Exhibit
  10.19

HOLMES
  FINANCING (NO. 4) PLC

REPORT
  AND ACCOUNTS

FOR
  THE YEAR ENDED 31 DECEMBER 2005

Registered
  in England and Wales No. 4167953



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Holmes Financing (No. 4) plc

Report of the directors

The Directors submit their report together with the accounts for the year ended 31 December 2005.

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.

Dividend

The profit for the year on ordinary activities after tax amounted to £45,000 (2004: £nil)

The Directors do not recommend the payment of a dividend (2004: £nil).

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, Euros and Swiss Francs. 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.

Further disclosures regarding financial risk management objectives and policies and the companys exposure to principal risks can be found in note 1.

Directors and their interests

The Directors who served throughout the year were:

Mr D M Green Mr M McDermott

Wilmington Trust SP Services (London) Limited (formerly SPV Management Limited)

At the year end and the previous year end, Holmes Holdings Limited and Mr M McDermott jointly held one share in the Company.

Wilmington Trust SP Services (London) Limited and Mr M McDermott jointly held one share in the holding company, Holmes Holdings Limited, at the year end. The other share in Holmes
Holdings Limited was held by Wilmington Trust SP Services (London) Limited. Mr M McDermott is also a Director of Wilmington Trust SP Services (London) 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.

Directors responsibility statement

The directors are responsible for preparing their report and financial statements. The directors have chosen to prepare accounts for the company in accordance with International Financial
Reporting Standards (IFRSs).  Company law requires the directors to prepare such financial statements in accordance with International Financial Reporting Standards, the Companies Act 1985 and Article 4 of the IAS Regulation.

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Holmes Financing (No. 4) plc

Directors responsibility statement - continued

International Accounting Standard 1 requires that financial statements present fairly for each financial year the companys financial position, financial performance and cash flows.
This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting
Standards Boards Framework for the preparation and Presentation of Financial Statements. In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable International Financial Reporting
Standards. Directors are also required to:

|· | properly
        select and apply accounting policies;                                                                                                                                                                                                                                                                                 
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|· | present
        information, including accounting policies, in a manner that provides
        relevant, reliable, comparable and understandable information;                                                                                                                                                                           
|· | provide additional disclosures
      when compliance with the specific requirements in International Financial
      Reporting Standards is insufficient to enable users to understand the impact
      of particular transactions, other events and conditions on the entitys
      financial position and financial performance; and
|· | prepare the accounts on
      a going concern basis unless, having assessed the ability of the company
      to continue as a going concern, management either intends to liquidate the
      entity or to cease trading, or have no realistic alternative but to do so.                                                               

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company, for safeguarding the assets,
for taking reasonable steps for the prevention and detection of fraud and other irregularities and for the preparation of a directors report which complies with the requirements of the Companies Act 1985.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements differs from legislation in other jurisdictions.

Going concern

The Directors confirm that they are satisfied that Holmes Financing (No.4) 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.

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, in accordance with the resolution
by Abbey National plc to appoint Deloitte & Touche LLP as auditors of Abbey National plc and its subsidiaries.

By Order of the Board

For and on behalf
  ofAbbey National
  Secretariat Services Limited, Secretary

24 February 2006

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

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Holmes Financing (No. 4) plc

Independent auditors report to the members of Holmes Financing (No. 4) PLC

We have audited the individual company financial statements (the financial statements) of Holmes Financing (No. 4) PLC for the year ended 31 December 2005, which comprise the
income statement, the balance sheet, the cash flow statement and the related notes 1 to 21. These financial statements have been prepared under the accounting policies set out therein.

This report is made solely to the companys members, as a body, in accordance with section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to
the companys members those matters we are required to state to them in an auditors report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and
the companys members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

The directors' responsibilities for preparing the Annual Report and the financial statements in accordance with applicable United Kingdom law and International Financial Reporting
Standards (IFRSs) as adopted for use in the European Union are set out in the statement of directors' responsibilities.

Our responsibility is to audit the financial statements in accordance with relevant United Kingdom legal and regulatory requirements, International Standards on Auditing (UK and Ireland)
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 in accordance with the relevant framework and are properly prepared in accordance with the
Companies Act 1985 and Article 4 of the IAS Regulation. We also report to you 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 or the Listing Rules regarding directors remuneration and transactions with the company and other members of the group is not disclosed.

We read other information in the directors report and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the
financial statements.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) 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 judgments made by the directors in the preparation of the financial statements, and of whether the
accounting policies are appropriate to the circumstances of the company 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 in accordance with those
      IFRSs as adopted for use in the European Union, of the state of the company's
      affairs as at 31 December 2005 and of its profit for the year then ended;
      and
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                
|· | the
      financial statements have been properly prepared in accordance with the
      Companies Act 1985.                                                                                                                                                    

Deloitte &
  Touche LLPChartered Accountants
  and Registered Auditors 
  London 
  24 February 2006

