Exhibit 10.19

HOLMES FINANCING (NO. 1) PLC



REPORT AND ACCOUNTS



FOR THE YEAR ENDED 31
DECEMBER 2003



Registered No. 3946294



---

HOLMES FINANCING (NO. 1) PLC



Report of the Directors



The Directors submit their report together with the accounts for the year to 31 December 2003.



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 results for the year are set out on page 4. The loss of £1,000 (2002: profit
£2,000) was transferred from reserves. The Directors do not recommend the payment of a dividend (2002: £Nil).



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 below were:



|                       |  |                        
|---------------------- |  | -----------------------
|M McDermott            |  |                        
|R Wise                 |  | (resigned 23 May 2003) 
|D Green                |  | (appointed 23 May 2003)
|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, at the year-end.



Page 2



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HOLMES FINANCING (NO. 1) PLC



Report of the Directors (continued)



5. Directors Responsibility in respect of the Preparation of Accounts



The Directors are required by United Kingdom company law to prepare accounts 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 of the profit or loss for that year.



The Directors confirm that suitable accounting policies have been used and applied consistently and reasonable and prudent judgements and estimates have been made in the preparation of the accounts for the year ended
31 December 2003. 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, 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.1) 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



On 1 August 2003, Deloitte & Touche, the Companys auditors transferred their
business to Deloitte & Touche LLP, a limited liability partnership incorporated under the Limited Liability Partnerships Act 2000. The Companys consent has been given to treating the appointment of Deloitte & Touche as extending to
Deloitte & Touche LLP with effect from 1 August 2003 under the provisions of section 26(5) of the Companies Act 1989. A resolution to re-appoint Deloitte & Touche LLP as the Companys auditor was passed at the Annual General Meeting on
24th June 2003.



By order of the Board



/s/ Cheryl Samuels



For and behalf of

Abbey National Secretariat Services Limited, Secretary



22 June 2004.



Registered Office:

Abbey National House

2 Triton Square

Regents Place

London

NW1 3AN



Page 3



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HOLMES FINANCING (NO. 1) PLC



INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF HOLMES FINANCING (NO. 1) PLC



We have audited the financial statements of Holmes Financing (No. 1) plc for the year ended
31 December 2003 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 at 31 December 2003 and of its loss for the year then ended and have been properly prepared in accordance with the Companies Act 1985.



Deloitte & Touche LLP

Chartered Accountants and Registered Auditors

London, England



25 June 2004.



Page 4



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HOLMES FINANCING (NO. 1) PLC



Profit and Loss Account

For the year
ended 31 December 2003



|                                                                                |  |      |  |           |   |  |           |  
|------------------------------------------------------------------------------- |  | ---- |  | --------- | - |  | --------- | -
|                                                                                |  | Note |  | 2003£000 |   |  | 2002£000 |  
|Interest receivable                                                             |  | 2    |  | 79,636    |   |  | 98,540    |  
|Interest payable                                                                |  | 3    |  | (79,635   | ) |  | (98,540   | )
|                                                                                |  |      |  |           |   |  |           |  
|Net interest income                                                             |  |      |  | 1         |   |  |          |  
|                                                                                |  |      |  |           |   |  |           |  
|OPERATING PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION                         |  | 4    |  | 1         |   |  |          |  
|                                                                                |  |      | 
|Tax on profit on ordinary activities                                            |  | 5    |  | (2        | ) |  | 2         |  
|                                                                                |  |      |  |           |   |  |           |  
|(LOSS) / PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION AND RETAINED FOR THE YEAR |  | 14   |  | (1        | ) |  | 2         |  
|                                                                                |  |      |  |           |   |  |           |  



There are no recognised gains or
losses in the year other than the (loss) / profit for the year and therefore no statement of total recognised gains and losses is required.



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



All transactions are derived from continuing operations
within the United Kingdom.



