Exhibit
  10.19

**HOLMES
  FINANCING (NO 3) PLC**

REPORT
  AND ACCOUNTS

FOR THE
  YEAR ENDED 31
  DECEMBER 2004

Registered
  in England and Wales
  No. 4154576

---





HOLMES FINANCING (NO
  3) PLCReport of the Directors

The Directors submit their
  report together with the accounts for the year ended 31 December 2004.

1. Principal
  activity and review of the year

The principal activity of
  the Company is to issue asset backed notes and enter into all financial arrangements
  in that connection. No future changes in activity are envisaged.

2. Results
  and dividends

The profit for the year on
  ordinary activities after tax amounted to £nil (2003 - £nil).

The Directors do not recommend
  the payment of a dividend (2003 - £nil).

The retained profit of £nil
  (2003 - £nil) has been transferred to reserves.

3. Financial
  Instruments

The Companys financial
  instruments, other than derivatives, comprise loans to group undertakings, borrowings,
  cash and liquid resources, and various items, such as debtors and creditors
  that arise directly from its operations. The main purpose of these financial
  instruments is to raise finance for the Companys operations.

The Company also enters into
  derivatives transactions (principally cross currency swaps). The purpose of
  such transactions is to manage the currency risks arising from the Companys
  operations and its sources of finance.

It is, and has been throughout
  the year under review, the Companys policy that no trading in financial
  instruments shall be undertaken.

The main risk arising from
  the Companys financial instruments is currency risk. The Company has debt
  securities in issue denominated in US Dollars and Euros. The Board reviews and
  agrees policies for managing this risk. The Companys policy is to eliminate
  all exposures arising from movements in exchange rates by the use of cross currency
  swaps to hedge payments of interest and principal on the securities.

All other assets, liabilities
  and transactions are denominated in Sterling.

4. Directors
  and their interests

The Directors who served throughout
  the year, except as noted,
  were:
  Mr D M Green
  Mr M McDermott
  SPV Management Limited
  At the year-end and the previous year-end, Holmes Holdings Limited and M. McDermott
  jointly held one share in the Company.

---





SPV Management Ltd and M.
  McDermott held one share in the holding company, Holmes Holdings Limited, at
  the year-end. The other share in Holmes Holdings Limited was held by SPV Management
  Limited. M. McDermott is also a Director of SPV Management Limited.

None of the other Directors
  had a beneficial interest in the shares of the Company, or of the holding company,
  Holmes Holdings Limited and its subsidiaries, at the year-end.

5. Directors'
  responsibility in respect of the preparation of accounts

The Directors are required
  by UK company law to prepare financial statements for each financial year that
  give a true and fair view of the state of affairs of the Company as at the end
  of the financial year and the profit or loss for that period.

The Directors confirm that
  suitable accounting policies have been used and applied consistently and that
  reasonable and prudent judgements and estimates have been made in the preparation
  of the financial statements for the year ended 31 December 2004. The Directors
  also confirm that applicable accounting standards have been followed and that
  the statements have been prepared on the going concern basis.

The Directors are responsible
  for keeping proper accounting records which disclose with reasonable accuracy
  at any time the financial position of the Company and to enable them to ensure
  that the financial statements comply with the Companies Act 1985. They are also
  responsible for the Companys system of internal control and for safeguarding
  the assets of the Company and hence for taking reasonable steps for the prevention
  and detection of fraud and other irregularities.

6. Going
  concern

The Directors confirm that
  they are satisfied that Holmes Financing (No.3) plc has adequate resources to
  continue in business for the foreseeable future. For this reason, they continue
  to adopt a going concern basis in preparing the financial statements.

7. Auditors

At the forthcoming Annual
  General Meeting of the Company it will be proposed that Deloitte & Touche
  LLP be re-appointed as auditors of the Company.



By Order of the Board



/s/ Karen Carson
  For and on behalf of
  Abbey National Secretariat Services Limited
  Company Secretary
  17 June 2005

---





Registered Office Address:

Abbey National House 
  2 Triton Square 
  Regents Place 
  London 
  NW1 3AN

---



INDEPENDENT AUDITORS
  REPORT TO THE MEMBERS OF HOLMES FINANCING (NO 3) PLC

We have audited the financial
  statements of Holmes Financing (No 3) plc for the year ended 31 December 2004
  which comprise the profit and loss account, the balance sheet and the related
  notes 1 to 17. These financial statements have been prepared under the accounting
  policies set out therein.