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Holmes Financing (No.
  4) plc

|Income
      Statement                      |       |  |                                            |   |                                            |  
|------------------------------------------- | ----- |  | ------------------------------------------ | - | ------------------------------------------ | -
|For the
      Year ended 31 December 2005   |       |  |                                            |   |                                            |  
|                                            |       |  |                                            |   |                                            |  
|                                            | Notes |  | Year
        ended31
        December 2005 |   | Year
        ended31
        December 2004 |  
|                                            |       |  | £000                                       |   | £000                                       |  
|                                            |       |  |                                            |   |                                            |  
|Interest
      and similar income           | 3     |  | 97,681                                     |   | 102,058                                    |  
|Interest
      expense and similar charges  | 4     |  | (97,681                                    | ) | (102,058                                   | )
|                                            |       |  |                                            |   |                                            |  
|Net
      Interest Income                   |       |  | -                                          |   | -                                          |  
|                                            |       |  |                                            |   |                                            |  
|Other
      operating income                | 6     |  | 65                                         |   | -                                          |  
|                                            |       |  |                                            |   |                                            |  
|Profit
      before tax                     |       |  | 65                                         |   |                                            |  
|Tax                                         | 7     |  | (20                                        | ) | -                                          |  
|                                            |       |  |                                            |   |                                            |  
|Profit
      attributable to equity holders | 16    |  | 45                                         |   | -                                          |  
|                                            |       |  |                                            |   |                                            |  

The Company has no recognised income or expenses other than the profit for the current and result for the previous year as set out above. Accordingly no separate statement of income and
expense is presented.

All of the operations of the Company are classed as continuing in the current and prior years.

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Holmes Financing (No.
  4) plc

|                                            |       |  |                          |   |                          |  
|------------------------------------------- | ----- |  | ------------------------ | - | ------------------------ | -
|Balance
      Sheet                         |       |  |                          |   |                          |  
|As at 31
      December 2005                |       |  |                          |   |                          |  
|                                            |       |  |                          |   |                          |  
|                                            |       |  | 31
        December 2005 |   | 31
        December 2004 |  
|                                            | Notes |  | £000                     |   | £000                     |  
|                                            |       |  |                          |   |                          |  
|Loans
      and advances to group companies | 8     |  | 1,836,000                |   | 1,836,000                |  
|Derivative
      financial instruments      | 9     |  | 28,912                   |   | -                        |  
|Other
      assets                          | 10    |  | 18,950                   |   | 20,484                   |  
|Cash
      and cash equivalents             | 13    |  | 115,880                  |   | 173,327                  |  
|                                            |       |  |                          |   |                          |  
|Total
      assets                          |       |  | 1,999,742                |   | 2,029,811                |  
|                                            |       |  |                          |   |                          |  
|Debt
      securities in issue              | 11    |  | (1,864,847               | ) | (1,836,000               | )
|Deferred
      tax liabilities              | 12    |  | (20                      | ) | -                        |  
|Other
      liabilities                     | 15    |  | (134,779                 | ) | (193,760                 | )
|                                            |       |  |                          |   |                          |  
|Total
      Liabilities                     |       |  | (1,999,646               | ) | (2,029,760               | )
|                                            |       |  |                          |   |                          |  
|Equity                                      |       |  |                          |   |                          |  
|Share
      capital                         | 15    |  | (50                      | ) | (50                      | )
|Retained
      earnings                     | 16    |  | (46                      | ) | (1                       | )
|                                            |       |  |                          |   |                          |  
|Total
      liabilities and equity          |       |  | (1,999,742               | ) | (2,029,811               | )
|                                            |       |  |                          |   |                          |  

The financial statements were approved by the board of directors and authorised for issue on 24 February 2006. They were signed on its behalf by:

M
  McDermottDirector

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Holmes Financing (No.
  4) plc

|                                                     |       |                       |   |                       | 
|---------------------------------------------------- | ----- | --------------------- | - | --------------------- | 
|Cash Flow
      Statement                            |       |                       |   |                       | 
|For the
      Year ended 31 December 2005            |       |                       |   |                       | 
|                                                     |       |                       |   |                       | 
|                                                     |       | Year
        ended 31 |   | Year
        ended 31 | 
|                                                     | Notes | December
        2005 |   | December
        2004 | 
|                                                     |       | £000                  |   | £000                  | 
|                                                     |       |                       |   |                       | 
|Net
      cash (used in) / from operating activities | 17    | (57,447               | ) | 173,327               | 
|                                                     |       |                       |   |                       | 
|Investing
      activities                           |       |                       |   |                       | 
|Amounts
      loaned to group companies              |       | -                     |   | -                     | 
|Repayment
      of loans to group companies          |       | -                     |   | -                     | 
|                                                     |       |                       |   |                       | 
|Net
      cash used in investing activities          |       | -                     |   | -                     | 
|                                                     |       |                       |   |                       | 
|Financing
      activities                           |       |                       |   |                       | 
|Issue
      of debt securities                       |       | -                     |   | -                     | 
|Repayment
      of debt securities in issue          |       | -                     |   | -                     | 
|                                                     |       |                       |   |                       | 
|Net
      cash (used in) / from financing activities |       | -                     |   | -                     | 
|                                                     |       |                       |   |                       | 
|Net
      movement in cash and cash equivalents      |       | (57,447               | ) | 173,327               | 
|Cash
      and cash equivalents brought forward      |       | 173,327               |   | -                     | 
|Cash
      and cash equivalents carried forward      |       | 115,880               |   | 173,327               | 
|                                                     |       |                       |   |                       | 



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Holmes Financing (No. 4) plc

Notes to the Financial Statements for the year ended 31 December 2005

1. Accounting policies

Adoption of International Accounting Standards

The financial statements have for the first time, been prepared in accordance with International Financial Reporting Standards (IFRS) adopted by the International Accounting
Standards Board (IASB), and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB. The date of transition to IFRS for the Company and the date of its opening IFRS balance sheet was 1
January 2004.

