Genesis Energy Plc.: INTERIM MANAGEMENT REPORT 1.

Corporate name, seat, foundation, corporate data Corporate name: Genesis Energy Investment Public Limited Company Abbreviated company name: Genesis Energy Plc. Registered seat: 1137 Budapest, XIII.

Szent István krt.

18. Date of the Articles of Association: 20 July 1983 Date of company registration: 17 July 1984 The Company was registered at the Budapest Metropolitan Court as Court of Registration. Number of corporate registration: 01-10-041020 Company form: Public Limited Company Date of the current Articles of Association: 19 April, 2010 Number, date and location of the latest corporate registration: 01-10-041020/211; 3 November, 2010, Budapest The term of the Company: indefinite. The business year corresponds to the calendar year for the parent company as well as for the subsidiary companies. The elected auditor: Audisoft Kft.

represented by Dr.

Julianna Mencz The Company publishes its announcements on the website of BÉT (Budapest Stock Exchange), PSZÁF (Hungarian Financial Supervisory Authority) and on its own corporate website, it sends them to the media and information storage system (www.kozzetetelek.hu) according to the provisions of the law. 2.

Operation of the Company in the third quarter of 2010 On 11 August 2009 Genesis Energy Investment Plc.

(hereinafter referred to as: the "Company") and Cogenco International Inc.

(hereinafter referred to as Genesis Solar Corporation (GSC)) entered into a stock purchase agreement (the “SPA”) regarding the potential sale of Company’s stakes in all of its subsidiaries (Genesis Solar España, S.L., Genesis Solar Singapore Pte.

Ltd.

and Genesis Solar Hungary Kft.

The SPA was amended several times and was consolidated on 12 May 2010.

The transaction was closed at the end of July 2010 in a way that GSC assigned its rights and obligations included in the contract to Genesis Capital Management Ltd.

(GCM).

The reason of the assignment is that GSC should not exercise any ownership rights in overseas subsidiaries before it complies with securities and other laws and other legislation of the US and its regulatory bodies (SEC).

Until this process is completed, the GSC-shares acquired by the Company will remain in an escrow account.

Durin g this period of time the Company, GCM and GIG Holding Ltd.

jointly exercise the voting rights in GSC.

Resulting from the transaction the stakes of the Company in its subsidiaries were acquired by GCM on 30 July 2010.

After 30 September, 2010 GCM paid the consideration for GSS and GSH in the form of GSC shares, however, his other obligations were not met and the claim against GCM and the companies purchased by GCM are still outstanding. Due to the events in the recent past (capital increase, closing of the SPA) there are no comparable periods for analyses.

Therefore, only the impact of the significant events influencing the valuation of the company can be given. By closing the SPA the claim deriving from the sale of the subsidiaries increased in the third quarter.

The closing had also a significant effect on the results of the period and the shareholders’ equity due to the special valuation method used in the financial statements of the holding as of 31 December, 2009.

The SPA set the consideration for the subsidiaries in the form of GSC shares.

As a consequence of the planned share swap the value of GSC shares, which are not yet traded on the stock exchange, correspond to Genesis Energy share price in a ratio of 1:1.

Based on this fact GSC shares as consideration for stock and shares were valued at the stock exchange price of Genesis Energy at the times of closing the financial statements of the Company. Applying the same valuation method at the end of the third quarter more than 597 million loss is generated compared to the 31 December, 2009 audited financial statements due to the decrease in Genesis Energy share price.

The loss was significantly improved by the surplus realized in the price of GSE after the closing. On 16 March 2010 the main shareholders of Genesis Energy at that time and four South-African companies, Logical Mining CC, Pinning Properties CC, Calypso Mining CC, Mohikan Development CC, as well as a Swiss Company Vital Source S.A.

entered into a structured private-investment-in-public-equity (PIPE) type agreement.

The contributions in kind of the South African group of investors provided to the Company primarily consisted of the assets of various companies registered in Hungary, including shares and stakes of RK Bányatársaság Kft with exploration rights in Rudabánya, Rudaferrox Kft., Pólus Ferroclean Kft., CEMCC Zrt., Ferroflock & Ferroblock Kft., Rudagipsz-Mix Zrt, Pólus Szikla Kft., Atombeton Kft.

and Pólus Kincs Zrt., real estates, machines, equipment and other assets like barite lens, refuse piles, exploration licenses and mining rights owned by these various companies.

The contribution in kind was effectuated on 14 May 2010.

The amount of the capital increase w as HUF 21,580,140,000 which was registered by the Company Court on 15 July 2010.

The new shares were generated on 12 October, 2010.

The introduction of the new shares to the stock exchange can be initiated after closing the public purchase offer of the parties acting in concert. Having authorized by the General Assembly the Board of Directors increased the capital of Genesis Solar España S.L.

by the in-kind contribution provided by Vital Source S.A., which is a 100% stake in a Spanish company (Lawrence Tres S.L.) possessing a real estate portfolio at a value of EUR 9 million.

Accordingly the Company provided the contribution, and the registration is in progress at the Spanish authorities. Genesis Energy engaged the London-based consulting firm Gorham & Partners Ltd to work with Genesis senior management to assist in the further development of the business.