Respective responsibilities
  of Directors and auditors

As described in the statement
  of Directors responsibilities, the Companys Directors are responsible
  for the preparation of the financial statements in accordance with applicable
  United Kingdom law and accounting standards. Our responsibility is to audit
  the financial statements in accordance with relevant United Kingdom legal and
  regulatory requirements and auditing standards, and the Listing Rules of the
  Financial Services Authority.

We report to you our opinion
  as to whether the financial statements give a true and fair view and are properly
  prepared in accordance with the Companies Act 1985. We also report if, in our
  opinion, the Directors report is not consistent with the financial statements,
  if the Company has not kept proper accounting records, if we have not received
  all the information and explanations we require for our audit, or if information
  specified by law regarding Directors remuneration and transactions with
  the Company is not disclosed.

We read the Directors
  report for the above year and consider the implications for our report if we
  become aware of any apparent misstatements.

Basis of audit opinion

We conducted our audit in
  accordance with United Kingdom auditing standards issued by the Auditing Practices
  Board. An audit includes examination, on a test basis, of evidence relevant
  to the amounts and disclosures in the financial statements. It also includes
  an assessment of the significant estimates and judgements made by the Directors
  in the preparation of the financial statements and of whether the accounting
  policies are appropriate to the Companys circumstances, consistently applied
  and adequately disclosed.

We planned and performed our
  audit so as to obtain all the information and explanations which we considered
  necessary in order to provide us with sufficient evidence to give reasonable
  assurance that the financial statements are free from material misstatement,
  whether caused by fraud or other irregularity or error. In forming our opinion,
  we also evaluated the overall adequacy of the presentation of information in
  the financial statements.

Opinion

In our opinion the financial
  statements give a true and fair view of the state of the Companys affairs
  as at31 December
  2004 and of its result for the year then ended and have been properly prepared
  in accordance with the Companies Act 1985.

Date: 17 June 2005

/s/ Deloitte & Touche
  LLP
  Deloitte & Touche LLP 
  Chartered Accountants and Registered Auditors 
  London

---





HOLMES FINANCING (NO
  3) PLC

Profit and loss accountFor the year ended 31 December 2004

|                                                                             |      |  |         |   |         |  
|---------------------------------------------------------------------------- | ---- |  | ------- | - | ------- | -
|                                                                             | Note |  | 2004    |   | 2003    |  
|                                                                             |      |  | £'000   |   | £'000   |  
|                                                                             |      |  |         |   |         |  
|Interest receivable                                                          | 2    |  | 64,697  |   | 56,193  |  
|Interest payable                                                             | 3    |  | (64,697 | ) | (56,193 | )
|                                                                             |      |  |         |   |         |  
|Net interest income                                                          |      |  | –       |   | –       |  
|                                                                             |      |  |         |   |         |  
|OPERATING PROFIT
      ON ORDINARY ACTIVITIESBEFORE TAXATION                 | 4    |  | –       |   | –       |  
|Tax on profit on ordinary activities                                         | 5    |  | –       |   | –       |  
|                                                                             |      |  |         |   |         |  
|PROFIT ON ORDINARY
      ACTIVITIES AFTER TAXATION AND RETAINED FOR THE YEAR |      |  | –       |   | –       |  
|Profit and loss account brought forward                                      |      |  | 1       |   | 1       |  
|                                                                             |      |  |         |   |         |  
|Profit and loss account carried forward                                      |      |  | 1       |   | 1       |  
|                                                                             |      |  |         |   |         |  

There are no recognised gains
  or losses in either the current or previous financial years other than the profit
  for the financial year and therefore no statement of total recognised gains
  and losses is required.

There is no difference between
  the profit on ordinary activities before taxation and the retained profit for
  the year stated above and their historical cost equivalents.

All transactions are derived
  from continuing operations.

