B. —14.

LOANS FOR PURCHASE OF FERTILIZER—SPECIAL FUND. 35. Under a special arrangement the Board advanced for the financial years ended on the 31st March, 1931 and 1932, £11,891 from a special fertilizer fund made available by the Government. Of this amount only £75 13s. sd. was owing at the 30th June, 1935, representing a reduction of £36 10s. sd. on the amount shown at the 30th June, 1934. So far the sum of £91 12s. sd. only has been written of! as irrecoverable, and as the loans were made on personal security only the result achieved must be regarded as very satisfactory. SCHEMES IN OTHER COUNTRIES AND INQUIRIES FROM ABROAD. 36. Numerous communications are received from overseas inquiring for details regarding the Rural Intermediate Credit system and its development. Full information was supplied during the year in response to inquiries from South Africa and Queensland. Close touch has been maintained with the development and working of ruralcredit systems in other countries with the object of adopting any alterations which experience in other countries suggests as desirable. Reports from Canada, Kenya, New South Wales, Queensland, South Africa, Tasmania, and Victoria were perused during the year. FINANCE AND ACCOUNTS. 37. Accounts to 30th June, 1935. —The accounts reveal a decrease in the gross income from £22,854 for the year ended 30th June, 1934, to £13,450. This figure, however, does not include the sum of £7,469 6s. 10d., the income earned by investments of the Rural Intermediate Credit Redemption Fund, credited direct to the Redemption Fund Account. The decrease in income is attributable to various factors, including — (a) The reduction of 1 per cent, in the Board's lending-rate from Ist September, 1934 : (b) The decrease of £14,806 to £259,274 in the investments in the course of the Board's ordinary business : (c) The fact that since 15th August, 1934, the Board has been unable to make any arrangements for the temporary investment of its surplus funds, and, as a result, large balances have been held uninvested. Although the gross income was reduced by £9,404 to £13,450, the interest profit was only £7,965 lower at £7,644. This was due to the smaller amount of the Board's funds" represented by still current issues of debentures carrying interest. 38. The expenditure, including interest paid on debentures, totalled £14,573, compared with £17,124 for the previous year. The reduction was due principally to the lower charge for interest on debentures and to a reduction in the cost of the services of the Public Trust Office. In addition to the expenditure referred to above, the sum of £1,200 has been charged to the Profit and Loss Account as an addition to the reserves for possible losses on advances. These reserves, which now stand at £7,757 6s. 7d., have been made after reviewing the position of all doubtful securities, and are considered adequate. They represent very slightly under 3 per cent, of the advances current at 30th June, 1935, £259,274, and, with the losses already written off, £504 13s. 5d., only 0-7 per cent, of the total advances (excluding fertilizer advances) made to 30th June, 1935, £1,138,240. 39. The result of the year's operations was a net loss of £2,323 7s. 4d., compared with a net profit of £5,729 13s. 4d. for the previous year. In accordance with section 39 (3) of the Rural Intermediate Credit Act, 1927, the net loss has been charged to the Rural Intermediate Credit Reserve, which was built up from the half-share of profits in previous years in terms of section 39 of the Rural Intermediate Credit Act, and which now stands at £12,375 4s. 6d. 40. The total investments, including accrued interest, as at 30th June, 1935, amounted to £453,809, a decrease of £158,730 on the previous year's figures. This total includes the investments of the Rural Intermediate Credit Redemption Fund, which at cost amount to £191,039 12s, 7d,

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