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Admissions. —During the past year 25 children have been admitted to the school. Of the 67 children in residence on the 31st March, 1912, 33 children hail from the North Island and 34 from the South Island. Discharges. —During the year 4 children have been discharged from the school. The reasons for the discharges were as follows :— (1.) A hemiplegic deaf-mute was transferred to the Nelson Home for Unimprovable Cases, as, after a considerable period, it was found that he was unimprovable. (2.) This boy, who had been admitted temporarily for observation, was allowed to return home. (3.) This case was over the compulsory age when the Education Amendment Act of 1910 came into force. As the Education Department had no legal jurisdiction over him, he was allowed to return to his parents. (4.) This case was of a weak-minded lad, just over twenty-one years of age, who had been sentenced for breaking into and entering, but who had been allowed out on probation on certain conditions. These conditions were not fulfilled, and eventually he came to me to be under observation. He remained at the school till the end of his probationary period, and had improved considerably, but, as we had no further hold over him, he was free to take his discharge. The short term of training he had with us was undoubtedly beneficial to him, and I am sorry we had no legal power to keep him longer, as he is essentially one of these weak-willed individuals who could be urged on by the stronger will of some unscrupulous person to commit some anti-social act, so that, in all probability, he will again be heard of in the prison records. Deaths. —There has been one death during the year : A B died on the 4th December, 1911—sudden heart-failure. This is the first child we have lost during the four years the school has been in existence. It is interesting to point out at this stage of our history that the death-rate among the children has been remarkably low. Taking the average number of children resident during the past four years, the average death-rate works out at the remarkably low figure of 065 per 100, or 6-5 per 1,000. Mentality. —The admissions classified according to mentality show —High-grade cases, 6 ; middlegrade cases, 11 ; low-grade cases, 8. Of the admissions, one boy is an epileptic. There are now four epileptic boys in residence. General Health. The general health of the children during the year has been good. In the early spring we had two very serious cases of pneumonia among the boys and one amongst the female staff. All three cases, thanks to the careful treatment received, fortunately recovered. We have again been fortunate, as far as infectious diseases are concerned. We had one case of cutaneous erysipelas, which was promptly isolated, and fortunately did not spread. During the year we have had three cases of tubercular trouble among the Mongol type of children. All, however, have done well, and only one of these cases is at present at home for treatment. In the other two cases there is at present no active mischief. During the very cold portions of the year the Mongol section of our children suffer severely from chilblains. These children generally suffer from abnormal heartaction, with enfeebled circulation, the cyanosed condition of their extremeties being very marked during the cold winter months. Great care is taken, however, before the winter sets in to ensure that these children are as physically fit as their abnormal physical condition will allow, so that they may the better withstand the cold of the winter months. In connection with the various illnesses to which our children are subject, I would call your attention to the faithful work performed by our nurses, who are untiring in their care of the sick children. Regarding the question of the health of our children, I would again point out to you, in view of our increasing numbers and the extensions contemplated in the immediate future, the urgent need for providing hospital accommodation at once. A small, inexpensive hospital for infectious cases, and a general hospital or infirmary where the many ordinary ailments common to our children may be satisfactorily dealt with, and where tie children who are recovering from an illness can be carefully tended during convalescence, are necessary. The whole of our dormitory accommodation is at present occupied, so that, should any serious outbreak of illness occur, our resources for providing proper attention to the sick would be totally inadequate. I submit this question to you for your consideration as one of great urgency. Scholastic and Industrial Training. The school-work, as a whole, has been carried on along much the same general lines as in other years. The smaller children, who now comprise about one-half of our school population, have made good progress during the year as far as both scholastic and manual instruction are concerned. With the low grades, who are incapable of any book-learning, the entire day is given to manual training ; and, recognizing the truth of the maxim of Froebel that the " working hand makes strong the working brain," some branch of manual instruction is given throughout the school. The younger division of our school is now divided into four classes of the following grades : (1.) A kindergarten for low-grade children ; (2) a kindergarten for middle-grade children ; (3) a middle-grade class of boys promoted from the kindergarten ; (4) a high-grade class who are capable of receiving benefit from scholastic instruction. It is exceedingly difficult work with the three lower sections of this part of our school. The development through the hand with the lower grade, and the awakening of the senses through the