ANNUAL REPORT INCLUDING SUSTAINABILITY REPORT - Readly

This is ReadlyCEO’S MESSAGEA strong year for Readly2020 was a special year for us atReadly and for the entire world. Interestin exploring digital alternatives grewsharply during the spring, especiallyin countries that were entirely or partlylocked down in response to the coronavirus pandemic. Although demandnormalised during the summer andautumn, growing digital awareness iscreating conditions for us at Readly tocontinue driving digitalisation of themagazine industry.TStrong growth in all marketsFinancially, 2020 was a strong year. Our sales amounted toSEK 352.6 million, an increase of 33.2 per cent compared with ayear ago. The number of full-paying subscribers grew by 33.2 percent to 367,764 (278,555). Performance in the UK was particularlystrong, where we saw good growth especially during the secondhalf of the year. Other markets continue to see good growth, andall markets contributed with double digit growth rates.Much to our satisfaction, we also saw an improvement of ourgross margin, which was 33.2 per cent in 2020, compared with31.3 per cent a year ago. At the same time, our EBITDA increasedto SEK -179.9 million (-134.6), largely owing to the investments wehave made in brand awareness – something that we expect willgenerate returns in both the short and long term. Through brandsurveys we can already see a clear increase in awareness of ourbrand and what our service entails and what advantages it brings.Bringing the magic of magazines into the futureOpening a magazine is like opening the door to a special place,a separate universe that takes us to foreign lands, situations orevents. Through magazines we find inspiration, insight andknowledge. Verified journalism is also an important pillar ofdemocratic societies. A fresh study from PwC shows thatconsumers today rely on magazines more than any other newsor information source, and many people are prepared to pay forquality content from trusted sources.he pandemic has brought forth changes inour behaviours that will have far-reachingeffects in society. A clear example is howquickly we changed over to a more digital lifeas workplaces and schools were forced toshut down in many countries early in the year.Digital meetings and education are today anatural part of our daily lives and will likelycontinue to be so also in the future.At Readly we have a fundamental conviction that it is by creatingvalue for our subscribers and our partners, i.e., publishers, advertisers and commercial partners, that we lay the foundation for ourshared success. So value creation is very high on our strategicagenda for 2021 and going forward. During 2020 Readly continuedworking for an even better product experience in order to elevatethe reading experience for our subscribers. This work is continuingalso into 2021. Among other things, we have further developedour presence on the Web with Readly GO, a service that simplifiesaccess and reading of our more than 5,000 titles for people whoare curious about digital magazines but have not yet downloadedthe Readly app.For Readly the pandemic has required certain adjustments in ourway of working, but overall we were spared from most of thenegative impacts that the pandemic has had for many companies.This is partly because we were previously already working fromvarious parts of the world and communicating via various digitalchannels, but partly also because growing interest in our serviceand digital services in general is strengthening our opportunitiesfor continued success.At the start of April we launched Readly in Australia and NewZealand, which illustrates the scalability of our product andbusiness model. A new market does not automatically meanthat we must open new offices and hire more people. Nearly allpreparation work including publisher agreements, partnershipsand other components of the launch plan was conducted by ourteams based in Europe via digital communication with our localcounterparties “down under”.We have also introduced Readly Moments, a function that sumsup our subscribers’ yearly reading and presents it in an excitingand easily grasped way. Here, readers can see highlights of theirpast year of reading on Readly and can also share their ReadlyMoments with family and friends.A year of developmentDuring the past year we also welcomed a number of new publishers[ 10 ]R E A D LY A N N U A L R E P O RT S U S TA I N A B I L I T Y R E P O RT 2 0 2 0

