our work as we respond to the framework they set us in addition to our company objects. The working relationship we share with colleagues in the Planning Directorate and in the transport, regeneration and place teams, is productive and the whole benefits from the drive and ambition of Rebecca Evans MS, her cabinet colleagues and officials.

As Directors of a limited company, this context is a supportive one, which help us as we execute our duties and responsibilities in governance and strategic direction. We are also fortunate to have a strong staff team and Commissioners on the Board to whom I extend my thanks and appreciation for all their commitment, expertise and enthusiasm. This context is important as we face increasing financial challenges and carry out strategic planning for coming years, considering strategic direction, human and financial resources.

Our financial reports reflect the accrued impact of IFRS accounting policy with regard to our leasing arrangements, the impact annual actuarial calculations related to the Local Government Pension Scheme to which we are an admitted body, and any changes to revenue and capital funding, as well as usual movement reflecting our work programmes. These items are closely monitored by the Board of Directors. Our continuing work, major projects and our strategic relationships are noted in our Framework Letter and Funding Agreement for the Term of Government 2021-2025 which is in place along with our annual remit letter which accompanies them. These have been considered by Directors and our auditors in relation to assessment of going concern and basis of opinion.

The Design Commission promotes good design across the built environment, viewing it as a critical factor in addressing climate and nature imperatives, securing efficient land and resource use, and in creating an environment that offers people quality and choice in their neighbourhoods, transport, healthcare and well-being.

Our already substantial role in several nationally strategic initiatives continues to include our specialist support and input into the place-led planning policy agenda - which identifies the critical role of good design in sound place-making. We continue to work toward the objectives of the Wellbeing of Future Generations Act alongside responding to decarbonisation and climate change imperatives.

Some highlights of the year include:

• Significant contributions to the Affordable Housing Task Force chaired by Lee Waters MS

• The Transforming Towns Agenda through which we delivered on our full scope for the accounting period and expect to be successful in further stages

• The roll out of new design guidance on Designing for Renewable Energy in Wales, on behalf of Welsh Government, as well as new guidance on best practice with Placemaking Plans – following their development and publication in the prior year

• Among other large scale projects, providing specialist strategic review and client support to the team delivering the £500m Velindre International Cancer Centre Project, Cardiff – now under construction

• Providing strategic design review and specialist input to Transport for Wales, local authorities, private practice and other stakeholders across Wales

• Refining and developing scope for Strategic placemaking support for local authorities

• Our Chief Executive’s continued chairing of the Welsh School of Architecture External Advisory Board

• Supporting key officials at senior levels in the Welsh Government and delivering a range of events for multi-disciplinary stakeholders

• Completing a successful public appointments process which will see four strong new appointments to our Board

We continue to focus on outcomes that lead to greater public value and to strengthen our collaboration and influence with decision makers across national and local government. Positive impact from regeneration and renewal depends upon excellence in built environment design and development ,especially for good quality homes, well-connected places and more walkable, greener neighbourhoods.

We have made strong new appointments to complement Board team which will be valuable in steering our course through detailed and strategic planning examining the next five years. I continue to value the work of all our Commissioners, staff and the team of dedicated inter-disciplinary design, development and construction professionals who give voluntarily of their time and expertise to support our nationwide services.

The Design Commission continues to pursue a commitment to quality and the importance of design, which must be made explicit and must be accelerated in delivery. We will continue to exercise leadership in our field, and to build capability and a culture of quality in practice and across sectors, that attends excellence, every day.

By order of the board

The directors are responsible for preparing the annual report and the 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 International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom. 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 of the profit or loss of the company for that period. In preparing these financial statements, International Accounting Standard 1 requires that directors:

• properly select and apply accounting policies;

• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

• provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

• make an assessment of the company's ability to continue as a going concern.

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 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 hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

We present our annual financial statements and this report for the financial year 1 April 2024-31 March 2025.

The principal activity of the company continued to be that of Design Commission for Wales, a national organisation established by the Welsh Government to promote good design for the built environment across sectors, for better buildings, spaces and places.

About us

We present our annual financial statements in this report for the financial year 1 April 2024-31 March 2025 during which our activities directly address the requirements of our Welsh Government Funding and Framework letter, in the context of our company Objects and Powers. They are aligned to our commitment to promoting design excellence for enhanced, high quality environments throughout Wales.

We continue to advocate high quality design, for better outcomes and greater long-term public value from significant public investments now and for future generations, working closely with senior officials of the Welsh Government and the wider public, private and third sectors.