Page 5



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HOLMES FINANCING (NO. 1) PLC



Balance Sheet

As at 31 December 2003



|                                                         |  |      |  |            |   |  |            |  
|-------------------------------------------------------- |  | ---- |  | ---------- | - |  | ---------- | -
|                                                         |  | Note |  | 2003 £000 |   |  | 2002 £000 |  
|FIXED ASSETS                                             |  |      |  |            |   |  |            |  
|Loans to group undertaking                               |  | 6    |  | 1,607,000  |   |  | 2,256,000  |  
|                                                         |  |      | 
|CURRENT ASSETS                                           |  |      |  |            |   |  |            |  
|Debtors                                                  |  | 7    |  | 13,844     |   |  | 20,447     |  
|Cash at bank and in hand                                 |  | 8    |  | 16         |   |  | 27         |  
|                                                         |  |      |  |            |   |  |            |  
|                                                         |  |      |  | 13,860     |   |  | 20,474     |  
|                                                         |  |      | 
|CREDITORS - amounts falling due within one year          |  | 9    |  | (13,786    | ) |  | (20,399    | )
|                                                         |  |      |  |            |   |  |            |  
|NET CURRENT ASSETS                                       |  |      |  | 74         |   |  | 75         |  
|                                                         |  |      |  |            |   |  |            |  
|TOTAL ASSETS LESS CURRENT LIABILITIES                    |  |      |  | 1,607,073  |   |  | 2,256,075  |  
|                                                         |  |      | 
|CREDITORS - amounts falling due after more than one year |  | 10   |  | (1,607,000 | ) |  | (2,256,000 | )
|                                                         |  |      |  |            |   |  |            |  
|NET ASSETS                                               |  |      |  | 74         |   |  | 75         |  
|                                                         |  |      |  |            |   |  |            |  
|CAPITAL AND RESERVES                                     |  |      |  |            |   |  |            |  
|                                                         |  |      | 
|Called-up share capital                                  |  | 13   |  | 50         |   |  | 50         |  
|Profit and loss account                                  |  |      |  | 24         |   |  | 25         |  
|                                                         |  |      |  |            |   |  |            |  
|EQUITY SHAREHOLDERS FUNDS                               |  | 14   |  | 74         |   |  | 75         |  
|                                                         |  |      |  |            |   |  |            |  



The financial statements on pages 4
to 12 were approved by the Board of Directors on 22 June 2004.



Signed on
behalf of the Board of Directors



/s/ Martin
McDermott



Director.



Page 6



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HOLMES FINANCING (NO. 1) PLC



Notes to the Accounts for the year ended 31 December 2003



|1. | Accounting Policies
|-- | -------------------



Basis of Accounting



The financial statements are 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:



|(1) | Interest receivable is recognised on an accruals basis.
|--- | -------------------------------------------------------



|(2) | Loans to group undertakings held as fixed assets are stated at cost less provision for any impairment.
|--- | ------------------------------------------------------------------------------------------------------



|(3) | 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.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | 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.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | The Company is a wholly owned subsidiary of Holmes Holdings Limited, a Company incorporated in Great Britain. Accordingly, the Company is not required to produce a cash flow
statement as prescribed in paragraph 5 (a) of FRS 1 (revised 1996), Cash flow statements.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(6) | Debt Securities in Issue are stated at net proceeds.
|--- | ----------------------------------------------------



|2. | Interest Receivable
|-- | -------------------



Interest receivable derives from loans made to group undertakings (see note 6) and bank interest.



|3. | Interest Payable
|-- | ----------------



Interest is payable on debt securities in issue (see note 11).



|4. | Operating Profit on Ordinary Activities before Taxation
|-- | -------------------------------------------------------



The Company has no employees (2002: None) other than its directors.



No emoluments were paid to the Directors by the Company during the current year (2002: £ 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.