This is Readly“CEO’S MESSAGEThrough magazines we find inspiration,insight and knowledge. Verified journalismis an important pillar of democratic societies.”and titles to Readly. Being able to offer a wide selection of engagingand inspiring titles in all our 11 markets is a key to our success.At the same time, publishers gain access to an additional sourceof revenue and an opportunity to reach new readers through ourplatform, which can be seen in the fact that roughly 20 per centof reading on Readly is done of titles from a country other thanthe subscriber’s place of domicile. Through more than 30 billionanonymised data points we also provide knowledge and insightsinto reader behaviours to publishers that support their revenuegeneration, as we enable optimisation of both editorial content andtheir advertisements. I am grateful for the very good relationshipswe have formed with publishers and partners since Readly wasfounded, and that we also had the pleasure of seeing more than 100new publishers come aboard in 2020.I am also very proud and happy about the keen interest in Readlythat the Initial Public Offering generated. The available scope in theissue was ten times oversubscribed, and we had the opportunity towelcome new, highly respected Swedish and international institutional investors as well as a large number of private individuals asnew shareholders, which was far more than we had dared hope for.Our goal in listing Readly was to broaden the ownership base andwith our owners’ support to increase opportunities to drive development of the digital magazine market over the long term. In thatI think we were successful. Through the IPO the company raisedapproximately SEK 450 million in new capital, which ensures thatwe can continue to work towards our strategic and financial goals.Thanks to all our employeesI want to round off my first yearly summary as CEO of a listedReadly by directing a big and sincere thank you to all of ouremployees. It was a year that in many ways will go down in historyas being extraordinary – both for us at Readly and for the world ingeneral. Readly is made up of a strong team of individuals who allcontribute their courage, experience, energy and passion forquality content and the publishing industry. Togetherwe are building the future of digital magazinereading. During 2020 we continued to createconditions for more people to discover themagic of magazines and laid the foundationfor continued positive development in 2021.During the year we strengthened our position in the UK considerably, among other things by expanding our selection of dailynewspapers. We can now offer our readers a number of leadingBritish newspapers, including the Daily Express, The Guardian andThe Observer – titles that attract great interest among an international audience. In Sweden and Germany, too, we welcomed leadingnews sources through Aftonbladet, as well as BILD andDie Welt after the end of the period.Readly’s first sustainability reportBeing able to make a positive difference in the world we operatein is something that we hold close to heart at Readly. We are therefore very proud to be able to present our first official sustainabilityreport, which includes among other things a materiality analysisthat maps out the sustainability aspects that all of Readly’s stakeholders feel are most important for us to focus on. The results ofthe survey and the in-depth interviews that have been conductedgive us valuable feedback on our sustainability work and are beingtaken into account in how we implement a systematic way ofworking in our future sustainability initiatives. One strategicallyprioritised area involves contributing to a smaller carbon footprintby continuing to be a driver of digitalisation in the magazineindustry, which also has a great impact on Readly’s business andour prospects for successful future development. Read moreabout this in Readly’s Sustainability Report on page 27.Maria HedengrenCEO, ReadlyListing on Nasdaq – a milestoneSince 17 September Readly’s shares are traded on NasdaqStockholm. Preparing the company for a stock market listing wasboth intense and educational. I am extremely humbled and gratefulfor the enormous effort that the team at Readly made to preparethe organisation for life in a public environment as well as to carryout the actual listing process.[ 11 ]R E A D LY A N N U A L R E P O RT S U S TA I N A B I L I T Y R E P O RT 2 0 2 0

This is ReadlyREADLY'S PURPOSE, VISION AND STRATEGYOur purpose: bringingthe magic of magazinesinto the future“The only thing we know about the future is ”There are many ways you could end that sentence. But most will agree that the futurewill bring change. At Readly we agree. The one thing we know for certain about thefuture is that it is growing increasingly digital. Readly’s purpose is to bring the magicof magazines into the future and capitalise on the digital opportunities it brings.Paradoxically, we also believe in a future that inmany ways will remain unchanged. Consumerswill always be eager to explore their interests,find inspiration, surrender to their passions,try new things or just relax. All of these needscan be met by reading magazines – by readingarticles, reports, or flipping through photos.Plus, many people associate magazine-readingwith personal time. And it is this captivating content and thatmoment for yourself where readers can enter another world andimagine other situations, experience current or historical events,see new places, find inspiration about their interests and perhapsdream away, that we call the magic of magazines.For us the future is also about the importance of providing accessto content from responsible publishers. In times of informationoverflow, clickbait and disinformation, we aim to be a counterforceto the spread of false and irresponsible content and enable socialand community engagement.Our visionNo matter what the future brings, at Readly we will continue toserve our purpose – bringing the magic of magazines into thefuture so that quality content is something that will continue tobe discovered and live on.Readly’s vision is totransform the consumptionof magazine content by offeringthe greatest experience andthe broadest selection.StrategyAs Europe’s leader in its format, Readly has set an ambitious growthstrategy. With our market-leading position in the “all-you-can-read”format in Europe, Readly is favourably positioned in the markets inwhich we are active. Our business model and our service offeringare scalable, we have a compelling offering to subscribers, publishers[ 12 ]R E A D LY A N N U A L R E P O RT S U S TA I N A B I L I T Y R E P O RT 2 0 2 0