The Company has chosen to adopt IFRS 7 Financial Instruments: Disclosure for this financial year, earlier than is required by the IASB.

As allowed by First time adoption of international financial reporting standards (IFRS 1), and Financial Instruments: Disclosure (IFRS 7) the Company has not
restated its 2004 income statements and balance sheets to comply with IAS 32, IAS 39 and IFRS7. The impact of this is that the Companys derivatives will not be held at fair value in the comparative income statement and balance sheet and the valuation adjustment to the
nominal value of the debt securities in issue that qualify as hedging instruments will not be included in the comparative income statement and balance sheet.

The principal accounting policies applied in the preparation of financial statements are set out below. These policies have been consistently applied to all years presented, unless other
otherwise stated.

Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The financial statements have been prepared under the historical cost
convention, as modified by the revaluation of available-for-sale financial assets, financial assets and financial liabilities held at fair value through profit or loss and all derivative contracts.

The financial statements have also been prepared in accordance with IFRSs adopted for use in the European Union and therefore comply with Article 4 of the EU IAS regulation.

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 income statement.

Foreign currency translation

Items included in the financial statements of the entity are measured using the currency that best reflects the economic substance of the underlying events and circumstances relevant to
that entity (the measurement currency). The financial statements are presented in Pounds Sterling.

Foreign currency transactions are translated into the measurement currency at the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

Revenue recognition

Interest income and expense is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts
estimated future cash receipts through the expected life of the financial asset to that assets net carrying amount.

Offsetting financial instruments

Financial assets and liabilities including derivatives are offset and the net amount reported in the balance sheet when there is a legally enforceable right to set off the recognised
amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

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Holmes Financing (No. 4) plc

Notes to the Financial Statements for the year ended 31 December 2005

Derivative financial instruments and hedge accounting

Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at their fair value. Fair values are obtained
from quoted market prices in active markets, including recent market transactions, and valuation techniques, including discounted cash flow models and option pricing models as appropriate.  All derivatives are carried as assets when fair value is
positive and as liabilities when fair value is negative.

The method of recognising the resulting fair value gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
The entity designates all its derivatives as hedges of the fair value of recognised assets or liabilities or firm commitments (fair value hedge). Hedge accounting is used for derivatives designated in this way provided certain criteria are met.

The entity documents, at the inception of the transaction, the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for
undertaking various hedge transactions. The entity also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair
values or cash flows of hedged items.

Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the
hedged asset or liability that are attributable to the hedged risk. Any hedge ineffectiveness is shown in other operating income.

If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of the hedged item for which the effective interest method is used is amortised to
profit or loss over the period to maturity. The adjustment to the carrying amount of a hedged equity security remains in retained earnings until the disposal of the equity security.

Income taxes, including deferred income taxes

Income tax payable on profits, based on the applicable tax law in each jurisdiction is recognised as an expense in the period in which profits arise. The tax effects of income tax losses
available to carry forward are recognised as an asset when it is probable that future taxable profits will be available, against which these losses can be utilised.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the
financial statements. Currently enacted tax rates are used in the determination of deferred income tax.

Deferred and current tax assets and liabilities are only offset when they arise in the same tax reporting group and where there is both the legal right and the intention to settle on a
net basis or to realise the asset and settle the liability simultaneously.

Financial assets

The entity classifies its financial assets as loans and receivables which are held at amortised cost.  These includes loans and advances to group companies shown on the face of the
balance sheet, accrued interest receivable shown within other assets.and cash and cash equivalents shown on the face of the balance sheet. Derivatives are classified as fair value and are shown on the face of the balance sheet.

Cash and cash equivalents

For the purposes of the cash
  flow statement, cash and cash equivalents comprise balances with less than three
  months maturity from the date of acquisition, including cash and non restricted
  balances with central banks, treasury bills and other eligible bills, loans
  and advances to banks, amounts due from other banks and short term investments
  in securities.

Financial Liabilities

Financial liabilities are measured at amortised cost, which includes a valuation adjustment for debt securities designated as hedging instruments. These include debt securities in issue
shown on the face of the balance sheet, and accrued interest shown within other liabilities.

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Holmes Financing (No. 4) plc

Notes to the Financial Statements for the year ended 31 December 2005

Financial Risk factors

The companys activities expose it to a variety of financial risks including currency risk, fair value interest rate risk and liquidity risk. The companys overall risk
management programmed focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the companys financial performance. The company uses derivative financial instruments to hedge certain risk
exposures.

Risk management is carried out by the central risk management function of the Abbey Group. Authority flows from the Abbey National plc Board of Directors to the Chief Executive Office and
from him to his direct reports. Delegation of authority is to individuals. Formal standing committees are maintained for effective management or oversight. Their authority is derived from the person they are intended to assist.

Currency Risk

The main operating (or functional) currencies of its operations are sterling, euro, US dollars and Swiss Francs. As the Company prepares its financial statements in sterling,
these will be affected by movements in the euro/sterling; US dollar/sterling and Swiss Franc/sterling exchange rates. The exposure to this risk is mitigated by the use of cross currency derivatives. Taking this into account, the Company did not have
a material financial exposure to foreign exchange gains and losses in either of the years to 31 December 2005 or 31 December 2004.