---





HOLMES FINANCING (NO 3) PLC

Balance sheet As at 31 December 2004

|                                                               |      |  |           |  |           | 
|-------------------------------------------------------------- | ---- |  | --------- |  | --------- | 
|                                                               | Note |  | 2004      |  | 2003      | 
|                                                               |      |  | £'000     |  | £'000     | 
|                                                               |      |  |           |  |           | 
|FIXED ASSETS                                                   |      |  |           |  |           | 
|Loans to Group Undertaking                                     | 6    |  | 1,356,500 |  | 1,356,500 | 
|                                                               |      |  |           |  |           | 
|CURRENT ASSETS                                                 |      |  |           |  |           | 
|Debtors                                                        | 7    |  | 14,986    |  | 11,520    | 
|Cash at bank and in hand                                       | 8    |  | 7         |  | 7         | 
|                                                               |      |  |           |  |           | 
|                                                               |      |  | 14,993    |  | 11,527    | 
|CREDITORS - amounts
      falling due within one year          | 9    |  | 14,942    |  | 11,476    | 
|                                                               |      |  |           |  |           | 
|NET CURRENT ASSETS                                             |      |  | 51        |  | 51        | 
|                                                               |      |  |           |  |           | 
|TOTAL ASSETS LESS
      CURRENT LIABILITIES                    |      |  | 1,356,551 |  | 1,356,551 | 
|                                                               |      |  |           |  |           | 
|CREDITORS - amounts
      falling due after more than one year | 10   |  | 1,356,500 |  | 1,356,500 | 
|                                                               |      |  |           |  |           | 
|NET ASSETS                                                     |      |  | 51        |  | 51        | 
|                                                               |      |  |           |  |           | 
|CAPITAL AND RESERVES                                           |      |  |           |  |           | 
|Called up share capital                                        | 13   |  | 50        |  | 50        | 
|Profit and loss account                                        |      |  | 1         |  | 1         | 
|                                                               |      |  |           |  |           | 
|EQUITY SHAREHOLDERS'
      FUNDS                               | 14   |  | 51        |  | 51        | 
|                                                               |      |  |           |  |           | 

The financial statements
on pages 4 to 11 were approved by the Board of Directors on 17 June 2005

Signed on behalf of the Board
of Directors



M McDermott
  Director

---





HOLMES FINANCING (NO 3) PLC

Notes to the accounts
  for the year ended 31 December 2004

1. ACCOUNTING POLICIES

Basis of accounting

The accounts have been prepared
  under the historical cost convention and in accordance with applicable United
  Kingdom law and accounting standards. The particular accounting policies adopted
  are described below:

Presentation of the profit
  and loss account

Due to the nature of the business
  the Directors are of the opinion that it is more appropriate to use net interest
  income rather than turnover in presenting the profit and loss account.

Interest Receivable

Interest receivable is recognised
  on an accrual basis.

Fixed Assets

Loans to group undertakings
  held as fixed assets are stated at cost less provision for any impairment.

Derivatives

Transactions are undertaken
  in derivative financial instruments, derivatives, which include
  cross currency swaps. Derivatives are entered into for the purpose of eliminating
  risk from potential movements in foreign exchange rates inherent in the Companys
  non-trading assets and liabilities. Non-trading assets and liabilities are those
  intended for use on a continuing basis in the activities of the Company. A derivative
  is designated as non-trading where there is an offset between the effects of
  potential movements in market rates of the derivative and the designated asset
  or liability being hedged. Non-trading derivatives are reviewed regularly for
  their effectiveness as hedges. Non-trading derivatives are accounted for on
  an accruals basis, consistent with the asset or liability being hedged. Income
  and expense on non-trading derivatives are recognised as they accrue over the
  life of the instruments as an adjustment to interest receivable or payable.

Interest receivable and
  payable on foreign currency

Interest receivable and
  payable arising in foreign currencies is translated at the average rates of
  exchange over the accounting year unless it is hedged in which case the relevant
  hedge rate is applied. Assets and liabilities denominated in foreign currencies
  are translated into sterling at the contracted hedge rates.

Debt securities

Debt Securities in Issue
  are stated at net proceeds.

