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National Security. The Service has maintained a close connection with the Organization for National Security and imposed restrictions on material intended for broadcast and maintained a continuous watch at the transmitter as required by the regulations. The broadcasting of news has been restricted to Daventry which was relayed at quite frequent intervals during the day and night. The relaying of Daventry news frequently required adjustments in our commercial programmes, and in these the Service has always obtained the ready co-operation of the advertisers whose programmes were affected Much valued publicity assistance was given to the general war effort and more especially to the recruiting campaign. In the latter connection very effective broadcasts were made from military camps An aspect which has been kept steadily in mind was the avoidance of any advertising matter which was likely to create alarm or exploit public sentiment during the existing war emergency This involved a very exacting censorship and close contact with the Director of Publicity. Knowing the power of Commercial radio in reaching the homes of the people, every opportunity was taken to use the Service in the direction of stabilizing public feeling and providing a much appreciated diversion in the present stress of circumstances. The Service proved its readiness to meet any emergency, and in this connection its services were enlisted m the broadcasting of special Ministerial statements and urgent Government announcements Ihe object here was to reach the people in the quickest possible way, and no expense was spared in the giving of station time, the provision of staff services, and the use of telephone-lines and other facilities for the prosecution of this task. In the programmes of entertainment any blatant use of war recordings was avoided while at the same time due regard was given to the stimulating of the nation's war effort and its spirit of patriotism Twenty-throe members of the staff left for service with the New Zealand Expeditionary Force' the Air Force, or homo camps. Technical. During the year all technical equipment has functioned most efficiently. The time lost on the air which could be attributed to failure of the technical equipment was surprisingly low ; IZB lost only 5 minutes out of 7,009 hours during which the station was actually on the air ; similarly 2Z13 lost only 35 minutes; 3ZB, 105 minutes; and 4ZB, 29 minutes. The frequency of 4ZB was changed to 1,280 kilocycles to enable the station to free itself of interference by Australian stations A considerable improvement was effected in a number of districts south and west of Dunedin' A central test-room and workshop were installed at Head Office in Wellington, where it is intended all equipment for stations should be designed and checked. Several emergency transmitters were designed and a commencement made with their construction. The work involved in installing new recording units at Head Office was completed. Plans for the new IZB studios were drawn up and technical details decided in the light of previous experience with other studios. New Station at Auckland. During the current year work was commenced on the erection of a Government building at Durham Street, Auckland, part of which will be used for new studios and offices for Station IZB. It is anticipated that the building will bo ready for occupancy by IZB during the next financial year. Advertising Revenue. The progress made by the Service in its commercial aspect is indicated in the following table, which gives the comparison between the advertising revenue of the previous year and that gained during the year under review. In making any comparison between the stations it should be noted that rates charged for advertising are progressively lower reading from IZB to 4ZB, as the rates are based on the difference in population.

Financial Statement. Revenue Account for the year and Balance-sheet as at 31st March, 1940, are submitted with this report. A net profit for the year of £22,056 was earned, which permits of the writing-off' of the remainder of the outstanding fire loss at Station 3ZB and removes from the Balance-sheet the accumulated adverse balance of some £2,710 shown at 31st March, 1939. It is anticipated that taxation legislation this year will impose income-tax on the profits of this Service for the first time, and a reserve of £13,400 has been sot aside to meet the charge. The net result is to show a favourable balance to date of £417.

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I Year ended Year ended ■—- 31st March, 31 at March, 1939. 1940. £ £ Station 1ZB .. .. .. .. .. 51,816 52,767 Station 2ZB .. .. .. .. .. 45,291 44,141 Station 3ZB .. .. .. .. 36,287 36,809 Station 4Z.B .. .. .. .. .. 25,287 27,739 Station 2ZA .. .. .. .. .. 2,624 7,229 Station 5ZB .. .. .. .. _ _ 2 863 Total revenue .. .. .. .. 161,305 171,548