Included in the table below are the Companys assets and liabilities at carrying amounts classified by currency.

|                                            | Euro     |   | US
        Dollars |   | Swiss
        Francs |   | Sterling |   | Total      |  
|------------------------------------------- | -------- | - | ------------------ | - | -------------------- | - | -------- | - | ---------- | -
|                                            | £000     |   | £000               |   | £000                 |   | £000     |   | £000       |  
|Loans
      and advances to group companies | 545,000  |   | 361,000            |   | 350,000              |   | 580,000  |   | 1,836,000  |  
|Derivative
      financial instruments      | 72,229   |   | (74,150            | ) | 30,833               |   | -        |   | 28,912     |  
|Other
      assets                          | -        |   | -                  |   | -                    |   | 18,950   |   | 18,950     |  
|Cash
      and cash equivalents             | -        |   | -                  |   | -                    |   | 115,880  |   | 115,880    |  
|                                            |          |   |                    |   |                      |   |          |   |            |  
|Total
      assets                          | 617,229  |   | 286,850            |   | 380,833              |   | 714,830  |   | 1,999,742  |  
|                                            |          |   |                    |   |                      |   |          |   |            |  
|                                            |          |   |                    |   |                      |   |          |   |            |  
|Debt
      securities in issue              | (617,231 | ) | (286,773           | ) | (380,843             | ) | (580,000 | ) | (1,864,847 | )
|Tax
      liabilities                       | -        |   | -                  |   | -                    |   | (20      | ) | (20        | )
|Other
      liabilities                     | (6,080   | ) | (3,136             | ) | (4,179               | ) | (121,384 | ) | (134,779   | )
|                                            |          |   |                    |   |                      |   |          |   |            |  
|Total
      Liabilities                     | (623,311 | ) | (289,909           | ) | (385,022             | ) | (701,404 | ) | (1,999,646 | )
|                                            |          |   |                    |   |                      |   |          |   |            |  

Cash flow and fair value
  interest rate risk

Interest rate repricing gap
  information is shown in the table below at 31 December 2005. It provides an
  estimate of the repricing profile of the Companys assets, liabilities
  and other off-balance sheet exposures. For the major categories of assets and
  liabilities, the table shows the carrying values of interest earning assets
  and liabilities, which reprice within selected time banks. Items are allocated
  to time bans by reference to the earlier of the next interest rate repricing
  date and the legal maturity date. This leads to an apparent timing mismatch
  where the anticipated maturity date is different from the legal maturity date
  and hedges have been structured accordingly. The tables do not purport to measure
  market risk exposure.

|                                            |            |   |                   |   | Non-     |   |            |  
|------------------------------------------- | ---------- | - | ----------------- | - | -------- | - | ---------- | -
|                                            | 1-3        |   |                   |   | interest |   |            |  
|                                            | months     |   | 1-5
        years |   | bearing  |   | Total      |  
|                                            | £000       |   | £000              |   | £000     |   | £000       |  
|Loans
      and advances to group companies | 1,836,000  |   | -                 |   | -        |   | 1,836,000  |  
|Derivative
      financial instruments      | 96,522     |   | (67,610           | ) | -        |   | 28,912     |  
|Other
      assets                          | -          |   | -                 |   | 18,950   |   | 18,950     |  
|Cash
      and cash equivalents             | 115,880    |   | -                 |   | -        |   | 115,880    |  
|                                            |            |   |                   |   |          |   |            |  
|Total
      assets                          | 2,048,402  |   | (67,610           | ) | 18,950   |   | 1,999,742  |  
|                                            |            |   |                   |   |          |   |            |  
|                                            |            |   |                   |   |          |   |            |  
|Debt
      securities in issue              | (928,323   | ) | (936,524          | ) | -        |   | (1,864,847 | )
|Tax
      liabilities                       | -          |   | -                 |   | (20      | ) | (20        | )
|Other
      liabilities                     | (115,880   | ) | -                 |   | (18,899  | ) | (134,779   | )
|                                            |            |   |                   |   |          |   |            |  
|Total
      Liabilities                     | (1,044,203 | ) | (936,524          | ) | (18,919  | ) | (1,999,646 | )
|                                            |            |   |                   |   |          |   |            |  

The table below summarises the effective interest rate by major currencies for monetary financial instruments:



|                                         | Euro  |  | US
        Dollars |  | Swiss
        Franc |  | Sterling | 
|---------------------------------------- | ----- |  | ------------------ |  | ------------------- |  | -------- | 
|Derivative
        financial instruments | 4.95% |  | 4.94%              |  | 4.82%               |  | 4.86%    | 
|Debt
        securities in issue         | 4.86% |  | 4.52%              |  | 3.50%               |  | 4.86%    | 
|                                         |       |  |                    |  |                     |  |          | 

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Holmes Financing (No. 4) plc

Notes to the Financial Statements for the year ended 31 December 2005

Interest rate sensitivity

As a result of the cross currency swaps the Companys total interest income and expenditure on financial assets and liabilities is based on the same rate of sterling LIBOR, it
therefore has no material sensitivity to changes in interest rates.

