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    Appendix 2 LONDON LEGACY DEVELOPMENT CORPORATION ANNUAL REPORT AND ACCOUNTS 2018/2019 STATEMENT OF AUDITED ACCOUNTS Page 1 of 133


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    Table of contents Chair’s foreword ......................................................................................................................... 3 Chief Executive’s statement ....................................................................................................... 4 Members of the London Legacy Development Corporation ...................................................... 7 Narrative Report....................................................................................................................... 12 Land ownership........................................................................................................................ 16 Statement of Responsibility for the Accounts .......................................................................... 32 Independent Auditor’s Report to the Members of the London Legacy Development Corporation .............................................................................................................................. 33 Comprehensive Income and Expenditure Statement .............................................................. 34 Balance Sheet.......................................................................................................................... 36 Movement in Reserves Statement ........................................................................................... 37 Statement of Cash Flows ......................................................................................................... 38 Accounting policies .................................................................................................................. 39 Notes to the Statement of Accounts ........................................................................................ 56 Group accounts........................................................................................................................ 94 Annual governance statement ............................................................................................... 113 Glossary of terms ................................................................................................................... 128 Page 2 of 133


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    Chair’s foreword Our focus on delivering the best legacy possible from the London 2012 Games has proceeded at pace during the year. The organisation continues to deliver on a broad front of measures from sports events to housing, jobs and skills to schools to ensure there are genuine benefits for east London. Three areas stand out from a crowded field of schemes. London Stadium enjoyed not only its busiest year of events for concerts and sports events, bringing millions of pounds in to London’s economy, but also made significant progress towards securing the venue’s long-term financial future. New agreements have been reached with West Ham United and UK Athletics (UKA), the threat of litigation on seating capacity has been removed and LS185, the stadium operator, is now part of the wider LLDC family. These changes mean that we are able to focus on our new commercial strategy to make London Stadium the best multi-use venue in the country. East Bank continues to make significant strides forward. This new powerhouse of culture, education, innovation and growth will deliver massive benefits for east London with some of the world’s largest and best cultural and education institutions coming together on three sites across the Park. Those benefits can already be seen with partners providing programmes out in the community. Planning permissions have been granted with construction beginning shortly. Work on our new neighbourhoods has also moved up a gear. Chobham Manor has completed its first phase, with construction well advanced on Phase Two. East Wick and Sweetwater is now starting to rise out of the ground. Meanwhile the Mayor of London has confirmed that at least 50 per cent of new homes across the remaining development sites on the Park – Stratford Waterfront, Pudding Mill and Rick Roberts Way - will be affordable. As with any project of this scale and scope, significant challenges and opportunities remain in the years ahead, and I am confident that we have the right leadership and staff in place to continue to deliver. My thanks go to the Board for the vital contribution they make on these issues. I would also like to thank Lyn Garner, our chief executive, her executive team and to all our staff and partners who work tirelessly to help create the opportunities for jobs, homes and growth in east London. Sir Peter Hendy CBE Chair Page 3 of 133


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    Chief Executive’s statement This has been a hugely challenging but highly effective year for the Legacy Corporation. We have made significant progress on a number of key projects helping us to deliver on the Mayor’s priorities and the promises made for the London 2012 Games. East Bank, the new powerhouse of culture, education, creativity and innovation, was formally launched by the Mayor of London last summer. That major announcement has been followed by a succession of positive steps to move the project forward. This project is so much more than the wonderful buildings in the heart of the Park. The partners are all developing projects to ensure that they build links with local communities, schools, cultural groups and businesses long before they open the doors of their new buildings. The EAST Summer School saw the partners collaborate on a programme of activities for local children with taster sessions in printmaking, dance, archaeology, shoe design and engineering. Later in the summer, UAL’s London College of Fashion launched the Fashion District, a cluster of ambitious businesses, academic institutions and investors in East London with the shared goal of making London the global capital of fashion technology. The V&A unveiled plans for its incredible Collection and Research Centre to be based at Here East while Sadler’s Wells continued with its inspirational ‘Every Child a Dancer’ programme. The BBC became the final partner to sign its Agreement for Lease ensuring all sites on East Bank will be occupied by institutions of international repute. Finally, UCL’s planning application for its UCL East campus received formal planning consent signalling the start of the university’s largest expansion in its history. The planning application for Stratford Waterfront was submitted and formally approved confirming the creation of one of the biggest and most ambitious culture and education projects for a generation. Our work to deliver thousands of new homes on and around the Park has also seen significant progress during the year. Chobham Manor, the first neighbourhood to be built on the Park, saw the completion of Phase One together with significant progress on Phases Two and Three. Families are now settling into their new homes as the neighbourhood starts to establish itself. At East Wick, our second neighbourhood, enabling works were completed and construction on Phase One is progressing rapidly. A little further south, construction of the new road connection for the third development at Sweetwater is also well advanced. When complete the two sites will contribute 1,500 homes in mixed developments, years ahead of the original schedule. Ensuring people moving onto the Park have the right social and community infrastructure is vital for us in creating settled communities. In September, the Bobby Moore Academy secondary school opened its doors to its first-year intake. The children not only enjoy state-of-the-art facilities but also get to use the London Marathon Trust’s Community Track as their playground and sports field during school hours. Later in the year we celebrated the hard work of young people leaving education and entering employment. Our East Works Awards showcased the diversity of talent, innovation and businesses on and around the Park. The awards help to highlight how creating opportunities for Page 4 of 133


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    young people and working with employers to address skills gaps is at the heart of what we aim to deliver. Beyond the Park boundary, great progress has been made in Hackney Wick with the completion and opening of the new Hackney Wick Station and the approval of the masterplan with its vision to create a new neighbourhood centre. Shortly after came news that Hackney Wick and Fish Island had been selected to be among the Mayor of London’s first Cultural Enterprise Zones, cementing the area’s reputation as a hub for creativity and innovation. Consultation on the new draft Local Plan and CIL Review was completed during the year, an important piece of work providing the blueprint for how we will create the mix of new homes, business space and public amenities that meet the need of local people as well as those of our growing capital. Queen Elizabeth Olympic Park itself enjoyed its most successful year to date with more than six million visits enjoying the world-class venues, events, wonderful parklands and open spaces. The Park retained the coveted Green Flag Award, meeting the exacting standards of high quality horticulture and active community participation for the fifth year running. A year-round calendar of events provided something for everyone from the family-focused Great Get Together attracting 10,000 people to music and dance events like Arcadia and Elrow Town. Perhaps the most memorable of all events staged on the Park during the year was the simple and poignant Shrouds of the Somme installation. Marking the centenary of the 100th anniversary of the end of the First World War, the exhibition drew visitors from all over the UK and overseas as well as providing local school children with the chance to learn about the sacrifices made by a generation of young people a centenary ago. The venues continue to establish themselves with the London Aquatics Centre celebrating its fifth year of operation. Once again, there were over one million visits to the venue this year, the vast majority of these were by local people including thousands of local schoolchildren. The Copper Box Arena serves as a vital community asset for sports facilities as well as hosting elite clubs like London Pulse netball and London Lions basketball teams. A range of commercial lets for large-scale events is helping to improve the commercial viability of the venue. Our other major venue, the ArcelorMittal Orbit, which includes the World’s longest tunnel slide continues to be an important and unique visitor attraction for London. The London Stadium has been central to the Park’s vibrancy and legacy since it re-opened fully in 2016 but it has also had to face significant pressures that have consumed both time and budget. New arrangements with West Ham United and UKA mean that all sides benefit from improved terms and conditions and relationships have improved. In addition, the stadium operator, LS185, is now part of the LLDC Group. The venue itself had its busiest events season to date with six concerts featuring the Rolling Stones, Jay Z and Beyoncé and the Foo Fighters, two athletics meets, a Saracens versus Harlequins rugby union premiership match plus all of West Ham’s home football fixtures. More than two million people visited the venue and while there are still significant challenges to address the future looks much brighter. I am pleased to see the Legacy Corporation continue to deliver against its vision. A huge amount has been delivered in a relatively short space of time yet so much more is still to come. The Page 5 of 133


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    organisation is strong, focused and well-equipped to continue its track record of delivery for the people of east London and beyond. Lyn Garner Chief Executive Page 6 of 133


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    Members of the London Legacy Development Corporation The Members of the London Legacy Development Corporation during the year ending 31 March 2019 were: Sir Peter Hendy CBE (Chair) Sir Peter Hendy took up his role in July 2017. He is also Chair of Network Rail. Previously, he was Commissioner of Transport for London (TfL) since 2006, having served as TfL's Managing Director of Surface Transport since 2001. He led, and played a key role in preparing for, the successful operation of London's transport for the 2012 Olympic and Paralympic Games. He was formerly Deputy Director UK Bus for FirstGroup and previously Managing Director of CentreWest London Buses. He started his transport career in 1975 as a London Transport graduate trainee. Sir Peter was president of the International Public Transport Association (UITP) from 2013 to 2015. He is a fellow of the Chartered Institute of Logistics and Transport, a fellow of the Chartered Institute of Highways and Transport and a fellow of the Institute of Civil Engineers. He was knighted in the 2013 New Year's Honours List, having been made CBE in 2006. Sonita Alleyne OBE Sonita Alleyne OBE is founder of the Yes Programme. She is on the board of the Cultural Capital Fund; a board member of the Museum of London; and most recently appointed to the Mayor’s Skill for Londoners Business Partnership Members Group. Previous roles include the BBC Trust; Chair of the Radio Sector Skills Council; non-executive director of the Department for Culture, Media and Sport; and a Governor at the University of the Arts London. Sonita won the Carlton Multicultural Achievement Award for TV and Radio. She is a Fellow of The Royal Society of the Arts and the Radio Academy. Clare Coghill Clare Coghill was elected to the London Borough of Waltham Forest in May 2010 to represent the High Street Ward in Walthamstow. She became Junior Cabinet Member for Health later in the same year. Subsequently, she held a junior portfolio focussed on Town Centres. Clare was appointed as Cabinet Member for Children and Young People in May 2012, leading the Council’s work on Children’s Social Care, Safeguarding and Education. In 2014, Clare was appointed the Cabinet Member for Economic Growth & High Streets and led a fresh approach to regeneration, planning and development. Waltham Forest has excellent infrastructure, green space and transport links; therefore, the priorities lie in developing new, good quality, affordable housing and vibrant town centres. Clare’s policy innovations in this role focussed on pubs, the night-time economy and economic growth. Clare became Leader of the Council in May 2017, and was re-elected for a four-year term in May 2018. Clare was born and raised in the West Midlands, and went on to study English Literature at the University of York, followed by a Master’s degree in English Literature and Translation at the University of Montpellier, in the south of France. Nicky Dunn OBE Nicky Dunn OBE has extensive experience in the leisure industry. Her company IMD Group provides strategic advice and operational guidance to venues, events and the arts. Previously she held a number of positions within the industry, planning, designing, overseeing construction of and operating large venues. Her experience includes theatres, arenas, stadia and conference and exhibition venues. Nicky chairs the Titanic Foundation, which owns the award-winning Titanic Belfast visitor attraction, Netball world cup 2019, and Jockey Club Live. She is also a Trustee of the Young Vic Theatre. She was a board member of the Princes Trust (NI) from 2007 to 2011. Keith Edelman Keith Edelman was formerly the Managing Director of Arsenal Holdings Plc and was instrumental in the development of the Emirates Stadium and the attendant regeneration of the surrounding area including the development of Highbury Square. He is currently Chairman of Revolution Bars Group Plc, Chairman of Bullion by Post Limited, Chairman of Pennpetro Plc, Senior Independent Director of Headlam Group Page 7 of 133