Cash flow statement

The Company is a wholly owned
  subsidiary of Holmes Holdings Limited, a company registered in England and Wales.
  Accordingly, the Company has taken advantage of the exemption in paragraph 5(a)
  of Financial Reporting Standard 1 (Revised), Cash Flow Statements and not published
  its own cash flow statement.

---





HOLMES FINANCING (NO
  3) PLC

NOTES TO THE ACCOUNTS
  FOR THE YEAR ENDED 31 DECEMBER 2004

2. Interest receivable

|                                                      |        |  |        | 
|----------------------------------------------------- | ------ |  | ------ | 
|                                                      | 2004   |  | 2003   | 
|                                                      | £'000  |  | £'000  | 
|                                                      |        |  |        | 
|Interest receivable from group companies (see note 6) | 64,697 |  | 56,193 | 
|                                                      |        |  |        | 
|                                                      | 64,697 |  | 56,193 | 
|                                                      |        |  |        | 

3. Interest
payable

|                                                                |        |  |        | 
|--------------------------------------------------------------- | ------ |  | ------ | 
|                                                                | 2004   |  | 2003   | 
|                                                                | £'000  |  | £'000  | 
|                                                                |        |  |        | 
|Interest payable on debt securities (see note 11).              | 64,697 |  | 56,193 | 
|                                                                |        |  |        | 
|                                                                | 64,697 |  | 56,193 | 
|                                                                |        |  |        | 
|All of the income
    is derived from one geographical segment. |        |  |        | 

4. Profit
      on ordinary activities before taxation

The Company has no employees
(2003: none) other than its Directors.

No emoluments were paid
to the Directors by the Company during the current year (2003: £ nil).

All administrative expenses,
    including auditors' remuneration, in the current and prior year were paid
    for, and borne, by Holmes Funding Limited, a fellow subsidiary undertaking.
Because of this, no expenses are shown in the Company.

5. Tax on profit
  on ordinary activities

|                                                                                     |       |  |       | 
|------------------------------------------------------------------------------------ | ----- |  | ----- | 
|                                                                                     | 2004  |  | 2003  | 
|                                                                                     | £'000 |  | £'000 | 
|                                                                                     |       |  |       | 
|UK Corporation Tax for the year at 0% (2003:0%)                                      |      |  |      | 
|                                                                                     |       |  |       | 
|                                                                                     |      |  |      | 
|                                                                                     |       |  |       | 
|The Company qualifies
    for the starting companies rate of corporation tax of 0%. |       |  |       | 

6. Loans
  to Group Undertaking

|                                                                                                                                            |           |  |           | 
|------------------------------------------------------------------------------------------------------------------------------------------- | --------- |  | --------- | 
|                                                                                                                                            | 2004      |  | 2003      | 
|                                                                                                                                            | £'000     |  | £'000     | 
|                                                                                                                                            |           |  |           | 
|Repayable:                                                                                                                                  |           |  |           | 
|More than two years but not more than five years                                                                                            | 750,000   |  | 750,000   | 
|More than five years                                                                                                                        | 606,500   |  | 606,500   | 
|                                                                                                                                            |           |  |           | 
|                                                                                                                                            | 1,356,500 |  | 1,356,500 | 
|                                                                                                                                            |           |  |           | 
|The loans
      are all denominated in sterling and are at variable rates of interest,
    based on LIBOR for	three-month sterling deposits |          
|                                                                                                                                            |          

---







7. Debtors

|                                              |        |  |        | 
|--------------------------------------------- | ------ |  | ------ | 
|                                              | 2004   |  | 2003   | 
|                                              | £'000  |  | £'000  | 
|                                              |        |  |        | 
|Amounts due from group undertaking            | 7      |  | 7      | 
|Called up share capital not paid              |        |  |        | 
| due
    from parent undertaking             | 37     |  | 37     | 
|Accrued interest receivable on loans to group |        |  |        | 
|undertaking                                   | 14,942 |  | 11,476 | 
|                                              |        |  |        | 
|                                              | 14,986 |  | 11,520 | 
|                                              |        |  |        | 