Liquidity risk

The table below analyses the Companys assets and liabilities into relevant maturity groupings based on the remaining period at balance sheet date to contractual maturity date:

|                                            | 1-3      |   | 3-12     |   | Over
        5 |   |            |  
|------------------------------------------- | -------- | - | -------- | - | -------------- | - | ---------- | -
|                                            | months   |   | months   |   | years          |   | Total      |  
|                                            | £000     |   | £000     |   | £000           |   | £000       |  
|Loans
      and advances to group companies | -        |   | 840,000  |   | 996,000        |   | 1,836,000  |  
|Derivative
      financial instruments      | -        |   | 96,522   |   | (67,610        | ) | 28,912     |  
|Other
      assets                          | 18,950   |   | -        |   | -              |   | 18,950     |  
|Cash
      and cash equivalents             | 115,880  |   | -        |   | -              |   | 115,880    |  
|                                            |          |   |          |   |                |   |            |  
|Total
      assets                          | 134,830  |   | 936,522  |   | 928,390        |   | 1,999,742  |  
|                                            |          |   |          |   |                |   |            |  
|                                            |          |   |          |   |                |   |            |  
|Debt
      securities in issue              | -        |   | (936,524 | ) | (928,323       | ) | (1,864,847 | )
|Tax
      liabilities                       | (20      | ) | -        |   | -              |   | (20        | )
|Other
      liabilities                     | (134,779 | ) | -        |   | -              |   | (134,779   | )
|                                            |          |   |          |   |                |   |            |  
|Total
      Liabilities                     | (134,799 | ) | (936,524 | ) | (928,323       | ) | (1,999,646 | )
|                                            |          |   |          |   |                |   |            |  
|Net liquidity
      gap                     | 31       |   | (2       | ) | 67             |   | 96         |  
|                                            |          |   |          |   |                |   |            |  

Credit risk

The maximum exposure to credit risk is the carrying amount of the Loans and advances to group companies of £1,836,000,000 and the fair value of derivative financial instruments of
£28,912,000.

Accounting for derivative financial instruments and hedging activities

The Company holds derivatives as fair value hedges of the non-sterling debt securities in issue in order to hedge foreign currency and interest rate risk. These require the Company to pay
a rate based on three-month sterling LIBOR and receive US dollar LIBOR, EURIBOR and fixed rate receipts in Swiss Francs. These are initially recognised and subsequently re-measured at fair value.

Fair value estimation

Where quoted market prices are not available, a discounted cash flow model is used based on a current yield curve appropriate for the remaining term to maturity.

2. Business and geographical segments

All of the Companys income
  is derived from activities in the same business and geographical segment, within
  the UK. There were no discontinued operations during the period.

3. Interest and similar income

|                                                 | Year
        ended       |  | Year
        ended       | 
|------------------------------------------------ | ------------------------ |  | ------------------------ | 
|                                                 | 31
        December 2005 |  | 31
        December 2004 | 
|                                                 | £000                     |  | £000                     | 
|Interest
      receivable from group companies   | 93,366                   |  | 99,746                   | 
|Interest
      receivable on collateralised cash | 4,315                    |  | 2,312                    | 
|                                                 |                          |  |                          | 
|Interest
      receivable                        | 97,681                   |  | 102,058                  | 
|                                                 |                          |  |                          | 

4. Interest expense and
  similar charges

|                                              | Year
      ended       |  | Year
      ended       | 
|--------------------------------------------- | ---------------------- |  | ---------------------- | 
|                                              | 31 December
      2005 |  | 31
      December 2004 | 
|                                              | £000                   |  | £000                   | 
|Interest
      payable on debt securities     | 92,614                 |  | 99,746                 | 
|Interest
      payable on collateralised cash | 4,315                  |  | 2,312                  | 
|Swap
      interest payable                   | 752                    |  | -                      | 
|                                              |                        |  |                        | 
|Interest
      payable                        | 97,681                 |  | 102,058                | 
|                                              |                        |  |                        | 



---




Holmes Financing (No. 4) plc

Notes to the Financial Statements
  for the year ended 31 December 2005

5. Profit before tax

Profit before tax has been arrived
  at after charging/(crediting):

|                                      |                          |   |                          | 
|------------------------------------- | ------------------------ | - | ------------------------ | 
|                                      | Year
        ended       |   | Year
        ended       | 
|                                      | 31
        December 2005 |   | 31
        December 2004 | 
|                                      | £000                     |   | £000                     | 
|Net
      foreign exchange gains      | (83                      | ) | -                        | 
|Net
      gain on hedging derivatives | 28,912                   |   | -                        | 
|Net
      loss on hedged item         | (28,930                  | ) | -                        | 

Auditors remuneration for the current and previous financial years has been borne by Holmes Funding Limited, a fellow subsidiary undertaking.

No emoluments were paid to the Directors in the current or previous financial year.

The Company had no employees
  in the current or previous financial year.

6. Other operating income

|                                      |                          |   |                          | 
|------------------------------------- | ------------------------ | - | ------------------------ | 
|                                      | Year
        ended       |   | Year
        ended       | 
|                                      | 31
        December 2005 |   | 31
        December 2004 | 
|                                      | £000                     |   | £000                     | 
|Net
      foreign exchange gains      | 83                       |   | -                        | 
|Net
      gain on hedging derivatives | 28,912                   |   | -                        | 
|Net
      loss on hedged item         | (28,930                  | ) | -                        | 
|                                      |                          |   |                          | 
|                                      | 65                       |   | -                        | 
|                                      |                          |   |                          | 

7. Tax

|                              |                        |  |                        | 
|----------------------------- | ---------------------- |  | ---------------------- | 
|                              | Year
      ended       |  | Year
      ended       | 
|                              | 31 December
      2005 |  | 31 December
      2004 | 
|                              | £000                   |  | £000                   | 
|Current
      tax:            |                        |  |                        | 
|UK
      corporation tax      | -                      |  | -                      | 
|                              |                        |  |                        | 
|                              | -                      |  | -                      | 
|                              |                        |  |                        | 
|Deferred
      tax (note 12): |                        |  |                        | 
|Current
      year            | 20                     |  | -                      | 
|                              |                        |  |                        | 
|                              | 20                     |  | -                      | 
|                              |                        |  |                        | 

Corporation tax is calculated
  at 30% (2004: 30%) of the estimated assessable profit for the year.