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    Plc and a Non-Executive Director of Altitude Group Plc. Prior to Arsenal, he was CEO of Storehouse plc and Managing Director of Carlton Communications Plc. Philip Glanville Philip Glanville was elected Mayor of Hackney in September 2016, becoming the borough's second directly elected Mayor. He was re-elected in May 2018, giving Hackney Labour their best result since 1986. Previously a councillor in Hoxton West for ten years, Philip spent three years as Cabinet Member for Housing before becoming Deputy Mayor in 2016. As Cabinet Member for Housing, Philip oversaw the delivery of genuinely affordable homes, which he is continuing as Mayor, committing the Council to tripling the number of council homes built since 2010, including 800 for social rent. Employment, skills and education are also a key priority for the Mayor; supporting schools, ensuring that we actively help young people into careers and that all residents, whatever their age, have the skills and support they need to get into employment, return to work or start a business ─ all contributing towards his agenda to bridge the gap between Hackney’s residents and their growing local economy. Critical to this agenda has been the Council’s award winning in-house apprenticeship programme. Philip is committed to being a campaigning Mayor, standing up for Hackney’s most vulnerable residents and for local government’s important role in fighting austerity. He writes extensively on these subjects, and more recently has been part of the growing ‘new municipalism’ movement in local government. He has served on the LLDC Board since 2016, and is currently the Chair of London Councils’ Grants Committee, Co-Chair of Thrive London and London Councils' Digital Champion. Baroness Tanni Grey-Thompson Baroness Tanni Grey-Thompson of Eaglescliffe has competed in five Paralympic Games, winning 11 gold, four silver and one bronze medal. She has held thirty world records. She is Chair of ukactive. In December 2012, she became a Member of the London Legacy Development Corporation. She has been a member of the National Disability Council and Senior Deputy Chair of the UK Lottery Award Panel. She was made a Dame of the British Empire in 2005 and was appointed to the House of Lords as a cross- bench peer in March 2010. Baroness Grey-Thompson was recently appointed as a member of the Board for the BBC. She has recently ended her term on the Board for the London Marathon and Transport for London. Philip Lewis (Deputy Chair) Philip Lewis is a chartered surveyor and heads the property division of the Kirsh Group, the international trading business founded by Natie Kirsh. In March 2019, he was appointed as Non-Executive Chairman of Smeg UK Ltd. Previously he was Chief Executive of Lambert Smith Hampton and Milner Estates Plc and Executive Chairman of Safestore Plc and Hines UK. He was Chairman of Sport England, London, past President of the British Council of Shopping Centres and a member of the London Land Commission. He has held non-executive roles with a number of companies and is involved in various charitable organisations. Jules Pipe CBE Jules Pipe is working on key priorities for the Mayor, including: revision of the London Plan, major regeneration projects across the capital, ensuring London’s infrastructure needs are delivered to benefit all Londoners, and building a skills system that properly addresses the needs of young people and the economy. Jules has unrivalled knowledge of London government, becoming the first directly elected mayor of Hackney in 2002 and serving as Chair of London Councils from 2010 until he joined the Mayor’s team as the Deputy Mayor for Planning, Regeneration and Skills in 2016. Pam Alexander OBE Pam Alexander OBE is an economic geographer passionate about housing and regeneration. Until January 2019 Chair of Covent Garden Market Authority, rebuilding the famous fruit and vegetable and flower market at the heart of the Nine Elms Opportunity Area, Pam chairs the Cultural Steering Group for Nine Elms, sits on the Nine Elms Strategy Board and is an Ambassador on the London Mayor's Cultural Leadership Board, working particularly on Creative Enterprise Zones. She is also a Non-Executive Director of the Connected Places Catapult and Chair of Commonplace Digital Ltd. Pam advises Grimshaw Page 8 of 133


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    LLP on gender diversity and is a founder member of Equilibrium Network. She is also involved in supporting her local theatres in Clapham and Battersea. Pam was until recently a Trustee of the Design Council, chairing Design Council Cabe, and a non-executive Director of Crossrail Ltd and of Crest Nicholson Plc. Previously she was Chief Executive of the South East England Development Agency (SEEDA) and of English Heritage and Deputy CE of the Housing Corporation, after many years as a civil servant in the then Department of the Environment. She was also a trustee of Brighton Dome Brighton Festival, chair of Peabody, a director of the Academy of Urbanism and a member of the previous Mayor of London’s Design Advisory Group. Pam was made OBE in 2012 for services to regeneration in the South East. Shanika Amarasekara Shanika Amarasekara is General Counsel to the British Business Bank which is the UK Government Development Bank to facilitate access to finance for small and medium sized businesses. She joined as a founder member of the Senior Management Team which set up and launched the bank in 2014. Prior to this she worked as General Counsel at an institution established by a number of central banks to promote financial stability and economic development. Shanika previously held senior positions at RBS and Allen & Overy. Simon Blanchflower For the last 20 years Simon Blanchflower has been involved in leading the development and delivery of major infrastructure projects. Most recently he has been the Major Programme Director on the Thameslink Programme which included the re-building of London Bridge station. He has experience of chairing the Boards of charitable companies and for the last 30 years has invested into his local community in North Kensington with particular interests in education and housing. He is a Fellow of the Institution of Civil Engineers. Rokhsana Fiaz OBE Rokhsana Fiaz OBE was elected as the Mayor of Newham in May 2018. Prior to this, she was a councillor for Custom House Ward from 2014, and the CEO of an international UNESCO supported charity promoting interfaith and global citizenship across the world. She has large-scale projects for local authorities, the European Commission and the Council of Europe, and in 2009 was honoured with the Officer of the Order of the British Empire (OBE) for services to Black and Minority Communities in the UK. Sukhvinder Kaur-Stubbs Sukhvinder Kaur-Stubbs has spent over 30 years placemaking through her community development work for English Partnerships, regeneration with the Black Country Development Corporation and the Regional Development Agency for the West Midlands and then overseeing joint ventures as a member of the Home Group and Swan Housing Association. She is also an accomplished CEO having led two high profile organisations through major change programmes and onto success in influencing government policies on inclusion, cohesion and diversity as well as shifting public discourse on these subjects. First at the think tank the Runnymede Trust, she helped craft what became the 2010 Equal Treatment Act and then at the philanthropic Barrow Cadbury Trust she pioneered approaches to improve social justice. Sukhvinder has served across the public, private and voluntary sectors including the boards of Severn Trent Water, Government's watchdog Consumer Futures, the Cabinet Office Better Regulation Executive and Chair of the Taylor Bennett Foundation. Currently, she is a Non-Executive Director for Lewisham and Greenwich NHS Trust where she chairs Workforce and Education, Governor at the Leathersellers Federation and Managing Director of Engage-Building Networks of Trust. Geoff Thompson Geoff Thompson MBE FRSA DL was the World United Karate Organisation world heavyweight champion and world team karate champion between 1982 and 1986 and won more than 50 national and international titles during a distinguished sporting career. Following his retirement from competitive sport, he established himself as an influential sports politician and administrator, taking on numerous public and private sector appointments with the aim of promoting equality, diversity and inclusion at all levels of society. Having experienced material deprivation and social and cultural exclusion while growing up in Hackney, Geoff is a lifelong advocate for the role that education, sport and culture can play in improving the lives of disadvantaged young people through the bidding, hosting and legacy of major games. He is Page 9 of 133


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    the Founder and Executive Chair of the Youth Charter, a UK-based international charity and United Nations Non-Governmental Organisation that uses the ethics of sport and artistic excellence to tackle the problems of educational non-attainment, health inequality, anti-social behaviour and crime in some of Britain’s most troubled communities. Geoff is also the Chair of the University of East London and an Advisory Board Member of the Muhammad Ali Centre, Louisville, Kentucky. His public and private sector appointments include chairing Sport England's Advisory Group on Racial Equality in Sport and serving as a member of its grant assessment panel. Among other appointments, he has been a director of the Sports Council Trust Company, a board member of the New Opportunities fund, an honorary fellow of the former Institute of Leisure, Amenities and Management, fellow of the Royal Society of Arts and independent assessor for the Office of the Commissioner for Public Appointments. In 1995, Geoff was appointed an MBE for his services to sport and in 2016 he was included in the Top 100 BAME (Black and Minority Ethnic) Leaders in Business List, in association with the Sunday Times. He is also a Deputy Lieutenant for Greater Manchester. Rachel Blake Rachel Blake is the Deputy Mayor for Regeneration and Air Quality at the London Borough of Tower Hamlets. She was elected to represent the Labour Party for Bow East Ward in May 2014 and appointed to Cabinet in July 2015. In Cabinet, she has worked on the production of a new Local Plan, a new Housing Strategy, a programme of 2,000 new affordable homes and a Tackling Poverty programme. Prior to this position, she held a range of roles in Local, Regional and National Government working on Housing, Regeneration and Planning Policy. She is also a member of the Local Government Association Policy Board for Environment, Economy, Housing and Transport. Changes to Board membership Five new Board members were appointed on 1 April 2018. They are Pam Alexander OBE, Shanika Amarasekara, Simon Blanchflower, Sukhvinder Kaur-Stubbs and Geoff Thompson. Mayor of the London Borough of Tower Hamlets, John Biggs, stepped down from the Board in May 2018, and Cllr Rachel Blake was appointed as the borough representative. Mayor of the London Borough of Hackney Phillip Glanville and Cllr Clare Coghill of the London Borough of Waltham Forest, were reappointed to the board in May 2018 following their re-elections in the local government elections. Following her election as Mayor of the London Borough of Newham in May 2018, Rokhsana Fiaz was appointed to the Board in June 2018. Page 10 of 133


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    Attendance at LLDC Board and Committee meetings during 2018/19 Meetings Meetings of Meetings of Meetings of Meetings of Meetings of Meetings of of the the Audit the the the Chair’s the the Health, Board Committee Investment Regeneration Committee Planning Safety and attended attended Committee and attended Decisions Security Notes attended Communities Committee Committee Committee attended attended attended Total number in the period 9 3 7 3 4 9 1 Peter Hendy 9/9 - 7/7 - 4/4 - - Pam Alexander 9/9 - - - - 7/7 - See note 1 Sonita Alleyne 9/9 - 7/7 3/3 4/4 - - See note 2, 3 Shanika Amarasekara 7/9 2/3 5/7 - - - - Cllr Rachel Blake 9/9 - - - - 1/2 - See note 1 Simon Blanchflower 9/9 - 7/7 - 2/2 - 1/1 See note 4 Cllr Clare Coghill 3/9 - - - - - - See note 3 Nicky Dunn 9/9 - 7/7 - 4/4 - 1/1 Keith Edelman 7/9 3/3 6/7 - 3/4 - 1/1 See note 2, 3 Rokhsana Fiaz 9/9 - - - - - - See note 5. Philip Glanville 6/9 - - - - - - See note 3 Tanni Grey-Thompson 7/9 3/3 - 2/3 - - - Sukvinder Kaur-Stubbs 8/9 - - 3/3 - 8/9 - See note 2 Philip Lewis 8/9 - - - 4/4 8/9 - Jules Pipe 5/9 - - - - - - See note 3 Geoff Thompson 9/9 1/3 - 3/3 - - - Piers Gough - - - - - 9/9 - Louise Wyman - - - - - 4/9 - Emma Davies - - - - - 5/9 - James Fennell - - - - - 8/9 - Cllr Nick Sharman (LBH) - - - - - 8/9 - Cllr Forhad Husain (LBN) - - - - - 1/1 See note 1 Cllr Ken Clark (LBN) - - - - - 1/1 See note 1 Cllr Juliet Marriott (LBN) - - - - - 1/1 See note 1 Cllr Rachel Tripp (LBN) - - - - - 2/5 See note 1 Cllr James Beckles (LBN) - - - - - 4/7 - See note 1 Cllr Daniel Blaney (LBN) - - - - - 2/3 See note 1 Cllr Dan Tomlinson (LBTH) - - - - - 5/7 - See note 1 Cllr Terry Wheeler (LBWF) - - - - - 1/2 See note 1 Cllr Jennie Gray (LBWF) - - - - - 0/2 See note 1, 6 Cllr Marie Pye (LBWF) - - - - - 4/5 - See note 1 Notes: A dash (-) indicates that an individual is not a Member of a Board or Committee 1. Joined or left the Planning Decisions Committee during the financial year: Pam Alexander joined the Committee in July 2018. Cllr Rachel Blake was appointed until 31 May 2018 as a Committee Member, then from 28 June 2018 as the substitute to Cllr Daniel Tomlinson. Cllr Forhad Husain and Cllr Ken Clark were appointed until 1 May 2018; Cllr Juliet Marriott was appointed from 21-31 May 2018; Cllr Rachel Tripp was appointed from 21 May – 31 May 2018 and from 28 June 2018 to January 2019 as a Member and then as a substitute Member for Cllr James Beckles from 11 March 2018; Cllr James Beckles was appointed from 28 June 2018; Cllr Daniel Blaney was appointed with Mayor Rokhsana Fiaz as substitute from 18 January 2019; Cllr Terry Wheeler was appointed as from 21 May – 31 May 2018 as a Committee Member, then from 28 June 2018 as the substitute to Cllr Jennie Gray then to Cllr Marie Pye; Cllr Jennie Gray was appointed from 28 June 2018 to 26 July 2018; Cllr Marie Pye was appointed from 18 October 2018. 2. Indicated that they were unable to attend specific Board or Committee meetings when the meeting calendar was issued. 3. Unable to attend a Board meeting called at short notice. 4. Joined or left a Committee during financial year: Simon Blanchflower joined the Chair’s Committee from 29 January 2019. 5. Joined Board during the course of the financial year: Mayor Rokhsana Fiaz was appointed on 5 June 2018. 6. Cllr Terry Wheeler deputised for Cllr Jennie Gray at 2 Planning Decisions Committee meetings and for Cllr Marie Pye at 1 meeting. Page 11 of 133