Page 7



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HOLMES FINANCING (NO. 1) PLC



Notes to the Accounts for the year ended 31 December 2003 (continued)



|5. | Tax on Profit on Ordinary Activities
|-- | ------------------------------------



|                                                                                                                    |  |           |   |  |           
|------------------------------------------------------------------------------------------------------------------- |  | --------- | - |  | ----------
|                                                                                                                    |  | 2003£000 |   |  | 2002 £000
|UK corporation tax for the year at 0% (2002:19%)                                                                    |  |          |   |  |          
|Adjustments in respect of prior years                                                                               |  | (2        | ) |  | 2         
|                                                                                                                    |  |           |   |  |           
|                                                                                                                    |  | (2        | ) |  | 2         
|                                                                                                                    |  |           |   |  |           
|The company qualifies for the starting companies rate of corporation tax of nil.                                  
|The tax assessed for the year is higher than the rate of UK corporation tax applicable tothis company (0 per
cent).
|                                                                                                                    |  |          
|The differences are explained below:                                                                                |  |           |   |  |           
|                                                                                                                    |  |          
|The corporation tax charge is made up as follows:                                                                   |  |           |   |  |           
|Profit on ordinary activities before tax                                                                            |  | 1         |   |  |          
|                                                                                                                    |  |           |   |  |           
|Profit on ordinary activities multiplied by starting rate of corporation tax in the UK of nil                       |  |          |   |  |          
|Effect of:                                                                                                          |  |           |   |  |           
|Adjustments to tax charge in respect of previous periods                                                            |  | (2        | ) |  | 2         
|                                                                                                                    |  |           |   |  |           
|                                                                                                                    |  | (2        | ) |  | 2         
|                                                                                                                    |  |           |   |  |           



|6. | Loans to Group Undertaking
|-- | --------------------------



|                                                 |  |            |  |           
|------------------------------------------------ |  | ---------- |  | ----------
|                                                 |  | 2003 £000 |  | 2002 £000
|Repayable:                                       |  |            |  |           
|More than two years but not more than five years |  | 650,000    |  | 1,250,000 
|More than five years                             |  | 957,000    |  | 1,006,000 
|                                                 |  |            |  |           
|                                                 |  | 1,607,000  |  | 2,256,000 
|                                                 |  |            |  |           



The loans are all
denominated in Sterling and are at variable rates of interest, based on LIBOR for three-month sterling deposits.



|7. | Debtors
|-- | -------



|                                                               |  |           |  |          
|-------------------------------------------------------------- |  | --------- |  | ---------
|                                                               |  | 2003£000 |  | 2002£000
|Amounts due from group undertaking                             |  | 20        |  | 81       
|Called up share capital not paid - due from parent undertaking |  | 37        |  | 37       
|Accrued interest receivable on loans to group undertaking      |  | 13,787    |  | 20,329   
|                                                               |  |           |  |          
|                                                               |  | 13,844    |  | 20,447   
|                                                               |  |           |  |          



|8. | Cash at Bank and in Hand
|-- | ------------------------



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



Page 8



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HOLMES FINANCING (NO. 1) PLC



Notes to the Accounts for the year ended 31 December 2003 (continued)



|9. | Creditors : amounts falling due within one year
|-- | -----------------------------------------------



|                         |  |           |  |            |  
|------------------------ |  | --------- |  | ---------- | -
|                         |  | 2003£000 |  | 2002 £000 |  
|Corporation tax          |  |          |  | (1         | )
|Other creditors          |  |          |  | 71         |  
|Accrued interest payable |  | 13,786    |  | 20,329     |  
|                         |  |           |  |            |  
|                         |  | 13,786    |  | 20,399     |  
|                         |  |           |  |            |  



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



|                                   |  |            |  |           
|---------------------------------- |  | ---------- |  | ----------
|                                   |  | 2003 £000 |  | 2002 £000
|Debt securities in issue (note 11) |  | 1,607,000  |  | 2,256,000 
|                                   |  |            |  |           