The charge for the year can be reconciled to the profit per the income statement as follows:

|                                                            | Year
        ended       |  | Year
        ended       | 
|----------------------------------------------------------- | ------------------------ |  | ------------------------ | 
|                                                            | 31
        December 2005 |  | 31
        December 2004 | 
|                                                            | £000                     |  | £000                     | 
|Profit
      before tax                                     | 65                       |  | -                        | 
|                                                            |                          |  |                          | 
|Tax
      at the UK corporation tax rate of 30% (2004: 30%) | 20                       |  | -                        | 
|                                                            |                          |  |                          | 
|Tax
      expense for the year                              | 20                       |  | -                        | 
|                                                            |                          |  |                          | 

8. Loans and advances to
  group companies

|                           | 31
      December 2005 |  | 31
      December 2004 | 
|-------------------------- | ---------------------- |  | ---------------------- | 
|                           | £000                   |  | £000                   | 
|Repayable:                 |                        |  |                        | 
|Less
      than 1 year     | -                      |  | -                      | 
|1
      to 2 years         | -                      |  | -                      | 
|2
      to 5 years         | 840,000                |  | 840,000                | 
|Greater
      than 5 years | 996,000                |  | 996,000                | 
|                           |                        |  |                        | 
|                           | 1,836,000              |  | 1,836,000              | 
|                           |                        |  |                        | 

The loans are all denominated
  in sterling and are at variable rates of interest, based on LIBOR for three-month
  sterling deposits. The carrying amount of loans and advances to group companies
  approximates to their fair value.

---




Holmes Financing (No. 4) plc

Notes to the Financial Statements
  for the year ended 31 December 2005

9. Derivative Financial Instruments

The Company holds derivatives
  as fair value hedges of the non-sterling debt securities in issue in order to
  hedge foreign currency and interest rate risk. These require the Company to
  pay a rate based on three-month sterling LIBOR and receive US dollar LIBOR,
  EURIBOR and fixed rate receipts in Swiss Francs. These are initially recognised
  and subsequently re-measured at a fair value. The hedging relationship between
  the cross currency derivatives and the debt securities in issue qualifies for
  a hedge accounting treatment of the liabilities.

10. Other assets

|                                                                     | 31
      December 2005 |  | 31
      December 2004 | 
|-------------------------------------------------------------------- | ---------------------- |  | ---------------------- | 
|                                                                     | £000                   |  | £000                   | 
|Amounts
      due from group companies                               | 1                      |  | 1                      | 
|Called
      up share capital not paid  due from parent undertaking | 37                     |  | 37                     | 
|Accrued
      interest due to group companies                        | 18,912                 |  | 20,446                 | 
|                                                                     |                        |  |                        | 
|                                                                     | 18,950                 |  | 20,484                 | 
|                                                                     |                        |  |                        | 

The carrying amount of other
  assets approximates to their fair value.

11. Debt securities in
  issue

|                                                      | 31
      December 2005 |  | 31
      December 2004 | 
|----------------------------------------------------- | ---------------------- |  | ---------------------- | 
|                                                      | £000                   |  | £000                   | 
|Series
      2 Class A Fixed/Floating Rate Notes 2008 | 555,682                |  | 490,000                | 
|Series
      2 Class B Floating Rate Notes 2040       | 24,583                 |  | 22,000                 | 
|Series
      2 Class C Floating Rate Notes 2040       | 36,966                 |  | 33,000                 | 
|Series
      3 Class A1 Floating Rate Notes 2040      | 550,000                |  | 550,000                | 
|Series
      3 Class A2 Floating Rate Notes 2040      | 238,075                |  | 300,000                | 
|Series
      3 Class B Floating Rate Notes 2040       | 20,023                 |  | 25,000                 | 
|Series
      3 Class C Floating Rate Notes 2040       | 28,676                 |  | 36,000                 | 
|Series
      4 Class A Fixed/Floating Rate Notes 2008 | 380,842                |  | 350,000                | 
|Series
      3 Class B Floating Rate Notes 2040       | 11,000                 |  | 11,000                 | 
|Series
      3 Class C Floating Rate Notes 2040       | 19,000                 |  | 19,000                 | 
|                                                      |                        |  |                        | 
|                                                      | 1,864,847              |  | 1,836,000              | 
|                                                      |                        |  |                        | 

Included in the carrying amount
  of debt securities in issue above are the following valuation adjustments as
  a result of the hedge accounting treatment of these instruments.

|                                                      | 31
        December 2005 |  | 31
        December 2004 | 
|----------------------------------------------------- | ------------------------ |  | ------------------------ | 
|                                                      | £000                     |  | £000                     | 
|Series 2 Class A Fixed/Floating
      Rate Notes 2008 | 65,682                   |  | -                        | 
|Series
      2 Class B Floating Rate Notes 2040       | 2,583                    |  | -                        | 
|Series 2 Class C Floating
      Rate Notes 2040       | 3,966                    |  |                          | 
|Series
      3 Class A2 Floating Rate Notes 2040      | (61,925)                 |  |                          | 
|Series 3 Class B Floating
      Rate Notes 2040       | (4,977)                  |  |                          | 
|Series
      3 Class C Floating Rate Notes 2040       | (7,324)                  |  |                          | 
|Series 4 Class A Fixed/Floating
      Rate Notes 2008 | 30,842                   |  | -                        | 
|                                                      |                          |  |                          | 
|                                                      | 28,847                   |  | -                        | 
|                                                      |                          |  |                          | 

The carrying amount of debt securities in issue approximates to their fair value.