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    Narrative Report The Legacy Corporation London Legacy Development Corporation (Legacy Corporation) is a Mayoral Development Corporation, established on 1 April 2012, under the provisions of the Localism Act 2011, with the vision of creating a dynamic new metropolitan centre for London. Its mission is: “To use the opportunity of the London 2012 Games and the creation of Queen Elizabeth Olympic Park to change the lives of people in east London and drive growth and investment in London and the UK, by developing an inspiring and innovative place where people want to live, work and visit.” The Mayor of London appoints the Members to the Legacy Corporation’s Board and allocates its budget. In addition, the Legacy Corporation is required to prepare its Statement of Accounts in accordance with the Chartered Institute of Public Finance and Accountancy (CIPFA) Code of Practice on Local Authority Accounting in the United Kingdom (‘the Code’). The Legacy Corporation seeks to deliver this mission through pursuing the following objectives: 1. LIVE Establish successful and integrated neighbourhoods, where people want to live, work and play 2. WORK Retain, attract and grow a diverse range of high quality businesses and employers, and maximise employment opportunities for local people 3. VISIT Create a diverse, unique, successful and financially sustainable visitor destination 4. INSPIRE Establish a 21st century district promoting cross-sector innovation, education, culture, sport, aspiration and participation in east London 5. DELIVER Deliver excellent value for money, and champion new models and standards which advance the wider cause of regeneration, in line with LLDC’s core values: Ambition, Responsibility, Collaboration and Excellence. In November 2016, the Legacy Corporation Board approved its updated five-year strategy which sets out the areas of focus for the organisation for the five years from 2015 to 2020 to support its mission and delivery of its objectives. The Local Government Act 2003 section 21 empowers the Secretary of State to make provision about the accounting practices to be followed by a local authority and likewise issue guidance. Section 23 defines ‘local authority’ to include functional bodies of the GLA and therefore the Legacy Corporation comes within the definition. Regulation 31 of the Local Authorities (Capital Finance and Accounts (England)) Regulations 2000 directs that the appropriate accounting practices for local authorities are those in the Code. These Accounts have been produced in accordance with this guidance and regulation. The Legacy Corporation replaced the Olympic Park Legacy Company, a company limited by guarantee, established in 2009 to create a lasting legacy from the London 2012 Games. As part of the statutory instrument creating the Legacy Corporation, it took over the property, rights and liabilities of the Olympic Park Legacy Company. Page 12 of 133


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    Financial review Overview Substantial progress was made during the year on East Bank, the Legacy Corporation’s flagship project to deliver a world-class cultural and education district on the Park. The project will bring together the Victoria and Albert Museum (V&A), Sadler’s Wells Theatre and the BBC alongside the University of the Arts London College of Fashion (UAL) in the heart of the Park at Stratford Waterfront, with University College London (UCL) creating a new campus, UCL East, comprising academic facilities and student residential accommodation, in the south of the Park at Marshgate and Pool Street. The V&A Collection and Research Centre will be located at Here East. Together, these institutions will form a new cultural and educational hub for east London, cementing the regeneration of the area, being a catalyst for job creation and economic growth, and strongly complementing the world-leading creative and technology sectors of east London. The project is funded through a mixture of partner and private sector funding, philanthropic funding and public sector funding from the Mayor of London and Government. In total, this investment is anticipated to generate 2,500 new jobs, over £1.5 billion of economic benefit at net present values and deliver 100,000m2 of cultural and education space. In May 2018, the Full Business Case to Government for their support in funding the project was approved, conditional on putting in place legal agreements with the East Bank partners and achieving planning consent. Over the course of the year, legal agreements were concluded with all partners, and planning permission progressed. In May 2018 UCL received outline planning permission for their development (with reserved matters approval in March 2019). In November 2018, the Legacy Corporation submitted a planning application for the Stratford Waterfront site (which was subsequently approved on 30 April 2019, subject to referral to the GLA for Stage 2 and completion of a Section 106 agreement). In January 2019, the lease with UCL for its sites in the south of the Park was executed triggering a significant lease premium to the Legacy Corporation. UCL will self deliver their developments. LLDC will procure and deliver the cultural and educational buildings on Stratford Waterfront. Procurement of construction works is well underway and by the end of 2018/19, the Legacy Corporation had successfully procured 5 out of a current total of 27 works packages with a combined value of £43.4m. Early enabling works on site commenced in November 2018 and substructure works are on target to commence in June 2019. Looking forward to 2019/20, the project will complete the final stages of design, procure the remaining works packages and increase its on-site construction activity; as a result, the volume and value of transactions processed through the Legacy Corporation’s accounts will materially increase. The London Stadium remained a key focus for the Legacy Corporation throughout 2018/19. In January 2019, the Legacy Corporation took the significant step of acquiring the Stadium operator, London Stadium 185 Limited, via its wholly-controlled partnership, E20 Stadium LLP. This gives the Legacy Corporation full control of the Stadium operations, enabling it to better maximise the commercial opportunities at the Stadium and reduce its operating costs. Accordingly, the financial results of London Stadium 185 Limited from the acquisition date to 31 March 2019 are consolidated into the Legacy Corporation’s Group Accounts (via the E20 Stadium LLP accounts) in line with International Accounting Standards (see Note G16 for further details). In addition, relationships with key London Stadium stakeholders improved over the year. In November 2018, the LLDC settled a substantial legal dispute with West Ham United Football Club (West Ham), the Stadium’s key tenant throughout the Premier League season, and reached agreement on a number of outstanding commercial matters which will benefit both parties. This means that the Corporation’s time and energy can be better utilised improving the financial performance of the venue. In addition, an Page 13 of 133


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    agreement in principle was reached with UK Athletics which will secure reductions in Stadium operating costs for the future and see more community activity in the Stadium. Funding for the Legacy Corporation’s programme for the development of the Park is provided through loan financing from the Greater London Authority (GLA), to be repaid from capital receipts generated from the exploitation of the Legacy Corporation’s ownership of development platforms on and around the Park and future contributions from East Bank partners to development costs. During the 2018/19 budget process, the GLA and the Corporation agreed to cap the LLDC borrowing limit at £520m and the GLA agreed to directly fund part of the East Bank project, invest directly to develop LLDC’s remaining development sites and, where extra funding is required, fund LLDC directly so that its borrowing limit is not breached. In 2018/19, the Legacy Corporation made a £6.4m net repayment of loan funding to the GLA. This consists of £72.9m loan funding drawn down during the year, offset by a £56.6m cash repayment in January 2019 and a £22.8m year-end reclassification of loan funding provided to E20 Stadium LLP (to revenue). The total outstanding loan balance due to the GLA as at 31 March 2019 is therefore £319.6m (from £326.0m as at 31 March 2018). Overall, the net capital funding requirement for the year from the GLA was £0.2m (on an accruals basis), which was significantly less than budgeted (£62.1m). The Legacy Corporation’s capital expenditure for the year was £80.2m against a budget of £120.4m reflecting mainly timing differences on capital projects, most particularly Legacy Community Scheme infrastructure works. Capital income was £21.7m positively higher than planned due to the early receipt of capital receipts from the Chobham Manor development, previously expected to be received in 2019/20. In September 2018, the Mayor announced support for additional affordable housing to be delivered across the Corporation’s remaining uncontracted development portfolio. Approximately 3,000 new homes will be built across Stratford Waterfront, Pudding Mill Lane and Rick Roberts Way over the next 10 to 20 years, and the agreement reached with the Mayor supports an average of 50 percent affordable housing across these three sites, with the GLA absorbing the consequential reduction in capital receipts, expected to be through housing and infrastructure grant investment and proposed additional long term general funding, presently assessed to be c£10m a year. The Legacy Corporation’s investment property portfolio has been revalued at 31 March 2019 in line with accounting policies. The assets are being developed or held by the Legacy Corporation for their income potential or capital appreciation and are therefore classified as investment property. A number of valuation methodologies have been applied but the investment method, where rental income is capitalised at appropriate yields, and the profits method, where earnings are multiplied by an appropriate factor, predominate. The Legacy Corporation’s investment property portfolio is now valued at £185.9m, a net decrease in fair value of £60.7m from the prior year. This is mainly driven by planned disposals of investment properties; during 2018/19, LLDC received a total of £73.9m in capital receipts from the sale of properties on the Chobham Manor development and the UCL site as part of the East Bank project. The valuation also reflects a further reduction in the value of the Rick Roberts Way site, largely driven by the increase in affordable housing assumed on the site, consistent with the Mayor of London’s policy on affordable housing. The post balance sheet achievement of planning consent for East Bank (subject to Stage 2 approval and conclusion of the Section 106 agreement) is likely to be reflected in an improvement in the value of the corporate investment property portfolio as contributions from partners to development costs become unconditional. The movements in investment properties are detailed more fully in Note 13 to the accounts. A deferred tax liability of £18.6m is recognised within the Legacy Corporation’s accounts (2017/18: £31.1m). The liability will crystallise as and when the Legacy Corporation disposes of its property portfolio and the historic increase in the value of its portfolio is realised. An amendment to the Local Authorities Capital Finance and Accounting Regulations permits Mayoral Development Corporations to use capital Page 14 of 133


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    receipts to fund their Corporation Tax liabilities and, accordingly, the deferred tax charge is recognised in the Legacy Corporation’s Capital Adjustment Account in the financial statements. The Legacy Corporation provided funding to E20 Stadium LLP for its operational and capital requirements in the year by way of a loan, amounting to £24.6m excluding interest. In light of the partnership’s current long-term financial forecasts, the Legacy Corporation currently holds its interest1 in the partnership at nil value. As a result both the Legacy Corporation’s investment and the loan are impaired within the 2018/19 accounts. E20 Stadium LLP’s forecasts also impact upon the London Stadium’s valuation as at 31 March 2019 in E20 Stadium LLP’s accounts. The fair value of the Stadium is assessed on an annual basis by independent valuers and based largely upon E20 Stadium LLP’s long-term forecasts. It is therefore subject to fluctuation each year, particularly as the commercial plans for the Stadium develop. As at 31 March 2019, the Stadium’s fair value is assessed to be nil due to the level of costs included in E20 Stadium LLP’s long-term forecasts. In 2016/17, E20 Stadium LLP recognised a provision for future losses arising from two onerous contracts; this provision remains as at 31 March 2019 and is consolidated in full within the Legacy Corporation’s Group Accounts. The Legacy Corporation was set up as a time-limited organisation that would in due course complete its development programme; return its planning powers to the Boroughs; and establish long-term arrangements for the management of Queen Elizabeth Olympic Park and surrounding neighbourhoods and for the continued realisation of the ambition “to use the opportunity of the London 2012 Games and the creation of Queen Elizabeth Olympic Park to change the lives of people in east London and drive growth and investment in London and the UK”. The Mayor has stated publicly that he would like this “Transition” of Legacy Corporation functions to begin in 2024/25 and so we have begun to work with the Mayor, the Boroughs and our stakeholders to develop a strategy for Transition. The Legacy Corporation Board set a clear direction of travel at its meeting in November 2018 and will review a high-level Transition Strategy in January 2020 for consideration by the Mayor. The Legacy Corporation has appointed a Head of Transition Programme and an internal Transition Programme Board has been established comprising staff from across the organisation. Staff are fully involved in development of the strategy. There are no financial implications in the 2019/20 financial year. 1 Amounts previously invested in the partnership as equity Page 15 of 133


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    Land ownership The majority of Queen Elizabeth Olympic Park land is owned by the Legacy Corporation with further land leased from third parties, predominately the Lee Valley Regional Park Authority. London Aquatics Centre and Copper Box Arena The London Aquatics Centre contains a 50m competition pool, 25m competition diving pool and a 50m warm-up pool — as well as a 50-station gym, dry diving facilities, a café, crèche, and meeting rooms. It reopened at the start of March 2014 as a venue accessible to the public and capable of hosting elite sports. With 2,500 permanent spectator seats, the venue has hosted a range of local and national competitions. The venue has had more than 4.8 million visitors pass through its doors since it opened in 2014, with 900 school children attending weekly lessons and 4,000 people signed up to the Better Swim School programme (including children) and 700 to the Tom Daley’s learn to dive programme. The Copper Box Arena hosted handball, fencing and goalball during the London 2012 Olympic and Paralympic Games, and reopened as a multi-use arena in July 2013. With a seating capacity for up to 7,500 spectators, the Arena hosts sport including basketball, netball, handball, badminton, fencing and boxing and is increasingly used for a wide range of events including e-sport tournaments and product launches. The venue also contains an 80-station gym. The Legacy Corporation retains the freehold of the London Aquatics Centre and the Copper Box Arena and engages Greenwich Leisure Limited (GLL) as the operator of both venues. Under the 10-year arrangement, which expires in March 2024, GLL meet the majority of operating costs and receive the incomes whilst paying a fee to LLDC. Surpluses and deficits are shared between the Legacy Corporation and GLL and the Legacy Corporation is responsible for the maintenance of these venues. Stadium The Stadium is surrounded by water on three sides and the ‘island’ site, excluding bridges, is leased by LLDC to E20 Stadium LLP until 2115. The venue has been transformed into a multi-use world class stadium. Over the year the Stadium played host to Premier League football as the home to West Ham United, as well as the Athletics World Cup, Muller Anniversary Games and Gallagher Premiership rugby, and also staged a major concert series featuring Rolling Stones, Foo Fighters, Jay-Z and Beyoncé. The partnership entered into a 25-year service concession arrangement with London Stadium 185 Limited on 30 January 2015 which grants the operator sole and exclusive rights to promote, sell and manage events in the Stadium and South Park. In January 2019, E20 Stadium LLP acquired all of the share capital of the operator from Vinci Stadium, bringing control of the Stadium operation under LLDC. Here East The buildings are leased to Innovation City (London) Limited (iCITY), trading as Here East for a period of 200 years to May 2214 with the Legacy Corporation receiving a proportion of net rents. iCITY’s is vision to provide an innovative new commercial space focused around established and start up technology companies. During 2018/19 an option agreement was agreed and put in place between the Legacy Corporation and iCITY, which allows iCITY to call for the grant of a new 999 year lease and disposal of the Legacy Corporation’s interest for a capital receipt, conditional upon iCITY meeting certain conditions. Here East consists of 1.2 million square feet of space, and features three main buildings — a 300,000 square feet innovation centre, a 1,045-seat auditorium and an 850,000 square feet building housing educational space, broadcast studios, office space and a state-of-the-art data centre. Here East tenants include British Telecommunications (broadcasting BT Sport), Studio Wayne McGregor, Loughborough University in London, Plexal, Scope, MatchesFashion.com and University College London Bartlett School of Architecture. Page 16 of 133