The consultants focus on two important areas: - The creation of a practical and achievable plan for the business for the next three years - Introducing suitable investors and joint venture partners to the Company who wish to invest and bring additional expertise in the development and management of mines similar to the mining assets of Genesis Energy. 3.

Financial Position of the Company The company does not prepare consolidated financial statements quarterly, the stand-alone financial statements of the holding is not audited, the receivables and payables generated in foreign currency are not revalued.

There is no significant change in the financial position of the company.

The liquidity risk is still high due to the following reasons: • The holding has no sales, its liquidity depends on the payment readiness of Genesis Capital Management Ltd.

The Company started legal actions to recover its claims. • Based on a preliminary survey among its shareholders the company plans to issue new shares against cash.

Until this event will occur other means of cash generation are very limited.

The new issuance can only start after closing the public purchase offer of the new shareholders.

The liquidity problems are intensified by drawing the process out. • As the production was ceased in Rudagipsz-Mix Zrt due to the problems in connection with Hasit Magyarország Kft., there are serious liquidity problems also on the level of the subsidiaries.
4.

Management There are significant changes in the management.

Unlike the previous practice, the strategic and operative governance were separated.

The management fulfilling operative tasks are supervised and controlled by two vice-chairmen appointed by the Board of Directors for this purpose.

The work of the Chief Executive Officer, Dr.

Zsolt Edgár Rasztovits is supported by his two deputies: Jenő Kunovits General Deputy Chief Executive Officer and Gabriella Prazsák Zádorné Chief Financial Officer. According to the decision of the General Meeting on 19th April, 2010 the members of the Board of Directors have been changed as follows: Please find the table under the following link: http://www.irw-press.com/dokumente/interim_310910_ENGLISH.pdf 5.

Portfolio 5.1.

General data The changes in the portfolio are important compared to 31 December, 2010.

The financial data of the subsidiaries contributed by capital increase in May 2010 will be consolidated in the financial statements at year end. The main data of the subsidiaries on 30 September, 2010: Please find the table under the following link: http://www.irw-press.com/dokumente/interim_310910_ENGLISH.pdf There have not been significant changes in the financial statements of the subsidiaries since 30 June, 2010 except the change in shareholders’ equity of two subsidiaries: Pólus Szikla Kft.

and RK Bányatársaság Kft.

Both subsidiaries were contributed at a higher value than the shareholders’ equity in its books based on the valuation of the auditor.

The assets were adjusted in the stand-alone financial statements of the subsidiaries applying the valuation for contribution purposes.

Valuation reserve was created due to the adjustment in real estate value of Pólus Szikla Kft and in exploration licences in RK Bányatársaság Kft. 5.2.

State subsidies Pólus Kincs Zrt.

and Rudagipsz-Mix Zrt.

were granted state subsidies in the framework of GOP (operative economy development programme) tender.

The total capital expenditure to be financed from resources gained on tender is 2.3 billion HUF out of which the non-refundable grant is close to 855 million HUF.

The realisation of the tender projects has been started, however there is delay compared to the planned schedule. An advance was given to Pólus Kincs Zrt.

in the amount of HUF 86 million in order to purchase mining machinery for deploying a plant for open pit mine according to the targets set in the tender.

A new production hall is also under construction.

.

An advance was also given to Rudagipsz-Mix Zrt.

in the amount of more than HUF 130 million to finance the purchase of equipment for research and development , IT as well as know-how in the framework of a tender for supporting the R&D activity.

Transfer of an advance for the third project of processing the refuse piles is projected in the near future. 5.3.

Legal cases We have already informed our shareholders in the teaser published in April, 2010 that Rudagipsz-Mix Zrt., the only company which had production activity, concluded a contract with Hasit Hungária Kft.

to operate its mines and processing plant and to take over the mining activity around Rudabánya completely. According to the stipulations of the agreement Rudagipsz-Mix Zrt.

occupied the assets, obtained all the necessary licences and mining rights and took over the employees of Hasit-Hungária Kft in a legal form when the employees can keep all their previous employment rights. In order to finance the purchase price Rudagipsz-Mix Zrt.

has concluded a loan contract with MFB Zrt.

(Hungarian Development Bank) and the bank signed an agreement with Hasit-Hungária Kft to provide the collateral for the financing.

In the meantime Hasit-Hungária Kft.

went into liquidation because of delivery service problems.

The loan contract was cancelled due to lack of cooperation on the side of the liquidator. The liquidator sent Rudagipsz-Mix Zrt.

a declaration to recede on 6 July, 2010, but he effected an illegitimate entrance arbitrarily into the property subject of the purchase beforehand and has been keeping it occupied since.

Rudagipsz-Mix Zrt.

has started the necessary legal actions to gain property protection and to attack the declaration of the liquidator. 6.

Statement by the issuer The issuer undertakes that the Interim Management Report contains data and statements true to facts and does not suppress any fact which could be significant for the estimation of the position of the issuer.
Budapest, November, 2009 Dr.

Zsolt Edgár Rasztovits Chief Executive Officer
GENESIS Energy Investment PLC. Szent István krt.

18. Budapest 1137
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