All the Class A Notes (irrespective of series) will rank pari passu and 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.

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 weighted average interest rate on the bonds was 4.89% as at 31 December
  2005.

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 11.



---




Holmes Financing (No. 4) plc

Notes to the Financial Statements for the year ended 31 December 2005

11. Debt securities in issue
   continued

Funding Limited, a group company,
  whose obligations in respect of these loans, are secured under a deed of charge
  which grants security over all its assets, primarily comprising shares in a
  portfolio of residential mortgage loans, in favour of the security trustee.
  These mortgages fail the derecognition criteria described in IAS 39 and as such
  are represented by a receivable on the balance sheet of Holmes Funding Limited,
  though legally Holmes Funding Limited is entitled to the income from these mortgages.
  The security trustee holds this security for the benefit of all secured creditors
  of Holmes Funding Limited, including the Company.

12. Deferred Tax

|                                | 31
        December 2005 |  | 31
        December 2004 | 
|------------------------------- | ------------------------ |  | ------------------------ | 
|                                | £000                     |  | £000                     | 
|Deferred
      tax liabilities: | 20                       |  | -                        | 
|                                |                          |  |                          | 

The movement on the deferred
  tax account is as follows:

|                              | 31
      December 2005 |  | 31
      December 2004 | 
|----------------------------- | ---------------------- |  | ---------------------- | 
|                              | £000                   |  | £000                   | 
|At
      1 January            | -                      |  | -                      | 
|Income
      statement charge | 20                     |  | -                      | 
|                              |                        |  |                        | 
|At
      31 December          | 20                     |  | -                      | 
|                              |                        |  |                        | 

The deferred tax liability arises as a result of the Company being taxed under the special regime for securitisation companies in the Finance Act 2005.

13. Cash at bank and in hand

The Company holds deposits at banks, which pay interest based on LIBOR.

Swap counterparties are subject to a cash collateralisation agreement whereby dependent on the credit rating of the counterparty an amount may be payable by the counterparty to the
Company. This amount is included in cash at bank and in hand, and within other liabilities. It is repayable when the swap agreements mature, or if earlier when the credit rating of the counterparty improves.

At 31 December 2005 an amount
  of £115,866,391 was held which related to cash received under cash collateralisation
  agreements. The amount was held on deposit at Federal Funds with an effective
  interest rate to match the interest payable to the swap counterparty.

14. Other liabilities

|                                                             | 31
        December 2005 |  | 31
        December 2004 | 
|------------------------------------------------------------ | ------------------------ |  | ------------------------ | 
|                                                             | £000                     |  | £000                     | 
|Amounts
      due in respect of collateralised cash received | 115,867                  |  | 173,313                  | 
|Accrued
      interest payable                               | 18,912                   |  | 20,447                   | 
|                                                             |                          |  |                          | 
|                                                             | 134,779                  |  | 193,760                  | 
|                                                             |                          |  |                          | 

The directors consider that the carrying amount of trade and other payables approximates to their fair value.

Other liability due after one year amount to £nil (2004: £nil).

15. Share capital

|                                         | 31
        December 2005 |  | 31
        December 2004 | 
|---------------------------------------- | ------------------------ |  | ------------------------ | 
|                                         | £000                     |  | £000                     | 
|Authorised:                              |                          |  |                          | 
|100,000 ordinary
      shares of £1 each | 100                      |  | 100                      | 
|                                         |                          |  |                          | 
|Issued:                                  |                          |  |                          | 
|50,000 ordinary shares
      of £1 each  | 50                       |  | 50                       | 
|                                         |                          |  |                          | 

49,998 Ordinary
  shares are partly paid to 25 pence. Two subscriber shares are fully paid.

---




Holmes Financing (No. 4) plc

Notes to the Financial Statements
  for the year ended 31 December 2005

16. Retained earnings

|                                  | £000 | 
|--------------------------------- | ---- | 
|Balance
      at 1 January 2004   | 1    | 
|Profit
      for the year         | -    | 
|                                  |      | 
|Balance
      at 1 January 2005   | 1    | 
|Profit
      for the year         | 45   | 
|                                  |      | 
|Balance
      at 31 December 2005 | 46   | 
|                                  |      | 

17. Notes to the cash
  flow statements

|                                                               | 31
        December 2005 |  | 31
      December 2004 | 
|-------------------------------------------------------------- | ------------------------ |  | ---------------------- | 
|                                                               | £000                     |  | £000                   | 
|Profit
      from operations                                   | 65                       |  | -                      | 
|                                                               |                          |  |                        | 
|Adjustments
      for:                                         |                          |  |                        | 
|Loss
      on derivatives                                      | 18                       |  | -                      | 
|Gain
      on foreign exchange                                 | (83)                     |  | -                      | 
|                                                               |                          |  |                        | 
|Operating
      cash flows before movements in working capital | -                        |  | -                      | 
|                                                               |                          |  |                        | 
|Decrease
      / (increase) in receivables                     | 1,534                    |  | (20,433)               | 
|(Decrease)
      / increase in payables                        | (58,981)                 |  | 193,760                | 
|                                                               |                          |  |                        | 
|Net
      cash flow from operating activities                  | (57,447)                 |  | 173,327                | 
|                                                               |                          |  |                        | 

Cash and cash equivalents (which
  are presented as a single class of assets on the face of the balance sheet)
  comprise cash at bank and other short-term highly liquid investments with a
  maturity of three months or less.