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    ArcelorMittal Orbit The ArcelorMittal Orbit has been open to the public since 5 April 2014. At 114.5m high the ArcelorMittal Orbit is the UK’s tallest sculpture incorporating two observation platforms at 76m and 80m which provide stunning views across London and Queen Elizabeth Olympic Park. Since its opening there have been 783k visits to the ArcelorMittal Orbit. In June 2016, LLDC launched the world’s longest and tallest tunnel slide adjoined to the tower. Over 310k people have bought tickets for the Slide since it opened. Abseiling remains popular and UpSlide Down, a new stair climb option, was launched in 2017. The Legacy Corporation retains the freehold of the ArcelorMittal Orbit and Engie manage the venue on behalf of the Legacy Corporation as part of their wider contract for delivering estates and facilities management services on the Park and receive a management fee. The Legacy Corporation meets all cost associated with the facility and receives all income. The Podium building adjacent to the ArcelorMittal Orbit contains the Last Drop cafe and hospitality suite. Engie pay the Legacy Corporation a rent and service charges for the premises, with a potential turnover share. The contract with Engie runs to 2024. Timber Lodge The Timber Lodge is in the northern part of Queen Elizabeth Olympic Park. It is a single storey timber framed building providing a café and canteen, toilet facilities and two function rooms, which are available for hire. The land is leased by the Legacy Corporation from Lee Valley Regional Park Authority, which expires in July 2053 and the building is sublet to the Company of Cooks who took on operation of the Timber Lodge in 2018/19 for a term of five years to January 2024. Off Park properties A number of off Park properties were transferred from the former London Development Agency and former London Thames Gateway Development Corporation and located in the areas neighbouring the Park. The majority are in Hackney Wick and to the south of Stratford High Street in Bromley-by-Bow and managed by Knight Frank LLP on behalf of the Legacy Corporation and are occupied on a variety of short-term leases. 3 Mills Studio 3 Mills Studio is a large film and TV studio offering production offices, construction and prop stores, make up, costume and green rooms and a mix of production related tenants such as camera hire and casting. The site is on land owned by the Lee Valley Regional Park Authority with a long lease to the Legacy Corporation until August 2103. The Clock Mill forms part of this site and is let to East London Science School Trust until August 2021. Knight Frank LLP has managed 3 Mills Studios for the Legacy Corporation since 2013. The contract now extends to March 2020. Development platforms The Legacy Corporation owns several development platforms, listed below: Chobham Manor The Legacy Corporation has a development agreement in place with Chobham Manor LLP, which is a joint venture between London & Quadrant and Taylor Wimpey. The agreement is to deliver a new residential neighbourhood at Chobham Manor, just south of Lee Valley VeloPark. Planning permission Page 17 of 133


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    has now been granted for all four phases of the scheme, with Phase 1 complete, Phase 2 partially completed, construction for Phase 3 underway and the whole development due to complete by 2022/23. The development will comprise 859 new homes of which 75 percent will be family homes with three or more bedrooms and 28 percent affordable homes (affordable rent, social rent or intermediate housing). Works are progressing on site. East Wick and Sweetwater The Legacy Corporation entered into an agreement with a joint venture between Places for People Homes and Balfour Beatty Investments in February 2015 for the development of approximately 1,500 new homes, including private rented and affordable homes, at East Wick and Sweetwater. The homes will be accompanied by a mix of social infrastructure including nurseries, primary schools and a library. The zonal master plan for East Wick has been approved, as has the Reserved Matters consent for Phase One. The Reserved Matters Application for Phases Two and Three construction will be submitted jointly in autumn 2019 following completion of design work. Construction works on the development and related infrastructure works is underway with Phase One due to be completed in 2020/21, the development is scheduled for 2027/28 completion. Stratford Waterfront Located opposite the London Aquatics Centre in the south of the Park, this development platform forms part of the East Bank project and will be home to UAL’s London College of Fashion, Sadler’s Wells and Victoria and Albert Museum (incorporating the Smithsonian Institution), and the BBC as well as residential and retail. All partner institutions have signed Agreements for Lease with the Legacy Corporation; each of these leases carries a 399 year term. UCL East Also, part of the East Bank project, this development platform will, in its first phase, comprise 50,000m2 of new university campus, with academic and student residential accommodation. UCL has appointed its contractor for their main academic buildings at Marshgate and a preferred bidder approved for their mixed-use Pool Street West building. UCL’s Reserved Matters Application was approved by the Planning Decisions Committee in March 2019, subject to conditions. UCL have a 299 year lease from January 2015 for the Marshgate and Pool Street sites. Pudding Mill The Pudding Mill development platform currently has outline planning consent under the Legacy Communities Scheme for up to 1,290 homes, as part of a mixed-use development. The outline scheme also includes a new local centre close to the DLR station. The Legacy Corporation is working with the GLA to review the housing strategy for this development and explore ways in which it can increase levels of affordable housing and accelerate delivery to meet housing need. Rick Roberts Way Rick Roberts Way is jointly owned by the Legacy Corporation and the London Borough (LB) of Newham. It is planned as the final phase of the Legacy Communities Scheme and has outline consent for up to 400 homes and a secondary school (which, in agreement with LB Newham, was delivered on Stadium Island). LLDC is working with LB Newham to agree a delivery route for this site. Comprehensive Income and Expenditure Statement The following table reports the same underlying information as the Comprehensive Income and Expenditure Statement, but in the form of the Legacy Corporation’s management accounts. Page 18 of 133


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    £’000 2018/19 2018/19 2018/19 Actual Budget Variance Total net revenue expenditure 16,676 19,207 (2,531) Trading net (surplus)/deficit 686 1,244 (558) Total 17,362 20,451 (3,089) The Legacy Corporation recorded net expenditure of £17.4m for the year, which was £2.5m lower than budget. The Legacy Corporation generated revenue income of £15.3m during the year, which was £2.0m better than budget. This is mainly due to higher than planned programming and events income (in Park Operations and Venues). Revenue expenditure for the year of £32.6m was £0.9m below budget, which was due, in part, to Regeneration and Community Partnerships spend on their Socio Economic programme reprofiling into 2019/20. The Legacy Corporation continually seeks to manage its cost base down and has been efficient and effective in the use of its revenue resources. The Expenditure and Funding Analysis (Note 3) provides a reconciliation between the figures reported within the Legacy Corporation’s management accounts (above) and its Net Cost of Services, as reported in the Comprehensive Income and Expenditure Statement. Balance Sheet The Balance Sheet as at 31 March 2019 is summarised below. 31 March 2019 31 March 2018 £'000 £'000 Long term assets 244,501 279,730 Cash and cash equivalents 58,894 21,550 Net current assets/(liabilities) (39,496) (18,949) Net pension liabilities (17,199) (15,250) Other long term liabilities (355,323) (370,254) Net assets (108,623) (103,174) Represented by Usable reserves 8,715 2,676 Unusable reserves 99,907 100,497 Total reserves 108,623 103,174 Usable reserves are made up of: General funds 21,512 9,360 Deferred tax reserve (12,797) (6,684) Total usable reserves 8,715 2,676 Long term assets The net decrease in long term assets relates largely to the net decrease in the fair value of investment property largely reflecting disposals of investment properties, Chobham Manor residential properties and UCL East, as part of the East Bank project, and increase in the affordable housing modelling assumptions applied to the Rick Roberts Way development platform. The Legacy Corporation’s portfolio was valued as at 31 March 2019 by GL Hearn Limited – external, independent property valuers, who have appropriate recognised professional qualifications. The assets are being held by the Legacy Corporation for their income generating potential or for capital appreciation and have therefore been classified as investment Page 19 of 133


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    property in accordance with IAS 40. Overall the value of investment property assets has decreased from £246.7m at the end of last year to £185.9m as at 31 March 2019. Also included within long term assets are assets under construction (within Property, Plant and Equipment), which relate to expenditure incurred on the East Bank project (see Note 12). Cash and cash equivalents The Legacy Corporation’s short-term cash balances, which relate to balances held to meet liabilities on the Legacy Corporation’s balance sheet in respect of its obligation under the Olympic Park Transport Environment Management Strategy (OPTEMS) and Section 106 schemes, are invested through the GLA Group Investment Syndicate (GIS). The GIS is an operation jointly controlled by the participants for the investment of pooled monies belonging to those participants and operated by the GLA as Investment Manager under the supervision of the Syndics (the participants’ respective Chief Financial Officers). The other current participants include the GLA, London Fire and Emergency Planning Authority, the London Pensions Fund Authority and The Mayor’s Office for Policing and Crime. Pooling resources allows the GLA’s Group Treasury team to make larger individual transactions and exploit the greater stability of pooled cash flows to obtain better returns. A risk sharing agreement ensures risk and reward relating to each instrument within the jointly controlled portfolio are shared in direct proportion to each participant’s investment. As at 31 March 2019 the value of the Legacy Corporation’s cash and cash equivalents was £58.9m (31 March 2018: £21.6m) The balance held with the GIS at 31 March 2019 is £42.0m (31 March 2018: £15.9m), with the balance of £16.7m (31 March 2018: £5.7m) being held within the Legacy Corporation’s bank accounts (see Note 16). The Legacy Corporation does not hold significant cash balances for its operational need. Working capital is requested from the GLA on a weekly basis based on forecast requirements. Cash inflows are generated from other sources including trading operations, planning fees and events held on the Park. Consequently, the Legacy Corporation has low sensitivity to variations in cash flow during the year. In 2018/19, the Legacy Corporation also received £73.6m in capital receipts from its investment properties (which were largely used to repay borrowings to the GLA), which are forecast to grow further in the future. Future plans may be affected by a number of factors, including inflationary increases that affect the Legacy Corporation’s capital and revenue costs, housing market movements, planning assumptions and the level of affordable housing that are material to receipts from the disposal of development land, and potential changes to the Legacy Corporation’s strategy, such as accelerating planned housing developments and delivering higher affordable housing on GLA owned land. The Legacy Corporation continues to follow closely the impact of the withdrawal of the United Kingdom from the European Union on the property and construction sector in particular. Pension Scheme The Legacy Corporation is a member of the Local Government Pension Scheme, administered by the London Pensions Fund Authority. The net liability (the amount by which pension liabilities exceed assets) affects the Legacy Corporation’s net worth as recorded in the Balance Sheet. However, statutory arrangements for funding the deficit mean that the Legacy Corporation’s financial position in relation to its pension obligations remains healthy. The net pension liability has increased from £15.3m (as at 31 March 2018) to £17.2m as at 31 March 2019 due to a change in the demographic assumptions (such as life expectancy) used by the actuary. A total of £3.0m (net) has been credited to the Comprehensive Income and Expenditure Statement of which £0.6m is related to the re-measurement of the net defined benefit liability, which is offset by service costs (£3.5m), net interest charged on the deferred liability (£0.5m) and the movement on the deferred tax pension asset (£0.3m). The deficit on the Pension Scheme will be made good by increased contributions by the Legacy Corporation over the employees’ remaining working life, as assessed by the Scheme actuary. Page 20 of 133


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    Other assets and liabilities The Legacy Corporation has a rolling loan facility with the GLA to finance the Legacy Corporation’s capital expenditure. As at 31 March 2019, the Legacy Corporation had drawn down loan funding to the value of £319.6m. This loan will be repaid from capital receipts generated from the exploitation of the Legacy Corporation’s ownership of development platforms on and around the Park. Interest payable on the loan is based on a 50-year Public Works Loan Board rate and is funded by GLA grant. £42.5m of liabilities on the Legacy Corporation’s balance sheet relate to its obligation under the Olympic Park Transport Environment Management Strategy (OPTEMS), Section 106 schemes and Community Infrastructure Levy. The Legacy Corporation has ring-fenced the funds required to meet its obligations. Provisions and contingent liabilities The Legacy Corporation continues to recognise a contingent liability in relation to a loan of £13.0m (principal £9.2m plus unpaid interest), which was used to part fund the construction of the ArcelorMittal Orbit and is repayable to ArcelorMittal Orbit Limited from future profits from the operation of the ArcelorMittal Orbit as and when they are generated (in the first instance against interest on the loan until wholly repaid then 50% against the principal thereafter). A discounted projected cash flow is used for calculation of the carrying amount. The projected cash flows result in the carrying value of the loan being set at nil. This position remains despite the surplus reported in 2017/18 due to the cumulative deficit position. No provisions are recognised as at 31 March 2019 in the Legacy Corporation’s single entity accounts. Reserves The Legacy Corporation’s net revenue expenditure is fully funded by the GLA via a revenue grant. This grant is agreed annually on a four-year rolling basis via the GLA’s statutory budgeting process and is drawn by the Legacy Corporation throughout the year on a cash-basis. This arrangement gives rise to timing differences between net expenditure calculated on an accruals-basis and the Legacy Corporation’s net cash requirement. It also means that the Legacy Corporation’s ability to generate surpluses within its General Fund is restricted. Accordingly, at the end of the financial year, the Legacy Corporation had negative usable reserves of £8.7m in the General Fund (2017/18: £2.7m). However, considering the Legacy Corporation’s funding arrangements with the GLA, the level of usable reserves reported in the statutory accounts is considered adequate for the Legacy Corporation to meet its current and future financial challenges. Forecasted net cash position In line with the Legacy Corporation’s approved long-term financial model, as updated for the 2018/19 outturn, the net cash position of the Legacy Corporation’s activities in the coming three years is expected to be as follows: Capital 2019/20 2020/21 2021/22 Total £m £m £m £m Capital expenditure 174.2 239.8 193.3 607.3 Funded by: Capital receipts (32.3) (38.1) (39.4) (109.8) Other grants/funding (56.9) (108.3) (123.5) (288.7) Borrowing from GLA drawdown (85.0) (93.4) (30.4) (208.8) Total funding (174.2) (239.8) (193.3) (607.3) Page 21 of 133


