Final Opinion Petrol AD 2006

RNS Number:9325W
Petrol AD
21 May 2007



               This document is a translation of the original in Bulgarian text,
                     in case of divergence the Bulgarian original is prevailing.

                          INDEPENDENT AUDITOR'S REPORT



To the shareholders of

Petrol AD


Report on the separate financial statements


1.  We have audited the accompanying separate financial statements of Petrol AD 
    (the "Company"), which comprise the separate balance sheet as at December 
    31, 2006 and the separate income statement, statement of changes in equity 
    and cash flow statement for the year then ended, and a summary of 
    significant accounting policies and other explanatory notes.


Management's responsibility for the separate financial statements


2.  Management is responsible for the preparation and fair presentation of these 
    separate financial statements in accordance with the International Financial 
    Reporting Standards (IFRS), as adopted by the European Union Commission. 
    This responsibility includes: designing, implementing and maintaining 
    internal control relevant to the preparation and fair presentation of 
    financial statements that are free from material misstatement, whether due 
    to fraud or error; selecting and applying appropriate accounting policies; 
    and making accounting estimates that are reasonable in the circumstances.


Auditor's responsibility


3.  Our responsibility is to express an opinion on these separate financial
    statements based on our audit. Except as discussed in paragraphs 6, 7, 8 and 
    9 below, we conducted our audit in accordance with International Standards 
    on Auditing. Those standards require that we comply with ethical 
    requirements and plan and perform the audit to obtain reasonable assurance 
    whether the separate financial statements are free from material 
    misstatement.



4.  An audit involves performing procedures to obtain audit evidence about the 
    amounts and disclosures in the separate financial statements. The procedures
    selected depend on the auditor's judgment, including the assessment of the 
    risk of material misstatement of the separate financial statements, whether 
    due to fraud or error. In making those risk assessments, the auditor 
    considers internal control relevant to the entity's preparations and fair 
    presentation of the separate financial statements in order to design audit 
    procedures that are appropriate in the circumstances, but not for the 
    purpose of expressing an opinion on the effectiveness of the entity's 
    internal control. An audit also includes evaluating the appropriateness of 
    accounting policies used and the reasonableness of accounting estimates made 
    by management, as well as evaluating the overall presentation of the 
    separate financial statements.



5.  We believe that the audit evidence we have obtained is sufficient and
    appropriate to provide a basis for our qualified audit opinion.



Basis for qualification



6.  Trade and other payables, amounting in total to BGN 65,611 thousand, include 
    current liabilities to a supplier amounting to BGN 48,781 thousand, net,
    as of December 31, 2006, related to a fuel supply agreement signed with the
    supplier, reduced also by ceded receivables from the same supplier. We have 
    not received confirmation from this supplier of the balance due to it. In 
    addition, as disclosed in note 36 of the accompanying separate financial 
    statements, in March 2007 the supplier filed a court claim against the 
    Company for a total amount of BGN 89,557 thousand, which includes claimed 
    overdue amounts of BGN 59,585 thousand, and which also claims that the 
    Company had understated sales reported to the supplier by BGN 11,361 
    thousand and thereby understated the amount due to the supplier. The 
    supplier also claims penalty interest for delay of BGN 18,611 thousand (the 
    equivalent of USD 12,525 thousand). In February 2007 the Company has 
    communicated by letter to this supplier its claim for BGN 83,973 thousand. 
    The nature of the related agreement and the mutual claims between the
    parties give rise to significant uncertainty as to the outcome of these
    disputes. In addition trade and other payables, amounting to total BGN 
    60,367 thousand as of December 31, 2005, include current liabilities to the 
    same supplier amounting to BGN 10,796 thousand, net, related to the same 
    fuel supply agreement, reduced also by ceded receivable from the same 
    supplier. We received a letter from this supplier, which confirmed as of 
    December 31, 2005 a net amount due to it of BGN 19,353 thousand. As a result 
    of the above, we were not able to satisfy ourselves as to the valuation, 
    completeness  and fair presentation of the current liabilities to this 
    supplier, as reported in the separate financial statements as of December 
    31, 2006 and December 31, 2005, as well as the valuation and fair 
    presentation of reported sales amounting to approximately BGN 7,311 thousand 
    and BGN 4,050 thousand for the years ended December 31, 2006 and 2005, 
    respectively, as well as to the overall effect of this litigation on the 
    financial statements of the Company.



7.  Inventories, as disclosed in note 21 to the accompanying separate
    financial statements, amounting to total BGN 28,704 thousand, include fuels 
    with a carrying amount of BGN 18,313 thousand as of December 31, 2006 (and
    respectively, BGN 30,768 thousand and BGN 20,093 thousand as of December 31,
    2005), purchased under the fuel supply agreement signed with the supplier
    referred to in paragraph 6 above. We have not received confirmation from 
    this supplier regarding the inventory quantities as of December 31, 2006. As 
    of December 31, 2005 the supplier has confirmed  quantities of inventories 
    at the Company's gas stations, which are higher than the quantities and 
    values reported in the accompanying separate financial statements and the 
    difference amounted to approximately BGN 5,509 thousand. As a result of the 
    above, we were not able to satisfy ourselves through other alternative 
    procedures as to whether inventories and current liabilities amounting to 
    approximately BGN 18,313 thousand and BGN 5,509 thousand are fairly 
    presented and valued in these separate financial statements as of December 
    31, 2006 and 2005, respectively.



8.  As disclosed in Note 19 to the accompanying separate financial statements, 
    the Company has reported long-term investments in subsidiary and associated 
    companies, which after their initial recognition are stated at cost, subject 
    to regular review for impairment. The accompanying separate financial
    statements do not include any impairment of these investments. As of 
    December 31, 2006 there are indications for possible impairment of part 
    of these investments with carrying amount of BGN 6,381 thousand. We have not 
    been provided with sufficient analysis of the value of these investments to 
    enable us to determine whether long-term investments in subsidiary and 
    associated companies are fairly presented and valued as of December 31, 
    2006.


9.  Trade and other receivables amounting to BGN 16,303 thousand as of December 
    31, 2006 include various receivables overdue for over one year amounting to 
    approximately BGN 1,500 thousand, for which there are indications for 
    impairment. As of December 31, 2006 no impairment has been provided for 
    these receivables. We have not been provided with sufficient evidence of the
    recoverability of these receivables to enable us to determine whether trade 
    and other receivables amounting to BGN 1,500 thousand are fairly presented 
    and valued as of December 31, 2006.


Qualified Opinion


10. In our opinion, except for the effects, if any, on the separate financial 
    statements of the matters discussed in paragraphs 6, 7, 8 and 9 above, the
    separate financial statements present fairly, in all material respects, the
    financial position of the Company as of December 31, 2006, and its financial
    performance and cash flows for the year then ended, in accordance with IFRS, 
    as adopted by the European Union Commission.


Emphasis of matter


11. Without further qualifying our opinion, we draw attention to the choice of 
    the management for the accounting framework applied, disclosed in note 2.1 
    to the accompanying separate financial statements.



Other Reports on regulatory requirements - Annual report of the activities of
the Company according to article 33 of the Accountancy Act


In accordance with the Accountancy Act, article 33, paragraph 5, the Separate
annual report of the activities and the Consolidated annual report of the
activities may be prepared and presented together, in which case specific
information should be included for the entities that comprise the Group taken as
a whole. Management has elected to prepare only Consolidated annual report of
the activities.


Deloitte Audit OOD

Sylvia Peneva

Managing Director

Registered Certified Public Accountant


May 7, 2007

Sofia



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