18. Related party transactions

The related party disclosures in this note apply to related parties, which comprise the following entities and individuals:

Abbey National plc, an entity with significant influence over the Company Holmes Funding Limited, a Group Company

Trading transactions

During the year, the company
  entered into the following transactions with related parties:

|                        |                             |  | Cash
        and cash         |  |                          | 
|----------------------- | --------------------------- |  | ----------------------------- |  | ------------------------ | 
|                        |                             |  | equivalents
        held with |  | Amounts
        owed by  | 
|                        | Interest
        receivable |  | related
        parties       |  | related
        parties  | 
|                        | 31
        December 2005    |  | 31
        December 2005      |  | 31
        December 2005 | 
|                        | £000                        |  | £000                          |  | £000                     | 
|Abbey National plc      | -                           |  | 14                            |  | -                        | 
|Holmes Funding Limited  | 93,366                      |  | -                             |  | 1,854,708                | 
|Holmes Holdings Limited | -                           |  | -                             |  | 37                       | 
|                        |                             |  |                               |  |                          | 

There were no related party transactions during the year, or existing at the balance sheet date, with the company or parent companys key management personnel.

19. 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.

Wilmington Trust SP Services (London) 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 Company meets the definition of a Special Purpose Entity as defined in and is therefore consolidated within the Abbey National plc group accounts.

---




Holmes Financing (No. 4) plc

Notes to the Financial Statements for the year ended 31 December 2005

19. Parent undertaking and controlling party - continued

The ultimate parent undertaking and controlling party of Abbey National plc is Banco Santander Central Hispano S.A., a company incorporated in Spain. Banco Santander Central Hispano, S.A.
is the parent undertaking of the largest group of undertakings for which group accounts are drawn up and of which the company is a member. Abbey National plc is the controlling party of the smallest group of undertakings for which the group accounts
are drawn up and of which the Company is a member.

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

20. Explanation of transition to IFRSs

Holmes Financing (No.4) PLChas chosen to prepare accounts in accordance with IFRSsfor the year ended 31 December 2005.

Up to 31 December 2004, the Group prepared its financial statements in accordance with UK Generally Accepted Accounting Principals (UK GAAP).

Key standards IAS 32 Financial Instruments: Disclosure and Presentation and IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial
Instruments: Disclosures have been applied prospectively from 1 January 2005. All other standards are required to be applied retrospectively.

No reconciliation of profit attributable to shareholders, shareholders funds, income statement or balance sheet under IFRS for the year to 31 December 2004 has been presented as all
applicable IFRS adjustments have only been applied prospectively.

21. Comparatives under UK GAAP for FRS 13

These are the disclosures that would have been included in the financial statements under UK GAAP relating to FRS 13 that have not been included in the financial statements above.

The following disclosures are
  made in respect of financial instruments as at 31 December 2004. Short-term
  debtors and creditors are included in all of the following disclosures.

a. Maturity profile of financial
  liabilities

|2004                                                   | Debt
        securities in |  |                           |  |                           | 
|------------------------------------------------------ | -------------------------- |  | ------------------------- |  | ------------------------- | 
|                                                       | issue                      |  | Other
        liabilities |  | Total
        liabilities | 
|                                                       | £000                       |  | £000                      |  | £000                      | 
|Within one year or less
      or on demand             | -                          |  | 193,760                   |  | 193,760                   | 
|More
      than one year but not more than two years   | -                          |  | -                         |  | -                         | 
|More than two years but
      not more than five years | 840,000                    |  | -                         |  | 840,000                   | 
|More
      than five years                             | 996,000                    |  | -                         |  | 996,000                   | 
|                                                       |                            |  |                           |  |                           | 
|                                                       | 1,836,000                  |  | 193,760                   |  | 2,029,760                 | 
|                                                       |                            |  |                           |  |                           | 

There are no material undrawn
  committed borrowing facilities.

b. Interest rate profile
  of financial assets and liabilities

|2004         |             |  |                       |  |              |  | Weighted            | 
|------------ | ----------- |  | --------------------- |  | ------------ |  | ------------------- | 
|             |             |  |                       |  |              |  | average
        age | 
|             |             |  |                       |  | Non-interest |  | until               | 
|             | Total       |  | Floating
        rate |  | bearing      |  | maturity*           | 
|             | £000        |  | £000                  |  | £000         |  | Years               | 
|Assets:      |             |  |                       |  |              |  |                     | 
|Sterling     | 2,029,811   |  | 2,009,327             |  | 20,484       |  | 0.1                 | 
|             |             |  |                       |  |              |  |                     | 
|Liabilities: |             |  |                       |  |              |  |                     | 
|Sterling     | (2,029,760) |  | (2,009,313)           |  | (20,447)     |  | 0.1                 | 
|             |             |  |                       |  |              |  |                     | 

*for non-interest bearing assets/liabilities
  only.

---




Holmes Financing (No. 4) plc

Notes to the Financial Statements
  for the year ended 31 December 2005

c. Fair values of financial assets and liabilities

The fair value of debt securities in issue was £1,866,846,000.

The estimated fair values of other assets and liabilities on the balance sheet were 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 an asset of £49,335,405. The cross currency swaps mature between June
2008 and July 2040.

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.

---