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    Revenue 2019/20 2020/21 2021/22 Total £m £m £m £m Income (13.4) (12.0) (10.9) (36.3) Revenue expenditure 35.4 31.3 29.9 96.6 Financing costs 11.2 14.0 15.8 41.0 Net expenditure 33.2 33.3 34.8 101.3 Funded by: GLA funding for core activities (16.8) (16.0) (16.0) (48.8) GLA funding for financing (11.2) (14.0) (15.8) (41.0) Reserves (5.2) (3.3) (1.4) (9.9) Net revenue position - - 1.6 1.6 Cost reduction and commercial income opportunities such as advertising, sponsorship and additional visitor attractions on the Park are being explored to assist in bridging the forecast revenue deficit in 2021/22. Changes to accounting policies The Legacy Corporation has not adopted any new accounting policies in 2018/19. Page 22 of 133


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    Commentary on key live projects East Bank Significant progress was made on the East Bank project in the year. LLDC has entered into binding Agreements for Lease with all the partner institutions. The V&A has signed an Agreement for Lease with Here East for their Collection and Research Centre. Funding from the Government was confirmed in 2018/19 through approval of the Full Business Case (subject to conditions). The Planning Decisions Committee resolved to grant planning consent for the Stratford Waterfront planning application on 30 April 2019, subject to referral to the GLA for Stage 2 and completion of a Section 106 agreement. RIBA stage 3 design for Stratford is complete and procurement for initial Stratford Waterfront contracts are underway with contracts awarded for Enabling Works, Substructure, Tower Cranes, Carpenter’s Land Bridge and Common Site Services, with procurement underway for other construction packages. Enabling works are underway on site. Work on UCL East has continued, UCL has appointed its contractor for its main academic buildings at Marshgate and a preferred bidder approved for their mixed-use Pool St West building. UCL’s Reserved Matters Application was approved by the Planning Decisions Committee in March 2019, subject to conditions. Enabling works have now commenced. The costs will be met through a mixture of partner and private sector funding, philanthropic funding and public-sector funding from the Mayor of London and Government, following the approval of the final business case. In total, this investment is anticipated to generate 2,500 new jobs, economic benefits of over £1.5 billion at net present values and deliver 100,000m2 of cultural and educational space. The Legacy Corporation continues to work with partners to develop collaborative projects and proposals to help deliver the programme’s strategic objectives. A Strategic Objectives Delivery Plan, which sets out how the overall regeneration objectives of the project, is in place and updated annually. Chobham Manor development In November 2012 LLDC entered into a development agreement with Chobham Manor LLP (a joint venture between Taylor Wimpey and London & Quadrant). The development of 859 homes of which 28 per cent is affordable, will contain 75 per cent family housing (defined as three bedrooms or more) in line with planning requirements and will be supported by facilities including a nursery and community spaces. 350 homes have now been completed. Phase One (consisting of 259 homes in blocks 1A, 1B, 1C and 1D) is now fully complete. In Phase Two, the first block is complete and 86 out of the 91 units have been occupied. In 2018/19 the Legacy Corporation recognised £20.3m of capital receipts arising from its share of proceeds from sales of homes on the Chobham Manor site. Planning permission has now been granted for all four phases of the scheme, with Phase One complete, Phase Two partially completed, construction for Phase Three underway and the whole development due to complete by 2022/23. This development zone is held as an investment property (as part of ‘Queen Elizabeth Olympic Park’ asset) in the Legacy Corporation’s accounts, further detail of which is given in Note 13. East Wick and Sweetwater East Wick and Sweetwater Projects Ltd (a joint venture between Places for People and Balfour Beatty) was appointed by the Legacy Corporation in February 2015 to create new neighbourhoods in East Wick and Sweetwater. The plans include building up to 1,500 new homes with up to 30 per cent affordable and 500 homes to rent on the Park. East Wick and Sweetwater will create a vibrant new community on the west of the Park, linking to existing communities in Hackney Wick and Fish Island. Construction works on the development and related infrastructure works is underway with Phase One due to be completed in Page 23 of 133


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    2020/21 and who development scheduled for 2027/28 completion. The Reserved Matters Application for Phases 2 and 3 construction will be submitted jointly in autumn 2019 following completion of design work. LLDC funded infrastructure works to support the development were granted planning permission in March 2017. Construction work on Stour Road (H16) Bridge is close to completion (this completed in May 2019) and the north/south road build and Monier Road (H14) Bridge are due to complete in 2019/20. It is anticipated that the Legacy Corporation will begin to receive capital receipts from this development in 2020/21. This development zone is held as an investment property (as part of ‘Queen Elizabeth Olympic Park’ asset) in the Legacy Corporation’s accounts, further detail of which is given in Note 13. Hackney Wick Neighbourhood Centre Outline planning permission for the regeneration of the central area around Hackney Wick station was issued in March 2018 following GLA Stage 2 sign-off. The application was submitted jointly with LB Hackney and prioritised no net loss of employment space. Work is ongoing to procure a developer for LLDC’s land in this area in 2019/20. Hackney Wick Station Improvements to Hackney Wick Station completed in 2018/19. The improvements include new routes to reduce journey-times between the station and Here East and Queen Elizabeth Olympic Park; a new and enlarged station concourse; the installation of lifts to the platforms; and the creation of a new north-south pedestrian route for both passengers and other pedestrians under the railway embankment. The construction was delivered by Network Rail and the new station entrance opened in May 2018. Bobby Moore Academy The Bobby Moore Academy, a split-site all-through school consisting of a two-form entry primary school at Sweetwater and a six-form entry secondary school at Stadium Island, is operated by the David Ross Education Trust. The primary school opened on 11 September 2017 for the start of the 2017/18 academic year for classes of year 7 secondary school students (whilst the secondary school was being completed), with the first primary intake starting in September 2018. The secondary school on Stadium Island opened in September 2018 for the 2018/19 academic year, for year 7 and 8 students. Prospects and outlook Looking forward the Legacy Corporation has a number of key milestones to achieve in 2019/20. The Legacy Corporation's significant residential projects, Chobham Manor and East Wick and Sweetwater, will provide new homes for people who want to live in the area. These projects will also generate significant capital receipts for the Legacy Corporation, supporting repayment of borrowings to the GLA, but are being delivered at a time when the UK housing market is softening; this could impact upon the level of receipts realised by the Legacy Corporation. Construction on Chobham Manor Phase Two is underway and due for completion in summer 2019, with construction of Phase Three to continue for completion in 2021/22. East Wick and Sweetwater Phase One works will continue and are on schedule for completion in 2020/21 with construction complete in 2019/20 for supporting infrastructure works, the H14 bridge and the North South Highway. Following granting of outline planning for the Legacy Corporation’s residential development at Stratford Waterfront procurement to select a developer will commence. Development strategies will also be progressed on LLDC’s future housing developments at Pudding Mill and Rick Roberts Way. In May 2019, designers were appointed to progress the Pudding Mill site. New facilities created as part of the East Bank project will not only strengthen the Park's offer for local, national and international visitors, but also create a home for skilled artists, designers, academics, Page 24 of 133


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    engineers, scientists, architects and craftspeople – and the global companies that need this talent. Key milestones in 2019/20 are: granting of planning application for Stratford Waterfront; start on site construction for cultural and educational buildings at Stratford Waterfront and UCL’s university campus, and delivery of construction procurement programmes. Marquee events at the London Stadium in 2019/20 will see it host Major League Baseball (MLB) in June 2019, the first time MLB matches have been held in Europe, as well as athletics with the Mueller anniversary games and summer concerts. These events will further enhance the Stadium’s reputation as a world-class multi-use stadium. West Ham United Football Club will also begin its fourth season in the stadium, bringing Premier League and cup football to Stratford. The Legacy Corporation has access to sufficient funding through the GLA to complete the development programme set out in its five-year strategy and budget and begin to repay the investment made by the Greater London Authority in the Olympic legacy. The Corporation’s four-year budget was approved by the Legacy Corporation Board and the Mayor in March 2019, and will be revisited annually as part of the statutory budget process of the GLA. The Legacy Corporation continually seeks to maximise the value for money of the investment in its activities and ensure that the organisation is as lean and effective as possible, while still resourced to deliver a challenging programme. Performance Measures The following performance indicators demonstrate how the Legacy Corporation has used its resources to deliver against its five strategic objectives during the year. Measure Progress to 31 March 2019 Further completion of units at Chobham Phase 1 of Chobham Manor has now completed. The Manor. first block of the second phase of homes is complete and mostly occupied; the rest of Phase 2 is on schedule to complete in summer 2019. Construction works for Phase 3 is already underway. The main package of construction works in Phase 1 Start on site at East Wick and commenced in this year. Sweetwater. Prepare development strategy for Rick Work continues with joint landowners LB Newham Roberts Way. and stakeholders to reach agreement on a delivery strategy and programme ahead of aiming to agree timeline and objectives. Pudding Mill developer procurement The delivery of Pudding Mill has been a major factor launched. in agreeing a way forward with the GLA around affordable housing, Procurement of design teams for this development is underway. Bobby Moore Academy secondary The school opened in September 2018 and was school site opens. officially opened by Sir Geoff Hurst MBE in December 2018. Page 25 of 133


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    Complete the Hackney Wick station The station is open to the public and the works are improvement works. complete, with the new underpass due to open in 2019/20. Appoint a developer for Hackney Wick The procurement strategy to select a development Neighbourhood Centre. partner was approved by LLDC’s Investment Committee in June 2017. Following GLA planning approval, the aim is to commence procurement in summer 2019. 3 Mills river walls repair work Construction commenced in this period with undertaken. scheduled completion in October 2019. 3 Mills future use agreed. Delivery strategy approved by Investment Committee and Board Deliver an effective and responsive This target has been exceeded each month in planning service. At least 70% of 2018/19, with actual performance ranging from 71% applications determined in time. at its lowest to 100% at its highest. Construction workforce targets (current The most recent construction figures available are to rather than lifetime figures): end of March 2019  25% of the workforce have  37% of construction employees working on permanent residency in the Park are Host Borough residents Host Boroughs  80% of the workforce are from BAME  25% of the workforce are from groups BAME groups  5% of the workforce are women  5% of the workforce are women  1% of the workforce are disabled people  3% of the workforce are disabled  4% of the workforce are apprentices  3% of the workforce are apprentices Copper Box Arena and London The most recent figures available are as of June 2018 Aquatics Centre workforce targets (these figures are reported annually): (current rather than lifetime figures):  69% workforce Host Borough residents  70% of the workforce have  37% are from BAME groups (see permanent residency in the commentary below) Host Boroughs  48% workforce are women  55% are from BAME groups  4% workforce are disabled  50% are women  3 – 5% are disabled Estates and Facilities workforce targets As of December 2018, the workforce performance is (current rather than lifetime figures): shown below:  70% of the workforce have  62% workforce Host Borough residents permanent residency in the  61% workforce are from BAME groups Host Boroughs  31% workforce are women  25% are from BAME groups  6% workforce are disabled  30% are women  5% are disabled Maintain Green Flag status for the Park The Park had its Green Flag status confirmed for the fifth year in a row in July 2018. Page 26 of 133


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    Meet estimate of 6 million visitors to the Estimate exceeded: visitor numbers to the Park from Park in 2018/19. April 2018 to February 2019 are estimated at over 6.5m. London Aquatics Centre throughput of Estimate exceeded: figures for 2018/19 show over 1m. 1,029,000 visits to the London Aquatics Centre. Copper Box Arena throughput of Estimate exceeded: figures for 2018/19 show over 445,000. show over 459,000 visits to the Copper Box Arena ArcelorMittal Orbit throughput of Figures for 2018/19 show over 155,000 visits to 180,000. ArcelorMittal Orbit. Full business case for East Bank The Full Business Case was approved, subject to approved by HMG. conditions. Progress Stratford Waterfront design, RIBA stage 3 design complete, OJEU planning and procurement. procurement for Enabling Works, Tower Cranes, Building Control and Carpenter’s Land Bridge, Substructure Works, complete and contract let. Procurements underway for the remaining 25 works packages, the majority to be let in 2019/20. Submission of the Planning application has been made with determination in April 2019. Continue to work with East Bank The Strategic Objectives Delivery Plan is in place with partners and to facilitate the East Bank partners. Initiatives in place include development of the partnership to engagement in the East Works employment and skills ensure the continued delivery of the programme; commencement of the Creative Content East Bank strategic objectives around programme (with the Open Doors event held at Here economic growth; education, jobs, East in July 2018); leadership of the EAST Education skills, participation, raising aspirations programme; and the STEP into Smithsonian and improving external perceptions to programme. maximise the value of the cluster. Delivery of East Education programme The EAST Education framework has been launched with East Bank partners. by all East Bank partners as the shared strategic approach to education engagement. Health and safety: Construction Over the past year we have fully achieved meeting undertaken without a fatal accident on this milestone, with no reportable accidents site; to prevent any life-changing injury representing a rate of 0.0. or occupational ill-health for any individual; and to minimise reportable accidents to a rate below 0.17 per 100,000 hours worked. Unqualified annual accounts for 2017/18 annual accounts approved with an 2017/18. unqualified opinion. Page 27 of 133


