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March, 1936, as compared with the years ended 31st March, 1934 and 1935, and the cash received for these periods is shown hereunder : — ® Percentage of Interest due. Net Interest. Shortage. Receipts to £ £ £ Interest due. 1933-34 .. .. .. 1,966,127 1,562,707 403,420 79-48 1934-35 .. .. .. 1,913,611 1,711,446 202,165 89-43 8 months, Ist August, 1935, to 31st, March, 1936 .. .. 1,200,879 1,142,947 57,932 95-16 The position has shown a marked improvement during the past three years. Arrears of Instalments.—There has been an annual increase in arrears of instalments of principal and interest since 1932, which was the peak year, as is shown by the following figures taken from the report of the Superintendent to the State Advances Office for the year ended 31st March, 1935. The figures represent the increases in arrears outstanding : 1931-32, £642,184 • 1932-33, £559,210 ; 1933-34, £508,132; 1934-35, £207,671. A comparison of the position as at 31st March, 1936, is rendered somewhat difficult by reason of the capitalization of arrears in the process of adjustment of mortgages under section 39 of the Mortgage Corporation of New Zealand Act, 1934-35, and also on account of the whole of the securities of the State Advances Office not having been taken over by the Corporation. The position so far as the mortgages taken over are concerned is satisfactory, for, after allowing for the capitalization of arrears to the extent of £256,687, the amount outstanding shows a reduction of £65,340 as compared with the previous year. A comparison with the preceding four years up to 31st March, 1935, shows that whereas the average yearly increase in arrears during those years was £479,049 the period just closed shows an increase of only £191,347, without taking into account adjustments by way of capitalization. Reverted Securities.—The Corporation had some 3,904 urban and suburban securities on its hands on the 31st March, 1936, all but thirty-one vacant premises being occupied. Of these vacant premises fifteen were situated in Auckland, one in Wellington, and the remaining fifteen in the smaller towns throughout the Dominion. The rental collected from the Ist August, 1935 (the date on which the Corporation assumed control), to the 31st March, 1936, amounted to £133,146, being 96-51 per cent, of the rental payable and 86-08 per cent, of the gross instalments of principal and interest payable in respect of the relative mortgages during that period. The Accounts for Eight Months ended 31st March, 1936.— The statements of account attached hereto cover the period from Ist August, 1935 (the date from which the mortgage assets of the State Advances Office were transferred to the Corporation), to the 31st March, 1936. Many of our rural mortgagors who have been in difficulties since the depression commenced have now made some definite progress towards recovery. During the period under review prices for primary produce have shown a rising tendency, and returns for meat and wool have on the whole been satisfactory. The position in regard to urban and suburban securities where the Corporation is mortgagee in possession has improved. The result is reflected in the balance-sheet figures, and the arrears position, as already stated, is more hopeful. It is pleasing to record that the Corporation has been able to show a return of approximately 2| : per cent, to the Crown on the Contingent Liability Account. .The accounts disclose a gross revenue from all sources for the period of eight months of £1,165,261, from which must be deducted £673,383 in respect of interest on stock issued, to the Minister of Finance and on stock and debentures issued to the public, which makes the gross profit £491,878. Management expenses and other charges, including additional provision for overdue interest £57,000, as shown in the Profit and Loss Account, amount to £149,992, and the net profit is therefore £341,996. Provision has been made in the Profit and Loss Appropriation Account for income-tax £105,000, dividends to shareholders £9,000, and for an Investment Fluctuation Reserve of £10,000. The balance which remains is £217,996, and this

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