This is ReadlyREADLY'S PURPOSE, VISION AND STRATEGYand partners, our product engages our readers, and we have ahigh share of recurring revenue. Against this backdrop, Readlyhas adopted a strategic growth plan that is based on the followingsix points: S trengthen our position as the European market leader in the“all-you-can-read” format by continuing to expand our offeringand developing new digital solutions together with publishers I ncrease the share of organic growth by investing in productdevelopment and stronger brand awareness C ontinue investing in conversion-driving campaigns andlong-term brand-building marketing Increase distribution, reach and brand awareness throughpartnerships Continue penetrating existing markets and expanding intonew geographic markets Develop new revenue streams over time“We have the largestnumber of magazinetitles and the highest scores inthe AppStore and Google Play.”including telecoms operators, energy companies, grocery retailersand membership networks. Going forward Readly will continue tofocus on further developing its network of partnerships in sectorssuch as retail, the hotel and restaurant industry and the transportsector. Entering into new partnerships also helps Readly achievegreater exposure in existing markets and future expansions tonew markets.Strengthen our position as the Europeanmarket leader in the “all-you-can-read” formatReadly is the market leader in Europe in the “all-you-can-read” format for digital magazines, with a digital offering of more than 5,000titles and approximately 140,000 editions to date. Among otherthings we have the largest number of magazine titles, the highestscores in the AppStore and Google Play, and agreements withmany large publishing houses in Germany, the UK and Sweden.Continue penetrating existing markets andexpanding into new geographic marketsReadly will continue to increase its penetration in existing coremarkets, where awareness and demand for digital all-you-canread magazine services are relatively high. Readly will alsofocus on accelerating its rate of growth in its secondary marketsand expanding into new geographic markets. Since Readly’splatform and business model are scalable, Readly can establisha presence in new geographic markets without costs for buildingup permanent, local teams. Having built up a network of some 900publishers facilitates this as the company establishes contactswith new, potential publishers in existing as well as new markets.With 900 publishers as partners worldwide, we are positioned toleverage our market-leading format. Our strategy builds upon thebreadth and depth of our content, where we will continue to addtitles in strategic categories in close cooperation with publishersaround the globe.Organic growthTo capitalise on the underlying growth potential, Readly will focuson continuously renewing and further developing its serviceoffering and user experience, such as by improving opportunitiesfor both new and existing users to even more quickly discoverrelevant and engaging content, experience the smart functionsthat Readly offers, and support frequent use of the app. We arealso working on further developing the mobile experience.Develop new revenue streams over timeReadly is constantly developing new product functionality andexploring new ways to generate additional revenue. One exampleof this is Readly Ads, our proprietary advertising technology.Readly Ads’ dynamic advertisements combine the best of offlineand online by allowing Readly to add advertisements that areadapted for a specific magazine or personalised for specificreaders. Readly thereby has the opportunity to establish itself inthe magazine advertisers market.Continue investing in conversion-drivingcampaigns and long-term brand-building marketingReadly will continue to invest in marketing initiatives and PRactivities aimed at strengthening the company’s brand andenhancing organic growth. Readly will also continue to invest inconversion of new customers via digital channels for digital,performance-based marketing. The marketing budget isallocated in view of the channels and markets that generate thehighest returns and based strategic considerations.Another example is the large volume of data points that Readlygenerates. Data-based insights are made available for publishers,giving them insights into readers’ preferences and behaviours,which in turn gives the publishers an opportunity to personalise andshare their future content. This could replace or reduce publishers’need to hire external consultants to collect and analyse customers’reading behaviours. Further, Ready believes there are opportunitiesin the future to develop e-commerce solutions that allow users tobuy products by clicking on a link in a magazine, for example.PartnershipsPartnerships are an important opportunity for Readly to increasethe inflow of subscribers as well as brand awareness. Readlycurrently has partnerships with a multitude of major actors,[ 13 ]R E A D LY A N N U A L R E P O RT S U S TA I N A B I L I T Y R E P O RT 2 0 2 0