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    Corporate risks The Legacy Corporation regularly reviews risks at a project, directorate and corporate level. The table below shows the current top corporate risks identified their potential impact, and what mitigating action is being taken. Summary Impact Mitigation Current RAG Risk that the East Bank Financial Effective design management and will be delayed, or costs implications and coordination. Rigorous cost and will be more than programme change control. Close work with anticipated. delays. partners, GLA and Government. R Coordination with Planning. Three lines of defence assurance approach. Risk to East Bank funding. Financial Full Business Case approved by implications and Government. Close working with programme Foundation for Future London. R delays. Ensure best outcome from residential development. East Bank construction Financial Experienced and well- resourced interface and procurement implications and project management partner, LLDC risk. programme team and assurance. Initial R delays. procurements have been delivered on time. Risk relating to capital and Financial and/ or Development and implementation of revenue income. delivery impacts. Housing Strategy, tight monitoring R Reputational and financial control, close working impacts. with GLA. Risk that the Stadium Financial and E20 Stadium LLP Board and restructuring will not reputational funders considering commercial sufficiently improve the impacts. options. Stadium operations brought R financial position of the in house. Stadium. Risk relating to current Financial and Close work with development housing development reputational partners and GLA, close economic R delivery. impacts. and financial monitoring. Risk relating to future Financial and Close working with GLA in particular housing development reputational on affordable housing, agreeing R delivery. impacts. Housing Strategy, ensure attractive propositions to market. Risk relating to security on Reputational, Monitoring threat levels across the the Park and the threat operational and Park ensuring appropriate security R level. financial resource and implementation of implications. new security measures. Local transport Reputational and Work with partners to determine infrastructure insufficient operational and deliver projects to improve for growing demand. impacts transport infrastructure. Potential limiter R on economic development in Stratford area. Page 28 of 133


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    Risk of unauthorised Financial, H&S Close working with operator, review climbers at ArcelorMittal and reputational of security measures. A Orbit. impacts. Future transition of LLDC Negative impacts Transition strategy being activities. on regeneration developed. Close working with key A of the area. stakeholders. Electric capacity requires Financial Energy strategy commissioned, reinforcement. impacts. review and implement findings. A Delivery of the strategy for Financial and Formalised working with partners 3 Mills Studios reputational and engagement with stakeholders. A impacts Risk relating to trading Financial Manage and monitoring financial activities including venues impacts, reduced targets and contracts. Spend to A (CBA, LAC, AMO), events income or save initiatives. Implement and car park. increased costs. commercial strategy. Risk about successful Reputational Progress reporting including annual implementation of the impacts. monitoring report, review of local Local Plan including plan including population forecasts A sufficiency of community infrastructure Risk relating to the Programme Continue political engagement work potential impact of policy delays, budget and briefings. Work through A change on the impacts. implications of withdrawal from the Corporation. EU. Risk about the impacts of The possibility of A comprehensive health and safety health and safety failures serious injuries or programme is in place, designed to on site. fatalities, the identify and manage the consequences of construction risks and led actively which may by LLDC and its project A include significant management partner. Oversite delays and through Health, Safety and Security reputational Committee damage. Risk relating to failure to Financial and New finance system implemented; embed fraud and reputational anti-fraud policy updated; financial assurance processes. impacts. and procurement controls; assurance from internal and A external audit; ongoing fraud awareness briefings. Mandatory fraud workshop held for finance practitioners. Risk relating to the Financial and Local Plan approved and being success of off-Park reputational implemented. Work ongoing on developments. impacts. development opportunities including A Hackney Wick, Pudding Mill Lane, Bromley by Bow. Staff resourcing, To ensure that High quality recruitment and recruitment and retention. resource is communications. Remuneration sufficient for package including benefits. Staff A delivery against training and development. LLDC’s objectives. Page 29 of 133


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    Risk relating to impact of Reputational Deliver a clear communication plan construction on residents impacts. which manages expectations and and visitors. explains the reasons for the A construction work and communicates future developments. Risk relating to carbon Reputational and Work on policy, liaison with GLA savings from the District financial impacts and with Engie. Heating Network A Risk relating to meeting Reputational A strong set of targets agreed priority theme targets and impacts. through procurement and contracts; G wider regeneration close working with partners. aspirations. Risk relating to Potential loss, Information security gap analysis information security non- theft or corruption complete, action plan being compliance. of data with implemented. Ongoing information G reputational and security briefings. financial impacts. Page 30 of 133


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    Purposes of major schedules within the financial statements The nature and purpose of the primary schedules included within the financial statements are set out below: Comprehensive Income and Expenditure Statement This statement shows both the revenue received and the costs incurred in the year of providing services, in accordance with International Financial Reporting Standards (IFRS). Balance Sheet The balance sheet shows the value as at the balance sheet date of the assets and liabilities recognised by the Legacy Corporation. The net assets of the Legacy Corporation (assets less liabilities) are matched by the reserves held by the Legacy Corporation. Reserves are reported in two categories. The first category of reserves is usable reserves, being those reserves that the Legacy Corporation may use to provide services. The Legacy Corporation is funded by the GLA; therefore, its level of usable reserves in the statutory accounts does not fully determine its ability to meet current and future financial challenges. The second category of reserves is those that the Legacy Corporation is not able to use to provide services (Unusable Reserves). This category of reserves is brought about by accounting entries and includes reserves that are impacted by timing differences shown in the movement in reserves statement line 'Adjustments between accounting basis and funding basis under regulations'. They are not cash- backed reserves or an additional source of funding for the Legacy Corporation. Cash Flow Statement The cash flow statement shows the movements in cash and cash equivalents of the Legacy Corporation during the financial year. The statement shows how the Legacy Corporation generates and uses cash and cash equivalents by classifying cash flows as derived from operating, investing and financing activities. Movement in Reserves Statement This statement shows the movements in the year on the different reserves held by the Legacy Corporation analysed between usable reserves and unusable reserves. The statement shows how the movement in the Legacy Corporation’s reserves is broken down between gains and losses recognised on an accounting basis and the statutory adjustments required to control the amounts chargeable to council tax for the year. Page 31 of 133


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    Statement of Responsibility for the Accounts The Legacy Corporation’s responsibilities The Legacy Corporation is required to:  Make arrangements for the proper administration of its financial affairs and to secure that one of its officers has responsibility for the administration of those affairs. In the Legacy Corporation that officer is the Deputy Chief Executive;  Manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets; and  Approve the Statement of Accounts. The Deputy Chief Executive’s responsibilities The Deputy Chief Executive is responsible for the preparation of the Statement of Accounts for the Legacy Corporation in accordance with proper practices as set out in the CIPFA LASAAC Code of Practice on Local Authority Accounting in the United Kingdom (the Code). In preparing this Statement of Accounts, the Deputy Chief Executive has:  selected suitable accounting policies and then applied them consistently  made judgements and estimates that were reasonable and prudent  complied with the Code  kept proper accounting records which were up to date, and  taken reasonable steps for the prevention and detection of fraud and other irregularities Certificate of the Deputy Chief Executive I certify that the Statement of Accounts gives a true and fair view of the financial position of the Legacy Corporation at the accounting date and of the income and expenditure for the year ended 31 March 2019. Gerry Murphy Deputy Chief Executive XX July 2019 Page 32 of 133


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    Independent Auditor’s Report to the Members of the London Legacy Development Corporation Opinion Auditor’s Certificate to be inserted. Page 33 of 133


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    Comprehensive Income and Expenditure Statement For the year ended 31 March 2019 Gross Income Gross Expenditure Net Expenditure Notes £'000 £'000 £'000 Communication, Marketing and Strategy 2/4 (60) 1,718 1,658 Development 2/4 (85) 8,181 8,096 Executive Office 2/4 (31) 2,166 2,135 Finance, Commercial and Corporate Services 2/4 (711) 8,437 7,726 Park Operations and Venues 2/4 (1,768) 1,919 151 Planning Policy & Decisions 2/4 (1,957) 2,737 780 Regeneration and Community Partnerships 2/4 (20) 2,456 2,436 Stadium 2/4 (5,118) 30,465 25,347 East Bank 2/4 - - - GLA Grant 2/4 (51,623) (51,623) Corporate Items 2/4 379 379 Net cost of services (61,373) 58,458 (2,915) Financing and investment income 7 (11,393) - (11,393) Change in fair value of investment properties 13 - 3,348 3,348 Impairment of investment in joint venture 14 - - - Financing and investment expenditure 8 - 27,935 27,935 Capital grants and contributions 9 (4,755) - (4,755) (Surplus) or deficit on provision of services before tax (77,521) 89,741 12,220 Corporation tax 10 6,581 6,581 Deferred tax 10 (12,449) (12,449) (Surplus) or deficit on the provision of services after tax (89,970) 96,322 6,352 Deferred tax asset on the net defined benefit liability 10 (348) (348) Remeasurement of the net defined benefit liability/asset 18 - (555) (555) Total comprehensive income and expenditure (89,970) 95,419 5,449 Page 34 of 133


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    For the year ended 31 March 2018 Gross Income Gross Expenditure Net Expenditure Notes £'000 £'000 £'000 Communication, Marketing and Strategy 2/4 (458) 2,428 1,970 Development 2/4 (71) 21,378 21,307 Executive Office 2/4 (34) 2,092 2,057 Finance, Commercial and Corporate Services 2/4 (324) 8,247 7,923 Park Operations and Venues 2/4 (1,606) 1,720 114 Planning Policy & Decisions 2/4 (1,853) 2,875 1,022 Regeneration and Community Partnerships 2/4 (344) 4,012 3,669 Stadium 2/4 (2,732) 17,633 14,901 Corporate Items 2/4 (36,388) 341 (36,047) Net cost of services (43,810) 60,726 16,916 Financing and investment income 7 (11,751) - (11,751) Change in fair value of investment properties 13 - 13,750 13,750 Impairment of investment in joint venture 14 - 4,906 4,906 Financing and investment expenditure 8 - 25,970 25,970 Capital grants and contributions 9 (14,802) - (14,802) (Surplus) or deficit on provision of services before tax (70,363) 105,352 34,989 Corporation tax 10 - 1,012 1,012 Deferred tax 10 (6,752) - (6,752) (Surplus) or deficit on the provision of services after tax (77,115) 106,364 29,249 Other comprehensive income and expenditure Remeasurement of the net defined benefit liability/asset 18 (3,081) - (3,081) Total comprehensive income and expenditure (80,196) 106,364 26,168 Page 35 of 133


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    Balance Sheet As at 31 March 2019 31 March 2019 31 March 2018 Notes £'000 £'000 Long term assets Intangible assets 11 184 17 Property, plant and equipment 12 57,411 32,135 Investment property 13 185,945 246,655 Investment in subsidiary 14 - - Long term debtors 15 961 923 244,501 279,730 Current assets Short term debtors 15 23,375 21,610 Cash and cash equivalents 16 58,894 21,550 82,269 43,160 Total assets 326,770 322,890 Current liabilities Short term creditors 17 (62,871) (40,559) (62,871) (40,559) Long term liabilities Long term borrowing 17 (321,566) (328,512) Long term creditors 17 (15,130) (10,666) Deferred tax liability 10 (18,627) (31,076) Retirement benefit obligation 18 (17,199) (15,250) (372,522) (385,504) Total liabilities (435,393) (426,063) Net assets (108,623) (103,173) Reserves Usable reserves 20 8,715 2,676 Unusable reserves 20 99,907 100,497 Total reserves 108,623 103,173 Page 36 of 133