|11. | Debt Securities in Issue
|--- | ------------------------



|                                                  |  |            |  |           
|------------------------------------------------- |  | ---------- |  | ----------
|                                                  |  | 2003 £000 |  | 2002 £000
|Series 1 Class A Floating Rate Notes 2005         |  |           |  | 600,000   
|Series 1 Class B Floating Rate Notes 2040         |  |           |  | 21,000    
|Series 1 Class C Floating Rate Notes 2040         |  |           |  | 28,000    
|Series 2 Class A Floating Rate Notes 2007         |  | 650,000    |  | 650,000   
|Series 2 Class B Floating Rate Notes 2040         |  | 23,000     |  | 23,000    
|Series 2 Class C Floating Rate Notes 2040         |  | 30,000     |  | 30,000    
|Series 3 Class A1 Floating Rate Notes 2010        |  | 375,000    |  | 375,000   
|Series 3 Class A2 Floating Rate Notes 2010        |  | 200,000    |  | 200,000   
|Series 3 Class B Floating Rate Notes 2040         |  | 24,000     |  | 24,000    
|Series 3 Class C Floating Rate Notes 2040         |  | 30,000     |  | 30,000    
|Series 4 Class A Fixed / Floating Rate Notes 2013 |  | 250,000    |  | 250,000   
|Series 4 Class B Floating Rate Notes 2040         |  | 11,000     |  | 11,000    
|Series 4 Class C Floating Rate Notes 2040         |  | 14,000     |  | 14,000    
|                                                  |  |            |  |           
|                                                  |  | 1,607,000  |  | 2,256,000 
|                                                  |  |            |  |           



The notes are
denominated in the following currencies:



|            |  |           |  |          
|----------- |  | --------- |  | ---------
|UK Sterling |  | 704,000   |  | 704,000  
|US Dollars  |  | 703,000   |  | 1,352,000
|Euro        |  | 200,000   |  | 200,000  
|            |  |           |  |          
|            |  | 1,607,000 |  | 2,256,000
|            |  |           |  |          

|
|



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



Page 9



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HOLMES FINANCING (NO. 1) PLC



Notes to the Accounts for the year ended 31 December 2003 (continued)



|11. | Debt Securities in Issue (continued)
|--- | ------------------------------------



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 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 Sterling and US Dollar LIBOR and three-month EURIBOR, except for the Series 4 Class A notes, on which interest is paid at a fixed rate until July 2010, after which it is paid at variable rates based on the three-month Sterling LIBOR.



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:



|                                           |  |            |  |           
|------------------------------------------ |  | ---------- |  | ----------
|                                           |  | 2003 £000 |  | 2002 £000
|Series 1 Class A Floating Rate Notes 2005  |  |           |  | 558,344   
|Series 1 Class B Floating Rate Notes 2040  |  |           |  | 19,539    
|Series 1 Class C Floating Rate Notes 2040  |  |           |  | 25,854    
|Series 2 Class A Floating Rate Notes 2007  |  | 650,199    |  | 605,046   
|Series 2 Class B Floating Rate Notes 2040  |  | 23,004     |  | 21,381    
|Series 2 Class C Floating Rate Notes 2040  |  | 30,027     |  | 27,103    
|Series 3 Class A1 Floating Rate Notes 2010 |  | 375,836    |  | 375,454   
|Series 3 Class A2 Floating Rate Notes 2010 |  | 200,552    |  | 208,490   
|Series 3 Class B Floating Rate Notes 2040  |  | 23,994     |  | 23,999    
|Series 3 Class C Floating Rate Notes 2040  |  | 30,219     |  | 30,125    
|Series 4 Class A Floating Rate Notes 2013  |  | 271,120    |  | 275,425   
|Series 4 Class B Floating Rate Notes 2040  |  | 11,103     |  | 11,018    
|Series 4 Class C Floating Rate Notes 2040  |  | 14,305     |  | 14,063    
|                                           |  |            |  |           
|                                           |  | 1,630,359  |  | 2,195,841 
|                                           |  |            |  |           



|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.



Page 10



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HOLMES FINANCING (NO. 1) PLC



Notes to the Accounts for the year ended 31 December 2003 (continued)



