8.—13 a.

16. Reverted Securities : Rural. —Pursuant to the Board's policy of reviewing the whole of the Corporation's securities, an effort has been made to deal first with the cases where mortgagors have either abandoned their properties or, through neglect, the farms have reverted so seriously as to become non-productive. If there is a prospect of bringing the land back to a productive state, favourable terms are offered with a view to encouraging a new owner to co-operate in the rehabilitation of the security. There are, however, quite a number of these holdings in deteriorated areas where further expenditure is not warranted, and mortgages on properties of this nature will ultimately require to be substantially written down. The book value of reverted securities is shown at £316,493 12s. 4d. The sum of £41,844 13s. 4d. at debit of Realization Suspense Account represents balances owing in respect of securities realized, but which have not been transferred to Contingent Liability Account pending final investigation and adjustment. Accounts foe 1937-38. The Revenue Accounts and Balance-sheet which are submitted hereunder furnish in a concise form a statement of the result of the year's business transactions and closing balances. Comparative tables similar to those supplied in the 1937 report will, however, assist in showing the variation in the financial position during recent years. As this is the first complete year of administration of the discharged soldiers settlement loans, it is necessary to make special reference to them and their effect on Revenue Accounts. They are, of course, now under the same control as the ex State Advances loans which were transferred to the Corporation on the Ist August, 1935. 17. Interest due and received. —

Notes. —(a) The figures for the years 1933-34 and 1934-35 relate to State Advances Office loans only, the Corporation having been established on Ist August, 1935. (b) The year 1936-37 was the first complete financial year of the Corporation's management, and during that period the reduction in the interest-rates was effective for a proportion of the accounts. (c) In 1937-38 further accounts were adjusted to the lower rate of interest, and the interest on discharged soldiers settlement loans (representing an investment of approximately £11,000,000) was included for a full year for the first time. (d) Figures under " Interest received " include both current interest and payments on account of arrears. « Although very fair progress has been made in bringing the collection of interest back to a normal basis, some reluctance has been displayed by applicants for relief under the Mortgagors and Lessees Rehabilitation Act to making payment before the adjustment of their accounts had been considered. Before the end of the current year it is hoped that this objection will have been entirely removed. 18. Revenue Accounts. —The gross revenue from all sources for 1937-38 is shown as £2,433,100, as compared with £1,983,513 for the previous year, the increase being due mainly to the inclusion of interest on the discharged soldiers settlement loans for the full period. Interest charges (in which there is also an increase, arising from the issue of additional stock to the Government in respect of the further assets taken over) have increased from £1,236,282 to £1,532,802. The gross profit for the past year was £900,298, as compared with last year's figure of £747,231. 19. Management Expenses.—The transfer of the discharged soldiers settlement loans involved an increase in the Corporation's clerical and field staff, and it became necessary to establish additional district offices, with the resultant increase in the management expenses of the Corporation. The total expenditure under this heading for the past year amounting to £212,185, in comparison with £129,882 for 1937.

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Net Interest Interest t Percentage ot due. received. Shortage. Receipts to Net Interest due. £ £ £ Per Cent. 1933-34 .. .. .. .. 1,966,127 1,562,707 403,420 79-48 1934-35 .. .. .. .. 1,913,611 1,711,446 202,165 89-43 1936-37 .. .. .. .. 1,733,047 1,665,559 67,4-88 96-11 1937-38 .. .. .. •• 2,404,385 2,348,385 56,000 96-67