XPP MIDCO ApS

The Group's business concept is to develop, market and sell high quality digital camera systems and software solutions. Our main customers are: I.The world's professional photographers, serious private photo enthusiasts, production studios and cultural heritage applications. This segment comprises both customers buying our full camera systems and customers looking for our highly appraised image workflow software, Capture One Pro. II.Industrial imaging end-users and integrators within Aerial mapping/documentation, inspection, surveillance and homeland security applications. All our customers are characterised by their need for world-class image quality and highly efficient workflow. It is our goal to be the world-wide market leader within all our target customer groups and applications. In this way, we can ensure satisfactory earnings and at the same time we can attract and retain the best product developers and sales & marketing experts within digital imaging.

The year 2018 overall shows satisfactory results, considering 2018 has been a transition year where significant funds have been invested in order to secure the technological leadership in the years to come. The Group's revenue amounted to DKK 469 million in 2018 (DKK 496 million in 2017). The Group profit after tax amounted to DKK 4.2 million in 2018 (DKK 0.5 million in 2017).

As stated above, the Group continued to invest heavily in 2018. The Group invests in both new market areas and distribution systems within digital photography as well as in the further development of the unique and patented series of portable digital cameras, lenses, backs and software solutions. Parent Company The Parent Company's revenue amounted to DKK 0 million in 2018 (DKK 0 million in 2017). The Parent company's profit after tax amounts to DKK 4,2 million in 2018 (DKK 0,5 million in 2017). The Parent Company's equity amounted to DKK 289 million at 31 December 2018 (DKK 285 million at 31 December 2017). No other issues regarding the Parent Company are relevant, which are not already mentioned in the operating review for the Group.

The demand for the best in class imaging workflow software and commercial drones/robotics is expected to drive the revenue growth going forward. The combination of presence on markets which are growing at double digit growth rates and having top of the line software and hardware solutions underpins the positive outlook that is reflected in our expectations for the future. The Software Division will continue its high growth in 2019, based on new products, new distribution systems and new OEM partnerships. Based on our recently launched camera systems for both SP and the INDU market segment and with current and planned products, we expect large growth in both revenue and earnings in 2019.

The Group's global market share is estimated to constitute approximately 60% of the market for high-quality digital camera systems in the professional market. The Group has significant growth opportunities in both the high end private photo-enthusiast market and especially in the industrial market segments.

The Group will continue to invest in the further development and knowledge of the Group's products, targeted distribution systems as well as potential new strategic partnerships.

No events have occurred which affect the consolidated financial statements and the Parent Company financial statements for 2018.

At 31 December 2018, the Group recognised an asset totalling DKK 7,227 thousand. The tax asset consists of non-utilised tax deductions in the form of timing differences.

Based on the budget for 2019, Management considers it likely that there will be future taxable income against which non-utilised tax losses and tax deductions can be offset.

The shares in Phase One A/S and XPP BidCo ApS have been provided as collateral for the Group's and the Parent Company's loans to credit institutions. Furthermore, guarantees for group entities have been provided to credit institutions.