12 (a) Maturity profile of financial liabilities



|                                                 |  |                              |  |                       |  |                      
|------------------------------------------------ |  | ---------------------------- |  | --------------------- |  | ---------------------
|                                                 |  | Debtsecurities in issue£000 |  | Otherliabilities£000 |  | TotalLiabilities£000
|2003                                             |  |                              |  |                       |  |                      
|                                                 |  |                              | 
|Within one year or less or on demand             |  |                             |  | 13,786                |  | 13,786               
|More than one year but not more than two years   |  |                             |  |                      |  |                     
|More than two years but not more than five years |  | 650,000                      |  |                      |  | 650,000              
|More than five years                             |  | 957,000                      |  |                      |  | 957,000              
|                                                 |  |                              |  |                       |  |                      
|                                                 |  | 1,607,000                    |  | 13,786                |  | 1,620,786            
|                                                 |  |                              |  |                       |  |                      
|2002                                             |  |                              |  |                       |  |                      
|                                                 |  |                              | 
|Within one year or less or on demand             |  |                             |  | 20,399                |  | 20,399               
|More than one year but not more than two years   |  |                             |  |                      |  |                     
|More than two years but not more than five years |  | 1,250,000                    |  |                      |  | 1,250,000            
|More than five years                             |  | 1,006,000                    |  |                      |  | 1,006,000            
|                                                 |  |                              |  |                       |  |                      
|                                                 |  | 2,256,000                    |  | 20,399                |  | 2,276,399            
|                                                 |  |                              |  |                       |  |                      



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 £000 |  | Floatingrate £000 |  | Non- interestbearing£000 |  | Weightedaverageyears untilmaturity*Years
|2003         |  |             |  |                    |  |                           |  |                                         
|             |  |             |  |                   
|Assets:      |  |             |  |                    |  |                           |  |                                         
|Sterling     |  | 1,620,860   |  | 1,607,016          |  | 13,844                    |  | 0.0                                     
|             |  |             |  |                    |  |                           |  |                                         
|Liabilities: |  |             |  |                    |  |                           |  |                                         
|Sterling     |  | 1,620,786   |  | 1,607,000          |  | 13,786                    |  | 0.0                                     
|             |  |             |  |                    |  |                           |  |                                         
|2002         |  |             |  |                    |  |                           |  |                                         
|             |  |             |  |                   
|Assets:      |  |             |  |                    |  |                           |  |                                         
|Sterling     |  | 2,276,474   |  | 2,256,027          |  | 20,447                    |  | 0.1                                     
|             |  |             |  |                    |  |                           |  |                                         
|Liabilities: |  |             |  |                    |  |                           |  |                                         
|Sterling     |  | 2,276,399   |  | 2,256,000          |  | 20,399                    |  | 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.



Page 11



---

HOLMES FINANCING (NO. 1) PLC



Notes to the Accounts for the year ended 31 December 2003 (continued)



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 2003 was a liability of £91,312,686 (2002 : a
liability of £93,198,999). The estimated fair value of the interest rate swap entered into by the Company as at 31 December 2003 was an asset of £24,059,536 (2002 : an asset of £31,223,066).



The cross currency swaps mature between June 2005 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 2003 or 31 December 2002.



|13. | Share Capital
|--- | -------------



|                                  |  |           |  |           
|--------------------------------- |  | --------- |  | ----------
|                                  |  | 2003£000 |  | 2002 £000
|Authorised:                       |  |           |  |           
|50,000 Ordinary shares of £1 each |  | 50        |  | 50        
|                                  |  |           |  |           
|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
|--- | --------------------------------------------------



|                                      |  |           |   |  |           
|------------------------------------- |  | --------- | - |  | ----------
|                                      |  | 2003£000 |   |  | 2002 £000
|Opening shareholders funds           |  | 75        |   |  | 73        
|Retained (loss) / profit for the year |  | (1        | ) |  | 2         
|                                      |  |           |   |  |           
|Closing shareholders funds           |  | 74        |   |  | 75        
|                                      |  |           |   |  |           



Page 12



---

HOLMES FINANCING (NO. 1) PLC



Notes to the Accounts for the year ended 31 December 2003 (continued)



|15. | Capital Commitments and Contingent Liabilities
|--- | ----------------------------------------------



There were no outstanding capital commitments or contingent liabilities at 31 December 2003 and 2002.



|16. | Related Party Transactions
|--- | --------------------------



The Company has taken advantage of the exemption covered by paragraph 3 (c) of FRS 8, 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. 1) plc. The total amount paid relating to the Company in the period ended 31 December 2003, by the group, was £15,000 (2002: £15,000).



|17. | Parent 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.



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