[Letterhead of KPMG Hungaria Kft.]

                       Report of the Independent Auditor
         to the Shareholders of Retail Chains Hungary Kereskedelmi Kft.

We have audited the balance sheet of Retail Chains Hungary Kereskedelmi Kft.
(the company) as at 31 December 1996 and 1995, and the consolidated balance
sheets of the company and its subsidiaries as at such dates, and the related
statements of income, shareholders' equity and cash flows for the years ended on
such dates (hereafter financial statements). These financial statements are the
responsibility of the Company's Board of Directors and its management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audits in accordance with generally accepted auditing
standards, including standards prescribed by the Auditors' Regulations (Manner
of Auditor's Performance) 1973. Those standards require that we plan and perform
the audit to obtain reasonable assurance that the financial statements are free
of material misstatement, whether due to error or intentional misrepresentation.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by the Board of
Directors and by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

The above mentioned financial statements were prepared on the basis of the
historical cost convention, in historical values adjusted for the changes in the
general purchasing power of the Israeli currency, in accordance with opinions of
the Institute of Certified Public Accountants in Israel. Condensed data in
nominal historical values, on the basis of which the adjusted financial
statements were prepared, is presented in Note 21.

In our opinion, the above financial statements present fairly, in all material
respects, the financial position of the company and the consolidated financial
position of the company and its subsidiaries as at 31 December 1996 and 1995 and
the results of its operations, the changes in the shareholders' equity and its
cash flows for each of the years ended in such dates, in conformity with
generally accepted accounting principles.

Without qualifying our opinion, we draw your attention to note 19, post balance
sheet events, which discusses the decision made by the quotaholders to start a
liquidation process from 15 January 1997.

February 28, 1997

KPMG Hungaria Kft.

/s/ Michael Kevehazi

Michael Kevehazi
Partner