8. Cash at
  Bank and in HandThe Company holds deposits at banks, which pay interest based on
  LIBOR.

9. Creditors : amounts falling due within one year

|                         |        |  |        | 
|------------------------ | ------ |  | ------ | 
|                         | 2004   |  | 2003   | 
|                         | £'000  |  | £'000  | 
|                         |        |  |        | 
|Accrued interest payable | 14,942 |  | 11,476 | 
|                         |        |  |        | 
|                         | 14,942 |  | 11,476 | 
|                         |        |  |        | 

10. Creditors : amounts
  falling due after more than one year

|                                    |           |  |           | 
|----------------------------------- | --------- |  | --------- | 
|                                    | 2004      |  | 2003      | 
|                                    | £'000     |  | £'000     | 
|                                    |           |  |           | 
|Debts securities in issue (note 11) | 1,356,500 |  | 1,356,500 | 
|                                    |           |  |           | 

11. Debt Securities in
  Issue

|                                                           |           |  |           | 
|---------------------------------------------------------- | --------- |  | --------- | 
|                                                           | 2004      |  | 2003      | 
|                                                           | £'000     |  | £'000     | 
|                                                           |           |  |           | 
|Series 2 Class A Floating Rate Notes 2007                  | 750,000   |  | 750,000   | 
|Series 2 Class B Floating Rate Notes 2040                  | 23,000    |  | 23,000    | 
|Series 2 Class C Floating Rate Notes 2040                  | 37,500    |  | 37,500    | 
|Series 3 Class A Floating Rate Notes 2040                  | 500,000   |  | 500,000   | 
|Series 3 Class B Floating Rate Notes 2040                  | 15,000    |  | 15,000    | 
|Series 3 Class C Floating Rate Notes 2040                  | 31,000    |  | 31,000    | 
|                                                           |           |  |           | 
|                                                           | 1,356,500 |  | 1,356,500 | 
|                                                           |           |  |           | 
|The notes are denominated
    in the following currencies: |           |  |           | 
|US Dollars                                                 | 810,500   |  | 810,500   | 
|Euro                                                       | 546,000   |  | 546,000   | 
|                                                           |           |  |           | 
|                                                           | 1,356,500 |  | 1,356,500 | 
|                                                           |           |  |           | 
|                                                           |           |  |           | 

---





Foreign currency notes are
  converted at the rate of exchange in the applicable hedging currency swap.

All the Class A Notes (irrespective
  of series) will rankpari
  passuand rateably without any preference or priority
  except, until enforcement of the security for the Notes, as to payments of principal
  in respect of which the Class A1 Notes will rank in priority to the Class A2
  Notes and the Class A3 Notes, and the Class A2 Notes will rank in priority to
  the Class A3 Notes.

Payments in respect of the
  Class B and C Notes will only be made if, and to the extent that, there are
  sufficient funds after paying or providing for certain liabilities, including
  liabilities in respect of the Class A Notes. The Class B Notes rank after the
  Class A Notes in point of security but before the Class C Notes.

Interest is payable on the
  notes at variable rates based on the three-month US Dollar LIBOR and three-month
  EURIBOR.

The Company's obligations
  to noteholders, and to other secured creditors, are secured under a deed of
  charge that grants security over all of its assets in favour of the security
  trustee. The principal assets of the Company are loans made to Holmes Funding
  Limited, a group Company, whose obligations in respect of these loans, are secured
  under a deed of charge which grants security over all of its assets, primarily
  comprising shares in a portfolio of residential mortgage loans, in favour of
  the security trustee. The security trustee holds this security for the benefit
  of all secured creditors of Holmes Funding Limited, including the Company.