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    Movement in Reserves Statement As at 31 March 2019 Total Total unusable General usable Unusable and other Total Notes Fund reserve reserves reserves reserves £’000 £’000 £’000 £’000 £’000 At 1 April 2018 2,676 2,676 100,496 100,496 103,172 Movement in reserves during 2018/19 Deficit on the From provision of services CIES 6,352 6,352 - - 6,352 Other comprehensive From income and expenditure CIES (348) (348) (555) (555) (903) Total comprehensive income and expenditure 6,004 6,004 (555) (555) 5,449 Adjustments between accounting and funding basis under regulations 21 35 35 (35) (35) - Transfer to reserve - - - - Decrease/(Increase) in 2018/19 6,039 6,039 (590) (590) 5,449 Balance at 31 March 2019 8,715 8,715 99,907 99,907 108,623 As at 31 March 2018 Total Total unusable General usable Unusable and other Notes Fund reserve reserves reserves Total reserves £’000 £’000 £’000 £’000 £’000 At 1 April 2017 (3,426) (3,426) 80,431 80,431 77,005 Movement in reserves during 2017/18 Deficit on the From provision of services CIES 29,248 29,248 - - 29,248 Other comprehensive From income and expenditure CIES 68 68 (3,149) (3,149) (3,081) Total comprehensive income and expenditure 29,316 29,316 (3,149) (3,149) 26,167 Adjustments between accounting and funding basis under regulations 21 (23,214) (23,214) 23,214 23,214 - Transfer to reserve 20 - - - - - Decrease/(Increase) in 2017/18 6,102 6,102 20,065 20,065 26,167 Balance at 31 March 2018 2,676 2,676 100,496 100,496 103,172 Page 37 of 133


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    Statement of Cash Flows For the year ended 31 March 2019 31 March 31 March 2019 2018 Notes £'000 £'000 Surplus/(Deficit) on the provision of services (6,353) (29,248) Adjustments to net (deficit) for non-cash movements 19 89,024 52,798 Adjustments for items included in the net (deficit) on the provision of (4,755) (14,802) services that are investing and financing activities 19 Net cash flows from operating activities 77,916 8,748 Investing activities 19 (37,605) (15,774) - 19 (2,969) Financing activities 2,969 Net increase/(decrease) in cash and cash equivalents 37,342 (9,994) Cash and cash equivalents at the start of the year 21,550 31,544 Cash and cash equivalents at the end of the year 58,894 21,550 Page 38 of 133


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    Accounting policies a) General Principles The Legacy Corporation is required to prepare an annual Statement of Accounts by the Accounts and Audit (England) Regulations 2015 (the 2015 Regulations). These regulations require the financial statements to be prepared in accordance with proper accounting practices. These practices primarily comprise the Code of Practice on Local Authority Accounting in the United Kingdom 2018/19 (the Code), and the Service Reporting Code of Practice, supported by International Financial Reporting Standards adopted by the European Union (Adopted IFRS) and statutory guidance issued under section 12 of the Local Government Act 2003. The Statement of Accounts summarises the Legacy Corporation’s and the Legacy Corporation Group’s (“the Group”) transactions for the 2018/19 financial year and its position at 31 March 2019. The Group financial statements have been prepared in accordance with the Code. b) Basis of accounting The Accounts are made up to 31 March 2019. The accounting policies set out below have been applied consistently in the period presented in these financial statements. The Accounts have been prepared under the accruals concept and in accordance with the historical cost accounting convention, modified by the revaluation of certain categories of non-current assets and financial instruments. Where items are sufficiently significant by virtue of their size or nature, they are disclosed separately in the financial statements in order to aid the reader's understanding of the Legacy Corporation's performance. c) Accruals of income and expenditure Activity is accounted for in the year that it takes place, not when cash payments are made or received. In particular:  Revenue from contracts with service recipients, whether for services or the provision of goods, is recognised when (or as) the goods or services are transferred to the service recipient in accordance with the performance obligations in the contract.  Expenses in relation to services received (including services provided by employees) are recorded as expenditure when the services are received rather than when payments are made; and  Interest receivable on investments and payable on borrowings is accounted for respectively as income and expenditure on the basis of the effective interest rate for the relevant financial instrument rather than the cash flows fixed or determined by the contract.  Where revenue and expenditure have been recognised but cash has not been received or paid, a debtor or creditor for the relevant amount is recorded in the Balance Sheet. Where debts may not be settled, the balance of debtors is written down and a charge made to revenue for the income that may not be collected. d) Going concern The financial statements have been prepared on a going concern basis as it is considered that the Legacy Corporation has in place appropriate funding from the Greater London Authority, and other sources, and will therefore continue in operational existence for the foreseeable future and meet its liabilities as they fall due for payment. Page 39 of 133


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    e) Accounting Standards issued but not yet effective The Code requires the Legacy Corporation to identify any accounting standards that have been issued but have yet to be adopted and could have a material impact on the Statement of Accounts. At the date of authorisation of the financial statements, the following amendments to the Code, standards and interpretations, which have not been applied in these financial statements, were in issue but not yet effective:  amendments to IAS 12 Income Taxes: Recognition of Deferred Tax Assets for Unrealised Losses.  amendments to IAS 7 Statement of Cash Flows: Disclosure Initiative.  IFRS 16 Leases – The Legacy Corporation has deferred implementation of the new standard following the 2018/19 agreement from the CIPFA/LASAAC local authority accounting Code Board to defer implementation in local authority financial statements to 2020/21. The new standard introduces a single lessee model which will require the Legacy Corporation to disclose assets leased under Operating leases on its Balance Sheet. The impact of this will be assessed through the year, as the public sector application is being determined. The Legacy Corporation does not consider the above-mentioned amendments to the Code and standards, amendments or interpretations issued by the IASB to be applicable or have a material impact in 2018/19. f) Cash and cash equivalents Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in three months or less from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value. In the cash flow statement, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Legacy Corporation’s cash management. g) Critical judgements on applying accounting policies In applying the accounting policies, the Legacy Corporation has had to make certain judgements about complex transactions or those involving uncertainty about future events. The critical judgements made in the Statement of Accounts are: Funding The Legacy Corporation’s funding is agreed annually for a four-year rolling budget via the GLA’s statutory budgeting process. The Legacy Corporation maintains a long-term financial plan, which is shared with the GLA and is heavily dependent on future receipts from the sale of development properties and support from the GLA. This provides the Legacy Corporation with a level of certainty about future levels of funding, however is subject to constant review. The Legacy Corporation has determined that this uncertainty is not yet sufficient to provide an indication that its long-term objectives will not be achieved. Investment properties The Legacy Corporation owns a number of commercial properties where all or part of the property is leased to third parties. Judgement needs to be exercised in determining whether these properties should be classified as investment properties in accordance with IAS 40. As investment properties are valued at Page 40 of 133


  • Page 41

    fair value with movements in the fair value being recorded in the Comprehensive Income and Expenditure Statement this could have a significant effect on the reported financial performance of the Legacy Corporation. Joint Ventures and Subsidiaries The Legacy Corporation is a member of E20 Stadium LLP, which is classified as a subsidiary of the Legacy Corporation and consolidated into the Legacy Corporation’s Group Accounts in line with international accounting standards. Stratford East London Holdings Limited (a wholly owned subsidiary of the Legacy Corporation) is the second member of the partnership. The Code requires local authorities with material interests in subsidiaries to prepare Group financial statements. Subsidiaries are those entities over whose activities the Group has control by itself. The Group's financial statements incorporate, as appropriate, the financial statements of the Legacy Corporation and E20 Stadium LLP as at the year end. Subsidiaries are consolidated into the Group accounts (from the date of acquisition) by adding like items of assets, liabilities, reserves, income and expenses together line by line to those of other group members in the financial statements. All intra-Group transactions, balances, income and expenses are eliminated on consolidation. Joint ventures are accounted for using the equity method (equity-accounted investment) and are initially recognised at cost. The prior year Group financial statements therefore included the Group’s share of the total comprehensive income and equity movements of equity-accounted investment, from the date that significant influence or joint control commences until the date that significant influence or joint control ceased (30 November 2017). Stratford East London Holdings Limited has a 1 percent non-controlling share in E20 Stadium LLP and has undertaken no financial transactions during the reporting period. The Legacy Corporation has not consolidated any financial information in relation to Stratford East London Holdings Limited. On 21 January 2019, E20 Stadium LLP acquired the full share capital, and therefore control, of London Stadium 185 Limited, the operator of the London Stadium. E20 Stadium LLP has determined that the acquisition of London Stadium 185 Limited constitutes a business combination as defined by IFRS 3 Business Combinations and accounted for under the acquisition method. Accordingly, the financial results of London Stadium 185 Limited from the acquisition date to 31 March 2019 are consolidated into the Legacy Corporation’s Group Accounts (via the E20 Stadium LLP accounts) in line with international accounting standards. h) Assumptions made about the future and major sources of estimation uncertainty The preparation of financial statements in conformity with the Code requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Legacy Corporation’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions or estimates are significant to the financial statements are disclosed in the following table: Page 41 of 133


  • Page 42

    Effect if actual results differ from Item Uncertainties assumptions Investment Investment property valuations have been A reduction in the estimated valuations would properties based on the potential income to be result in a loss being recorded in the generated by the various assets. Should Comprehensive Income and Expenditure evidence emerge that causes the Legacy Statement (CIES). For example, a 10 per cent Corporation to amend these estimates, the reduction in the value of the investment estimated fair value of its investment properties would result in a £13.8m charge to properties could change. This includes the CIES. Conversely, an increase in value changes to the affordable housing would result in increases to the CIES. assumptions on the Corporation’s remaining development sites on the Park, which are likely increase in future years in line with the Mayor’s affordable housing strategy. Uncertainty around the withdrawal of the United Kingdom from the European Union, and the impact on the property and construction sector in particular, could have an adverse effect on property values and, therefore, the Legacy Corporation's investment property portfolio. Property, plant and Assets are depreciated over useful lives If the useful life of assets is reduced, equipment that are dependent on assumptions about depreciation increases and the carrying amount the levels of repairs and maintenance that of the assets falls. will be incurred in relation to individual The carrying amount of Assets under assets. Construction could reduce if there are changes Assets under Construction are measured to the capital projects to which the costs relate at historical cost where those costs are (e.g. abortive costs). considered to meet the recognition criteria in IAS 16 (Property, plant and equipment). Pensions liability The estimation of the net liability to pay The assumptions interact in complex ways. The pensions depends on a number of complex actuaries review the assumptions triennially and judgements relating to the discount rates to changes are adjusted for in the Accounts. be used, the rate at which salaries are Details on sensitivity analysis can be found in projected to increase, changes in Note 18. retirement ages, mortality rates and expected returns on pension fund assets. Page 42 of 133


  • Page 43

    Fair value When the fair values of financial assets and The authority uses the discounted cash flow measurements financial liabilities cannot be measured (DCF) model to measure the fair value of some based on quoted prices in active markets of its investment properties and financial assets. (i.e. Level 1 inputs), their fair value is The significant unobservable inputs used in the measured using valuation techniques (e.g. fair value measurement include management quoted prices for similar assets or liabilities assumptions regarding rent growth, vacancy in active markets or the discounted cash levels (for investment properties) and discount flow (DCF) model). rates – adjusted for regional factors (for both Where possible, the inputs to these investment properties and some financial valuation techniques are based on assets). observable data, but where this is not Significant changes in any of the unobservable possible judgement is required in inputs would result in a significantly lower or establishing fair values. These judgements higher fair value measurement for the typically include considerations such as investment properties and financial assets. uncertainty and risk. However, changes in the assumptions used could affect the fair value of the Legacy Corporation’s assets and liabilities. Where Level 1 inputs are not available, the Legacy Corporation employs relevant experts to identify the most appropriate valuation techniques to determine fair value (for example for investment properties, external valuers GL Hearn). Information about the valuation techniques and inputs used in determining the fair value of the authority’s assets and liabilities is disclosed in notes 13 and 26. Group Accounts The Legacy Corporation’s Group Accounts The Stadium’s valuation and the provision for (share of losses in include its share of losses in E20 Stadium onerous contracts are based largely upon E20 joint LLP, which in 2018/19 include a number of Stadium LLP’s long-term forecasts. If actual venture/subsidiary) estimations relation to the London results were to differ from the underlying Stadium’s fair value and a provision for assumptions then this could have a material onerous contracts (see Narrative Report, impact upon the Legacy Corporation’s share of page 16). losses reported in its Group Accounts. Page 43 of 133


  • Page 44

    i) Events after the Reporting Period Events after the Balance Sheet date are those events, both favourable and unfavourable, that occur between the end of the reporting period and the date when the Statement of Accounts is authorised for issue. Two types of events can be identified: Adjusting events Those events that provide evidence of conditions that existed at the end of the reporting period – the Statement of Accounts is adjusted to reflect such events. Non-adjusting events Those events that are indicative of conditions that arose after the reporting period - the Statement of Accounts is not adjusted to reflect such items, but, where a category of events would have a material effect, disclosure is made in the notes of the nature of the events and either their estimated financial effect or a statement that such an estimate cannot be made reliably. Events taking place after the date of authorisation for issue are not reflected in the Statement of Accounts. j) Revenue recognition Revenue is recognised when the significant risks and rewards of ownership have passed to the buyer and it can be reliably measured. Revenue generated from planning fees is recorded on completion of the service provided. Revenue generated from rental of commercial properties is recorded in line with the accounting policy described in paragraph ‘x) Leases’ depending on whether the commercial properties are leased out under a finance or an operating lease. Revenue generated from the organisation of event is recorded as deferred revenue until the event occurs. Revenue is measured after the deduction of Value Added Tax (where applicable). The Legacy Corporation implemented IFRS 15 – Revenue from Contract with Customers for the first time in 2018/19. The standard required the Legacy Corporation to recognise revenue from a contract only when the authority has satisfied the identified performance obligations of the contract. This has not had a material impact on the Legacy Corporation Financial Statements. k) Segmental reporting The Comprehensive Income and Expenditure Statement and the Expenditure and Funding Analysis both include a segmental analysis, which requires local authorities to report performance based on how their organisations are structured and how they operate and monitor and manage financial performance. In accordance with the Code, the Legacy Corporation's operating segments have been determined by identifying the segments whose operating results are reviewed by the Board, when making decisions regarding the allocation of resources and for the assessment of performance. The operating segments of the Legacy Corporation and their principal activities are as follows: Communications, Marketing and Strategy The Communications, Marketing and Strategy directorate supports and delivers effective communications between the Legacy Corporation and its stakeholders, and manages online information to ensure it is accurate and up to date. It is responsible for preparing the Legacy Corporation’s strategy concerning the organisation and its role. Page 44 of 133