As in the previous year our team and Board of Directors are aware of constrained public finance. Whilst we are sensitive to this context our day to day financial monitoring and management, and our audited financial reports continue to show, as previously reported, the need for our own resources to be increased and strengthened. Our fixed overheads have a major impact on our resources and our capacity for compliance with our remit is coming under increasing pressure. We appreciate the ongoing constructive input of our colleagues in Welsh Government working with us to find a positive outcome.

We look forward to further collaboration with our colleagues in the Welsh Government to ensure we do not lose ground at a time when climate, nature and socio-economic factors coalesce to create a challenging operating environment. We remain committed to working closely with our partners, colleagues and stakeholders, across sectors and professions, with the common purpose and collective responsibility we all share to help promote well-designed, healthy and sustainable places everywhere, for everyone.

The results for the year are set out on page 12.

Going Concern

The company's financial statements currently show that the company has net liabilities of £111,463 (2024: net assets of £586,441). The directors have reviewed the forecasts covering a period of at least 12 months from the date of approval of the financial statements and have confidence in the continued support from its shareholders, the Welsh Government, to meet its liabilities.

Whilst the Statement of Financial Position showed a net asset position as at 31st March 2024, the main driver of the positive reserves figure was the gains on the defined benefit pension scheme. The previously reported Defined Benefit Pension Asset has now been removed as a result of the adoption of the IFRS pension reporting guidance with regards to Asset Ceiling, which states that an asset can only be recognised in the event of the company receiving an economic benefit.

In the current year, it has been confirmed that an economic benefit in the form of refunds from the plan or reductions in future contributions to the plan will not be available to the company and therefore the asset has been derecognised. Without these actuarial gains, the company is operating at a loss and is now showing a net liability position.

Performance (internally and externally) against the framework is monitored by Welsh Government, the company assists in the monitoring process. The company is required to manage its financial performance within the budget that has been agreed with the Welsh Government, further details of this are set out in the annual framework agreement.

The company continues to use the going concern basis of preparation for its financial statements. The directors are satisfied that, with the continued support of Welsh Government, it will continue to trade for the foreseeable future. The company has a strong cash position due to the timing of the funds that it receives. The company acknowledges that in real terms, whilst the funding has not increased for some considerable years, with the effect of inflation, it has taken a considerable reduction to its funding. This has resulted in the balance sheet being in a net liability position after stripping out the pension fund for FY25. The directors monitor the performance on a regular basis and currently has the resources available for the next 12 months from the date of signing. Further to the above, additional funding has been secured from the Welsh Government post year-end, with immediate effect for 25/26 financial year. Welsh Goverment is committed to ensuring that DCFW remains a going concern.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

In accordance with the company's articles, a resolution proposing that the Board of Directors will consider Azets Audit Services be reappointed as auditor of the company will be put at a General Meeting.

Each director in office at the date of approval of this annual report confirms that:

• so far as the director is aware, there is no relevant audit information of which the company's auditor is unaware, and

• the director has taken all the steps that he / she ought to have taken as a director in order to make himself / herself aware of any relevant audit information and to establish that the company's auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.

We have audited the financial statements of DCFW Limited (the 'company') for the year ended 31 March 2025 which comprise the income statement, the statement of comprehensive income, the statement of financial position, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards.

In our opinion the financial statements:

• give a true and fair view of the state of the company's affairs as at 31 March 2025 and of its loss for the year then ended;

• have been properly prepared in accordance with UK adopted international accounting standards; and

• have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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 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.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. 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.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

• the information given in the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the directors' report has been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

• the financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of directors' remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

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.

A further description of our responsibilities is available on the Financial Reporting Council's website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Extent to which the audit was considered 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 and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.

We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework.  Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.  This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.

In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:

• Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud; 

• Reviewing minutes of meetings of those charged with governance;

• Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection; 

• Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;

• Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias. 

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation.  This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.  The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Use of our report

This report is made solely to the 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 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 company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

The income statement has been prepared on the basis that all operations are continuing operations.

These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

DCFW Limited is a private company limited by guarantee incorporated in England and Wales. The company is a wholly owned subsidiary of the Welsh Government. The registered office is Cambrian Buildings, 4th Floor, Mount Stuart Square, Cardiff, United Kingdom, CF10 5FL.

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union, IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, except as otherwise stated.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

The company's financial statements currently show that the company has truenet liabilities of £111,463 (2024: net assets of £586,441) and a loss for the financial year of £13,904 (2024: profit of £7,746).