The estimated fair values
  of the notes, based on the mid-market price on 31 December, are as follows:

|                                          |           |  |           | 
|----------------------------------------- | --------- |  | --------- | 
|                                          | 2004      |  | 2003      | 
|                                          | £'000     |  | £'000     | 
|                                          |           |  |           | 
|Series 2 Class A Floating Rate Notes 2007 | 749,908   |  | 750,156   | 
|Series 2 Class B Floating Rate Notes 2040 | 22,997    |  | 23,000    | 
|Series 2 Class C Floating Rate Notes 2040 | 37,495    |  | 37,582    | 
|Series 3 Class A Floating Rate Notes 2040 | 500,006   |  | 500,750   | 
|Series 3 Class B Floating Rate Notes 2040 | 15,000    |  | 14,981    | 
|Series 3 Class C Floating Rate Notes 2040 | 31,000    |  | 31,115    | 
|                                          |           |  |           | 
|                                          | 1,356,406 |  | 1,357,584 | 
|                                          |           |  |           | 

12. Financial Instruments

The Companys policies
  as regards derivatives and financial instruments are set out in the Report of
  the Directors on page 1 and the accounting policies on page 6. The Company does
  not trade in financial instruments. The following disclosures are made in respect
  of financial instruments. Short-term debtors and creditors are included in all
  of the following disclosures.

---





12 (a) Maturity profile
  of financial liabilities

|                                                                  |                                      |  |                         |  |                         | 
|----------------------------------------------------------------- | ------------------------------------ |  | ----------------------- |  | ----------------------- | 
|                                                                  | Debt
      securities
      in issue |  | Other
      Liabilities |  | Total
      Liabilities | 
|                                                                  | £'000                                |  | £'000                   |  | £'000                   | 
|                                                                  |                                      |  |                         |  |                         | 
|2004                                                              |                                      |  |                         |  |                         | 
|Within one year or less or on demand                              |                                     |  | 14,942                  |  | 14,942                  | 
|More than one year
    but not more than two years                |                                     |  |                        |  |                        | 
|More than two years
       but not more than five years           | 750,000                              |  |                        |  | 750,000                 | 
|More than five years                                              | 606,500                              |  |                        |  | 606,500                 | 
|                                                                  |                                      |  |                         |  |                         | 
|                                                                  | 1,356,500                            |  | 14,942                  |  | 1,371,442               | 
|                                                                  |                                      |  |                         |  |                         | 
|                                                                  |                                      |  |                         |  |                         | 
|2003                                                              |                                      |  |                         |  |                         | 
|Within one year or less or on demand                              |                                     |  | 11,476                  |  | 11,476                  | 
|More than one year
    but not more than two years                |                                     |  |                        |  |                        | 
|More than two years
       but not more than five years           | 750,000                              |  |                        |  | 750,000                 | 
|More than five years                                              | 606,500                              |  |                        |  | 606,500                 | 
|                                                                  |                                      |  |                         |  |                         | 
|                                                                  | 1,356,500                            |  | 11,476                  |  | 1,367,976               | 
|                                                                  |                                      |  |                         |  |                         | 
|There are no material
    undrawn committed borrowing facilities. |                                      |  |                         |  |                         | 

12 (b) Interest
rate profile of financial assets and liabilities

After taking into account
  the cross currency swaps entered into by the Company, the interest rate profile
  of the Companys financial assets and liabilities was:

|                                                        |           |  |                     |  |                                    |  |                                                                 | 
|------------------------------------------------------- | --------- |  | ------------------- |  | ---------------------------------- |  | --------------------------------------------------------------- | 
|                                                        | Total     |  | Floating
      rate |  | Non-
      interest 
      bearing |  | Weighted
      average
      years
      until
      maturity * | 
|                                                        | £'000     |  | £'000               |  | £'000                              |  | Years                                                           | 
|                                                        |           |  |                     |  |                                    |  |                                                                 | 
|2004                                                    |           |  |                     |  |                                    |  |                                                                 | 
|Assets:                                                 |           |  |                     |  |                                    |  |                                                                 | 
|Sterling                                                | 1,371,493 |  | 1,356,507           |  | 14,986                             |  | 0.1                                                             | 
|                                                        |           |  |                     |  |                                    |  |                                                                 | 
|Liabilities:                                            |           |  |                     |  |                                    |  |                                                                 | 
|Sterling                                                | 1,371,442 |  | 1,356,500           |  | 14,942                             |  | 0.1                                                             | 
|                                                        |           |  |                     |  |                                    |  |                                                                 | 
|                                                        |           |  |                     |  |                                    |  |                                                                 | 
|2003                                                    |           |  |                     |  |                                    |  |                                                                 | 
|Assets:                                                 |           |  |                     |  |                                    |  |                                                                 | 
|Sterling                                                | 1,368,027 |  | 1,356,507           |  | 11,520                             |  | 0.1                                                             | 
|                                                        |           |  |                     |  |                                    |  |                                                                 | 
|Liabilities:                                            |           |  |                     |  |                                    |  |                                                                 | 
|Sterling                                                | 1,367,976 |  | 1,356,500           |  | 11,476                             |  | 0.1                                                             | 
|                                                        |           |  |                     |  |                                    |  |                                                                 | 
|* for non-interest
    bearing assets/liabilities only. |           |  |                     |  |                                    |  |                                                                 | 