  • Page 45

    Development The Development directorate leads on the design and development of Queen Elizabeth Olympic Park. They are responsible for delivering the Legacy Communities Scheme – the Park masterplan which sets out new residential neighbourhoods as well as commercial, educational, recreational and other developments across the Park. They are also tasked with delivering the Legacy Corporation’s East Bank project (though this is reported as if it were a separate ‘directorate’ in management reporting). In addition, the Development directorate is responsible for Housing Strategy and overseeing developments that are under contract. Executive Office The Executive Office includes the Legacy Corporation’s Chair and Chief Executive who, together with the Executive Management Team, lead the work that the Legacy Corporation does as an organisation. Staff in the Executive Office support the Legacy Corporation’s senior leadership, as well as providing the important functions of Human Resources and Health and Safety to LLDC. Finance, Commercial and Corporate Services The Finance, Commercial and Corporate Services directorate provides support across the Legacy Corporation for finance, IT and information management, governance, programme management and assurance, commercial and procurement. As part of the Mayor's shared service agenda, legal and insurance services are provided by Transport for London, internal audit by MOPAC, the Mayor's Office of Policing and Crime, (both functional bodies within the Greater London Authority Group), and treasury management and secretariat services are provided by the Greater London Authority. In addition, the Legacy Corporation is part of the Greater London Authority Group Collaboration Board initiative, which seeks to promote collaboration across the GLA Group in areas of common interest and in line with Mayoral priorities. Park Operations and Venues Park Operations and Venues has the objective of operating a successful and accessible Park and world- class sporting venues, offering facilities for high-performance and community participation, enticing visitor attractions, ensuring the successful financial legacy of the Park and securing a busy programme of sporting, cultural and community events that will create a sense of excitement and continue to draw visitors to Stratford and the surrounding area. The Executive Director of Park Operations and Venues is the Legacy Corporation’s lead on health and safety and security. Planning Policy and Decisions The Planning Policy and Decisions Team fulfils a statutory function and contributes to the Legacy Corporation’s Place objective: creating London’s most dynamic urban district, becoming a location of choice for current residents and new arrivals, and linking the Olympic Park estate with surrounding neighbourhoods. Regeneration and Community Partnerships The Regeneration and Community Partnerships directorate has a wide range of responsibilities which tie directly to the Legacy Corporation’s priority themes around regeneration, community engagement and equality and inclusion. The directorate runs community and business engagement, outreach programmes, schools programmes and a number of other socio-economic projects to further these goals. Stadium The Stadium directorate holds the cost of the Legacy Corporation’s investment in, and funding of, E20 Stadium LLP, including capital investment and ongoing working capital requirements. Page 45 of 133


  • Page 46

    l) Government grants and contributions Whether paid on account, by instalments or in arrears, government grants are recognised as due to the Legacy Corporation when there is reasonable assurance that:  the Legacy Corporation will comply with the conditions attached to the payments; and  the grants will be received. Amounts recognised as due to the Legacy Corporation are not credited to the Comprehensive Income and Expenditure Statement until conditions attached to the grants have been satisfied. Conditions are stipulations that specify how the grant should be used by the Legacy Corporation and which if not met require the grant to be returned to the transferor. Monies advanced as grants for which conditions have not been satisfied are carried in the Balance Sheet as creditors. When conditions are satisfied, the grant is credited to the relevant service line or non-ring- fenced revenue grants and all capital grants credited to the Comprehensive Income and Expenditure Statement. Where capital grants are credited to the Comprehensive Income and Expenditure Statement, they are reversed out of the General Fund Balance in the Movement in Reserves Statement. Where the grant has yet to be used to finance capital expenditure, it is posted to the Capital Grants Unapplied Reserve. Where it has been applied, it is posted to the Capital Adjustment Account. Amounts in the Capital Unapplied Reserve are transferred to the Capital Adjustment Account once they have been applied to expenditure. Community Infrastructure Levy The Legacy Corporation has elected to charge a Community Infrastructure Levy (CIL). The levy will be charged on new builds (chargeable developments) with appropriate planning consent. The Legacy Corporation charges for and collects the levy, which is a planning charge. The income from the levy will be used to fund infrastructure projects to support the development of the area. CIL is received without outstanding conditions; it is therefore recognised at the commencement date of the chargeable development in the Comprehensive Income and Expenditure Statement in accordance with the accounting policy for government grants and contributions set out above. CIL charges will be largely used to fund capital expenditure. However, a small proportion of the charges may be used to fund revenue expenditure. m) Financing and investment income and expenditure Financing and investment income comprises interest income on funds invested, changes in the fair values of investment properties and the expected return on pension assets. Interest income is recognised in the Comprehensive Income and Expenditure Statement as it accrues using the effective interest rate method. Financing and investment costs comprise interest expense on borrowings and finance lease liabilities and the expected cost of pension scheme defined benefit obligations. n) Corporation and chargeable gains taxation The Legacy Corporation is subject to both corporation and chargeable gains taxation and complies with the Income and Corporation Taxes Act 1988 and Taxation of Chargeable Gains Act 1992. Deferred tax is provided in full using the balance sheet liability method for all taxable temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. Deferred tax is measured using currently enacted or substantially enacted tax rates. Page 46 of 133


  • Page 47

    Deferred tax assets are recognised to the extent that the temporary difference will reverse in the foreseeable future and that it is probable that future taxable profit will be available against which the asset can be utilised. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. o) Value Added Taxation (VAT) VAT payable is included as an expense only to the extent it is not recoverable from HMRC. VAT receivable is payable to HMRC and is excluded from income. p) Revenue expenditure funded from capital under statute Expenditure incurred during the year that may be capitalised under statutory provisions but does not result in the creation of a non-current asset has been charged as expenditure in the Comprehensive Income and Expenditure Statement in the year. Where the Legacy Corporation has determined to meet the cost of this expenditure from existing capital resources, a transfer in the Movement in Reserves Statement from the General Fund Balance to the Capital Adjustment Account reverses out the amounts charged. q) Intangible assets Other intangible assets Software costs are measured at cost less accumulated depreciation and accumulated impairment losses. Amortisation is charged to the Comprehensive Income and Expenditure Statement on a straight-line basis over the estimated useful lives of intangible assets, from the date that they are available for use, unless such lives are indefinite. The estimated useful lives are three to five years. r) Property, plant and equipment Recognition Expenditure, of £10,000 and above, on the acquisition, creation or enhancement of property, plant and equipment is capitalised on an accruals basis, provided that it is probable that the future economic benefits or service potential associated with the item will flow to the Legacy Corporation and the cost of the item can be reliably measured. Expenditure that maintains but does not add to an asset’s potential to deliver future economic benefits or service potential (repairs and maintenance) is charged as an expense when it is incurred. Expenditure below £10,000 may be grouped and capitalised where practicable to do so. Measurement Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self- constructed assets includes the cost of materials and direct labour, and any other costs directly attributable to bringing the assets to a working condition for their intended use. Where there is a legal obligation to remove the asset and/or restore the site on which it is located at the end of its useful economic life, the costs of dismantling and removing the items and restoring the site on which they are located are also included in the cost of the asset. Assets are then carried in the Balance Sheet using the following measurement bases: Page 47 of 133


  • Page 48

     Assets under construction – depreciated historical cost  Non-property assets – depreciated historical cost basis as a proxy for current value. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Depreciation Depreciation is calculated on the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value. Depreciation is recognised in the Comprehensive Income and Expenditure Statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Leased assets are depreciated over the shorter of the lease term and their useful lives. Land is not depreciated. The estimated useful lives for the current period are as follows: Buildings 50 years Furniture fixtures and fittings 5 to 10 years Plant and equipment 3 to 40 years Computer equipment 3 years Motor vehicles 3 years Depreciation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate, the effect of such adjustment being prospectively recognised as a change of estimate. Disposals Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of the item, and are recognised net within other gains and losses in the Comprehensive Income and Expenditure Statement. The following policy is applied to the de-recognition of fully depreciated assets:  asset life of five years – write off after eight years if existing use cannot be determined (or sooner if confirmed no longer in use), and  asset life of three years – write off after five years if existing use cannot be determined (or sooner if confirmed no longer in use). s) Interests in companies and other entities The Legacy Corporation has material interests in companies and other entities that have the nature of subsidiaries and require it to prepare group accounts. In the Legacy Corporation’s own single-entity accounts, the interest is recorded as financial assets at cost, less any provision for losses incurred by the entity to the extent they are likely to be borne by the Legacy Corporation. Page 48 of 133


  • Page 49

    t) Investment property Investment property is property held solely either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the supply of services or for administrative purposes. Investment properties are measured initially at cost and subsequently at fair value, being the price that would be received to sell such an asset in an orderly transaction between market participants at the measurement date. As a non-financial asset, investment properties are measured at highest and best use. Properties are not depreciated but are revalued annually according to market conditions at the year- end. Gains and losses on revaluation are posted to the Financing and Investment Income and Expenditure line in the Comprehensive Income and Expenditure Statement. The same treatment is applied to gains and losses on disposal. Rentals received in relation to investment properties are credited to the Financing and Investment Income line and result in a gain for the General Fund Balance. However, revaluation and disposal gains and losses are not permitted by statutory arrangements to have an impact on the General Fund Balance. The gains and losses are therefore reversed out of the General Fund Balance in the Movement in Reserves Statement and posted to the Capital Adjustment Account and (for any sale proceeds greater than £10,000) the Capital Receipts Reserve. u) Provisions, contingent liabilities and contingent assets Provisions Provisions are recognised on the Balance Sheet when a present legal or constructive obligation exists for a future liability in respect of a past event and where the amount of the obligation can be estimated reliably. Provisions are measured at management's best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material. Contingent liabilities A contingent liability arises where an event has taken place that gives rise to a possible obligation whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Legacy Corporation. Contingent liabilities also arise in circumstances where a provision would otherwise be made but either it is not probable that an outflow of resources will be required or the amount of the obligation cannot be measured reliably. Contingent liabilities are not recognised in the Balance Sheet but disclosed in a note to the accounts. Contingent assets A contingent asset arises where an event has taken place that gives rise to a possible asset whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Legacy Corporation. Contingent assets are not recognised in the Balance Sheet but disclosed in a note to the accounts where it is probable that there will be an inflow of economic benefits or service potential. v) Foreign currencies Transactions in currencies other than sterling are recognised at the rates of exchange prevailing at the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are translated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Page 49 of 133


  • Page 50

    Exchange differences on monetary items are recognised in the Comprehensive Income and Expenditure Statement in the period in which they arise. w) Leases (the Legacy Corporation as lessee) Leased assets Leases under which the Legacy Corporation assumes substantially all the risks and rewards of ownership are classified as finance leases. On initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. After initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Leases where the Legacy Corporation does not assume the risks and rewards of ownership are classified as operating leases and the leased assets are not recognised in the Legacy Corporation's Balance Sheet. Lease payments Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated across each period for the lease term to produce a constant rate of interest on the remaining balance of the liability. Payments made under operating leases are recognised in the Comprehensive Income and Expenditure Statement on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense over the term of the lease. Determining whether an arrangement contains a lease. At inception of an arrangement, the Legacy Corporation determines whether such an arrangement is or contains a lease. A specific asset is the subject of a lease if fulfilment of the arrangement is dependent on the use of that specified asset. An arrangement conveys the right to use the asset if the arrangement conveys to the Legacy Corporation the right to control the use of the underlying asset. At inception or upon reassessment of the arrangement, the Legacy Corporation separates payments and other consideration required by any such arrangement into those for the lease and those for other elements (such as services) based on their relative fair values. If the Legacy Corporation determines for a finance lease that it is impracticable to separate the payments reliably, an asset and a liability are recognised at an amount equal to the fair value of the underlying asset. Subsequently the liability is reduced as payments are made and an imputed finance charge on the liability is recognised using the Legacy Corporation's incremental borrowing rate. x) Leases (the Legacy Corporation as lessor) Leased assets Leases under which the Legacy Corporation transfers substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is derecognised from the Legacy Corporation Balance Sheet and a finance lease receivable for an amount equal to the lower of its fair value and the present value of the minimum lease payments. The difference between the carrying amount of the lease asset derecognised and the finance lease receivable is recognised in the Comprehensive Income and Expenditure Statement. Leases where the Legacy Corporation does not assume the risks and rewards of ownership are classified as operating leases and the leased assets are retained in the Legacy Corporation's Balance Sheet. Lease payments Finance lease income is allocated to accounting periods to reflect a constant periodic rate of return on the Legacy Corporation's net investment outstanding in respect of the leases. Page 50 of 133

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