The directors have reviewed the forecasts covering a period of at least 12 months from the date of approval of the financial statements and have confidence in the continued support from the Welsh Government, to meet its liabilities.

Whilst the Statement of Financial Position showed a net asset position as at 31st March 2024, the main driver of the positive reserves figure was the gains on the defined benefit pension scheme. The previously reported Defined Benefit Pension Asset has now been removed as a result of the adoption of the IFRS pension reporting guidance with regards to Asset Ceiling, which states that an asset can only be recognised in the event of the company receiving an economic benefit.

In the current year, it has been confirmed that an economic benefit in the form of refunds from the plan or reductions in future contributions to the plan will not be available to the company and therefore the asset has been derecognised. Without these actuarial gains, the company is operating at a loss and is now showing a net liability position.

Performance (internally and externally) against the framework is monitored by Welsh Government, the company assists in the monitoring process. The company is required to manage its financial performance within the budget that has been agreed with the Welsh Government, further details of this are set out in the annual framework agreement.

The company continues to use the going concern basis of preparation for its financial statements. The directors are satisfied that, with the continued support of Welsh Government, it will continue to trade for the foreseeable future. The company has a strong cash position due to the timing of the funds that it receives. The company acknowledges that in real terms, whilst the funding has not increased for some considerable years, with the effect of inflation, it has taken a considerable reduction to its funding. This has resulted in the balance sheet being in a net liability position after stripping out the pension fund for FY25. The directors monitor the performance on a regular basis and currently has the resources available for the next 12 months from the date of signing. Further to the above, additional funding has been secured from the Welsh Government post year-end, with immediate affect for 25/26 financial year. Welsh Goverment is commited to ensuring that DCFW remains a going concern.

The directors have at the time of approving the financial statements, a reasonable expectation that the company has adequate resources and ongoing support of Welsh Government to continue in operational existence for the foreseeable future.

The income disclosed in the Income Statement represents grants and ancillary project income receivable in the year, under the following headings:

Core Grant Income    - Grant income is received from the Welsh Government

Project grant Funding    - Project specific grant funding is receivable from the Welsh Government

Project Income        - Income generated by project attendance, including delegate fees.

Government grants

Grants receivable from the Welsh Government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the company will comply with the conditions attached thereto.

Government grants and project related income relating to costs yet to be incurred are deferred and recognised in the Income Statement over the period necessary to match them with the costs for which they are intended to compensate.

Grants received for the purchase of capital equipment are credited to a deferred income account and released to the Income Statement over the expected useful lives of the assets concerned.

Property, plant and equipment are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.

At each reporting end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

Financial assets are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.

At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs.

Provisions are recognised when the company has a legal or constructive present obligation as a result of a past event and it is probable that the company will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting end date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Retirement benefits of the employees of the company are provided by the Cardiff and Vale of Glamorgan Pension Fund. This is a defined benefit pension schemes which is externally funded and contracted out of the State Earnings Related Pension Scheme.

Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.

The liability recognised in the statement of financial position for defined benefit schemes is the present value of schemes'' liabilities less the fair value of schemes'' assets. The operating and financing costs of defined benefit schemes are recognised separately in the income statement. Operating costs comprise the current service cost, any gains or losses on settlement or curtailments, and past service costs where benefits have vested. Net interest income and expense on net defined benefit assets and liabilities is determined by applying discount rates used to measure defined benefit obligations at the beginning of the year to net defined benefit assets and liabilities at the beginning of th year and is included in finance income and costs. Remeasurements arising from defined benefit plan comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (is any, excluding interest). The company recognises them immediately in Other Comprehensive Income and all other expenses related to defined benefit expenses in the income statement.

Rentals payable under operating leases, less any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the company is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.

The lease liability is measured at amortised cost using the effective interest method. It is reassessed at each financial period end to reflect lease modifications and any changes to the factors considered at initial measurement, as set out above. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the company acts as a lessor, a lease is classified as a finance lease whenever it transfers substantially all the risks and rewards of ownership of the underlying asset to the lessee, either at the end of the lease term or for the major part of the economic life of the asset. All other leases are classified as operating leases. If an arrangement contains both lease and non-lease components, the company allocates the consideration in the contract to the two elements. When the company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately, classifying the sub-lease with reference to the right-of-use asset arising from the head lease instead of the underlying asset.

Government grants are recognised when there is reasonable assurance that the grant conditions will be met and the grants will be received.