Benchmark rates for determining
  interest payments for the floating rate assets and liabilities are given in
  the note to the accounts relevant to the financial instrument type.

---





12 (c) Fair values
  of financial assets and liabilities

The fair value of
      debt securities in issue is disclosed in note 11 to the accounts.

Fair value disclosures
  are not provided for loans to group undertakings, as there is no liquid and
  active market for such instruments.

The estimated fair values
  of other assets and liabilities on the balance sheet are not materially different
  from their carrying amounts.

The estimated fair value of
  the cross currency swaps entered into by the Company as at 31 December 2004
  was a liability of £151,134,494 (2003 : a liability of £99,865,589).

The cross currency swaps mature
  between January 2007 and July 2040.

The fair value of the instruments will largely be recognised after the end of
  the next financial year.

12 (d) Currency
  profile

Taking into account the
  effect of derivative instruments, the Company did not have a material financial
  exposure to foreign exchange gains or losses on monetary assets and monetary
  liabilities denominated in foreign currencies at 31 December 2004 or 31 December
  2003.

13. Share capital

|                                       |       |  |       | 
|-------------------------------------- | ----- |  | ----- | 
|                                       | 2004  |  | 2003  | 
|                                       | £'000 |  | £'000 | 
|                                       |       |  |       | 
|Authorised:                            |       |  |       | 
|100,000
    Ordinary shares of £1 each | 100   |  | 100   | 
|                                       |       |  |       | 
|Allotted
      and called up:          |       |  |       | 
|50,000 Ordinary
    shares of £1 each  | 50    |  | 50    | 
|                                       |       |  |       | 

49,998 ordinary shares are
  partly paid to 25 pence. 2 subscriber shares are fully paid.

14. Reconciliation
  of movements in shareholders' funds

|                                        |       |  |       | 
|--------------------------------------- | ----- |  | ----- | 
|                                        | 2004  |  | 2003  | 
|                                        | £'000 |  | £'000 | 
|                                        |       |  |       | 
|Opening and closing shareholders' funds | 51    |  | 51    | 
|                                        |       |  |       | 

15. Capital Commitments
  and Contingent Liabilities

There were no outstanding
  capital commitments or contingent liabilities at 31 December2004 and 2003.

---





16. Related party disclosures

The Company has taken advantage of the exemption covered by paragraph 3 (c) of FRS8 'Related Party Disclosures' not to disclose transactions with entities that are part of the Holmes Group.

The group remunerates SPV
  Management Limited for administration services provided to Holmes Financing
  (No. 3) plc. The total amount paid relating to the Company in the period ended
  31 December 2004, by the group, was £14,394 (2003: £15,000).

17. Parent undertaking
  and controlling Party

The immediate parent of the
  Company is Holmes Holdings Limited, a Company incorporated in Great Britain
  and registered in England and Wales, which prepares the only accounts into which
  the Company is consolidated.

SPV Management Limited, a
  Company incorporated in Great Britain and registered in England and Wales, holds
  all of the beneficial interest in the issued shares of Holmes Holdings Limited
  on a discretionary trust for persons employed as nurses in the United Kingdom
  and for charitable purposes.

The administration, operations,
  accounting and financial reporting functions of the Company are performed by
  Abbey National plc, which is incorporated in Great Britain.

Copies of all sets of group
  accounts, which include the results of the Company, are available from Abbey
  Secretariat, Abbey National House, 2 Triton Square, Regent's Place, London,
  NW1 3AN.

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