This is ReadlyFinancial targetsThe Board of Directors has adopted three financialtargets for the medium and long term.Growth30%-35%In the medium term Readly shall maintain an annual organic growthrate of 30 to 35 per cent. In 2020, growth was 33.2 per cent (35.1).Operating profit before depreciationand amortisation35%Gross marginLong term Readly shall achieve a gross marginof 35 per cent. The gross margin in 2020 was33.2 per cent (31.3).4-5 yrsReadly shall achieve a positive EBITDA in four to five years.In 2020 EBITDA was SEK 178.5 million (-134.6), which is inline with the company’s planned financial performance.Dividend PolicyReadly’s Board of Directors does not intend to propose a dividend inthe short- or medium term, but instead intends to use the cash flowthat is generated for continued investments in growth. Each year theBoard of Directors will evaluate the possibility of proposing a dividendafter taking into consideration development of the business as well asits operating profit and financial position.[ 14 ]R E A D LY A N N U A L R E P O RT S U S TA I N A B I L I T Y R E P O RT 2 0 2 0

This is ReadlyREADLY'S ECOSYSTEM – BUSINESS MODELA strong value propositionthat adds valueEnvironmentMinimised environmentalimpact through digitalisation.New revenue, increasedreach and presence, aswell as opportunity for adata-driven approach.Pu b lishersReadly's ecosystem– in association withstakeholder groups.AdvA place in the driver’sseat in digitalising themagazine industry.crSubs i be r sP a r tn e r sAttract, buildloyalty and retaincustomers andmembers byoffering themReadly.EmployeesUnlimited accessto Readly’sextensive offeringof magazinesfrom responsiblepublishers.e rt i s e r sSocietyShareholdersFacilitate access toquality journalism andtrusted content.Long-term potentialto earn additionalrevenue from targetedads in digital magazineformats.Sustainable growth.Readly aims to be at the forefront in digitalisation of magazinesubscriptions and has a business model with a strong valueproposition for all of its stakeholders.[ 15 ]R E A D LY A N N U A L R E P O RT S U S TA I N A B I L I T Y R E P O RT 2 0 2 0

This is ReadlyREADLY'S ECOSYSTEM – BUSINESS MODEL20%of Readly's subscribersread titles from countries otherthan the ones they live in.Readly’s publisher partnershipsReadly offers its readers trusted content from approximately900 publishers. During 2020 the breadth of the offering wasstrengthened through agreements with approximately 100 newpublishers, and through these close to 800 titles have joined theplatform. Above all, the offering of highly respected and populardaily newspapers has increased with leading titles from severalcountries, including the UK and Sweden. After the end of the year,the news offering was strengthened in Germany as well through anew agreement with Axel Springer.Readly’s publisher partnerships include publishing houses suchas Condé Nast, Hearst Magazines, Bauer and TI Media – globalcompanies with reach across the UK, Germany, Italy and theNetherlands. Egmont Publishing and Aller Media are examples ofpublishers in the Swedish market, and Funke Mediengruppe andAxel Springer are publishers in the German market. At year-end2020 Readly had 900 active agreements with publishers aroundthe world.[ 16 ]R E A D LY A N N U A L R E P O RT S U S TA I N A B I L I T Y R E P O RT 2 0 2 0

This is ReadlyREADLY'S ECOSYSTEM – BUSINESS MODELPublishers use Readly as part of their digital strategies foraudience development, tactical subscription delivery and practicalaudience insight. Through this Readly helps publishers generatenew readers, increase their brand footprint and establish a globaldigital presence. Readly makes it possible for publishers to expandtheir readership bases globally and thereby generate additionalrevenue from Readly’s subscription fees and potentially toincrease their advertising revenue through increased circulation.Commercial partnersReadly’s commerci

Introduction 27 Readly's prioritised sustainability aspects 30 Sustainability governance 40 Auditor's opinion regarding the statutory sustainability report 41 Governance Remuneration Report 2020 42 Board of Directors 44 Senior Management Team 46 Directors' Report 48 Risk and risk management 52 The Readly share 59 Corporate Governance Report 62