Use of estimates and judgements

The preparation of the financial statements requires DCFW to make estimates and assumptions that affect the application of policies and reported amounts. Estimates and judgements are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future period affected.

Information about significant areas of estimation and critical judgement in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes:-

Note 12 - Measurement of defined benefit contributions depends on the selection of certain assumptions which include the discount rate, inflation rate, salary growth, rate of increase in deferred pensions and expected return on scheme assets.

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.

Measurement of defined benefit contributions depends on the selection of certain assumptions which include the discount rate, inflation rate, salary growth, rate of increase in deferred pensions and expected return on scheme assets.

An analysis of the company's revenue is as follows:

The average monthly number of persons (including directors) employed by the company during the year was:

Their aggregate remuneration comprised:

The charge for the year can be reconciled to the (loss)/profit per the income statement as follows:

As income tax is only charged on interest receivable and minimal trading income there is no material tax effect arising from the adjustments for the defined benefit pension scheme adjustments.

Included within leasehold land and buildings are right-of-use assets with a carrying value of £142,145 as at 31st March 2025 (carrying value as at 31st March 2024: £159,920).

Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:

The company has provided £10,000 (2024: £10,000) in respect of dilapidation costs for the year ended 31 March 2025. The provision will crystallise in the event that the company vacates the premises.

The company contributes into Cardiff and Vale of Glamorgan Pension Fund which is part of the Local Government Pension Scheme ("LGPS"). The LGPS is a funded defined benefit pension plan with benefits up to 31 March 2014 being linked to final salary. Benefits after 31 March 2015 are based on a Career Average Revalued Earnings scheme. Details of the benefits to be paid for the period covered by this disclosure are set out in the LGPS (Benefits, Membership and Contributions) Regulations 2007. The assets of the scheme are held separately from those of the company.

The contributions are determined by a qualified actuary on the basis of triennial valuations. The most recent valuation was at 31 March 2025. Liabilities have been estimated by the independent qualified actuary on an actuarial basis using the projected unit credit method.

The employer's regular contributions to the fund for the annual accounting period to 31 March 2025 are estimated to be £85,000 (2024: £81,000). Additional contributions may also become due in respect of any employer discretions to enhance members' benefits in the Fund over the next accounting period.

The Board of Directors continue to monitor the risks associated with the pension scheme. However they understand that should the company be wound up the pension liability will revert to the Welsh Government and therefore the associated risks are minimised.

The previously reported Defined Benefit Pension Asset has been removed as a result of the adoption of the IFRS pension reporting guidance with regards to Asset Ceiling, which states that an asset can only be recognised in the event of the company receiving an economic benefit.

In the current year, it has been confirmed that an economic benefit in the form of refunds from the plan or reductions in future contributions to the plan will not be available to the company and therefore the asset has been derecognised.

There is therefore an unrecognised asset of £939,000 in relation to the difference between the fair value of assets of £2,080,000 and the present value of funded defined benefit obligation of £1,141,000.

Assumed life expectations on retirement at age 65:

The total expenses for the year of £31,000 is included in investment income.

Amounts recognised in other comprehensive income

The amounts included in the statement of financial position arising from the company's obligations in respect of defined benefit plans are as follows:

Movements in the present value of defined benefit obligations

Movements in the fair value of plan assets:

The remuneration of key management personnel, including directors, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.

Key management personnel during the year received emoluments of £128,116 (2024: £121,956) including £30,695 (2024: £29,234) of post-employment benefits.

The Welsh Government is a related party as DCFW Limited is a wholly owned subsidiary of the Welsh Government. During the year the company received £375,450 (2024: £360,000) of core grant funding from the Welsh Government and recognised £111,004 (2024: £33,921) of Revenue Funding and £0 (2024: £300) of Recharge Income. At the year end, of the grants received in the current and preceding years, £178,262 (2024: £191,985 was deferred at the year-end.

The company is a wholly owned subsidiary of the Welsh Government. The company's results are not consolidated into the financial statements of the Welsh Government.

The company was incorporated as being limited by guarantee and has no share capital. The liability of the members is limited to £1 each.

The company is satisfied that it has sufficient liquid resources, in the form of cash and cash equivalents and agreed funding for 2025/26 to meet all current contractual commitments. The company considers that other than the risk of grant clawback, which is actively managed, it is not exposed to significant liquidity, credit or cashflow risks. The company considers that the continued support from the Welsh Government enables it to ensure all liabilities could be met as they fall due at least 12 months from the date the financial statements are approved.