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Edited Transcript of FUTR.L earnings conference call or presentation 22-May-20 8:30am GMT

Half Year 2020 Future PLC Earnings Call

Bath May 23, 2020 (Thomson StreetEvents) -- Edited Transcript of Future PLC earnings conference call or presentation Friday, May 22, 2020 at 8:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Penelope Ladkin-Brand

Future plc - CFO

* Zillah Byng-Thorne

Future plc - CEO & Executive Director

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Presentation

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Zillah Byng-Thorne, Future plc - CEO & Executive Director [1]

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Good morning, everyone, and welcome to the Future plc 2020 Half 1 Results. I'm very pleased to be able to present the business results to you today. In order to help orientate, I'll just call out each slide that I'm on before I move to it so you can follow us through the presentation.

Just moving on to Slide 2. I just wanted to give you a brief update on the key highlights of the last 6 months before handing over to Penny, who'll take you through the financial detail. I think the headline on this slide, continued strong momentum, the strategy is working, probably captures the summary of the business update. And despite the challenging and unprecedented time that we find ourselves in, our strategy continues to deliver. We have, over the last 6 months, had really record-breaking audience numbers with average users during the period of 253 million, so just over 0.25 billion, growth of 26% year-over-year.

Our monetization model is such that this strong audience growth has resulted in double-digit organic revenue growth, with Media revenues themselves up 21% at an organic level, so a really pleasing revenue performance. Of course, core to our business model is our scalable operating model, and that's never more evidenced by the adjusted operating profit margin, which is up 28 -- up to 28%, up 7 percentage points in the period.

And then finally, the operating leverage can be really evidenced and the capital-light model seen through the improvements in our EPS, with our adjusted diluted EPS growth of 60% in the half.

Now it's impossible, moving on to Slide 3, to talk to you today about our business without first addressing the impact of the virus. Above all, our priority during these times has been about keeping our businesses and our people safe and ensuring that the legacy that we've created so far in our organization continues once we recover from this unusual period. As we thought about how we wanted to respond to the pandemic, we identified 3 critical groups and specific actions that were required to support in both the short-term extraordinary times and also the longer-term recovery period.

So looking first to our people. One of the things we did at Future was moved to working from home early. We were one of the first organizations to globally shut all of our offices, and ensuring our employees are safe is critical for us.

The next thing we looked at was actually creating a hardship fund. This is particularly important for our U.S. colleagues, where there's a different government aid model. And we wanted to ensure that no one at Future couldn't afford to pay their bills or couldn't afford to put food on the table. And then following feedback from our staff around increased costs associated with working from home, we also put in place a work-from-home stipend.

As we all experience working from home, communication becomes ever more important, and we've certainly increased our rhythm and frequency of communications and also the mediums in which we do that, ranging from weekly CEO letters through to Slack chats and virtual town halls like we're doing today with you.

And then it's also important to make sure we address individual mental health and ensure that our organization is well and that we're also doing fun stuff and we try to organize virtual social events across the organization as well.

Moving to our business. I think one of the key things was to really make sure that we adapted and flexed our content model to respond to the items that people wanted to read now. And so we really responded to increased search demand around working from home, computer video game playing and also interest in the virus itself. We've also looked to create new virtual events, and a good example of that is with the canceling of E3, we've actually replaced that with the Future game show, which will be broadcasting in June.

Regrettably, but importantly, we also removed and closed loss-making or marginal activities during this period. And as a result, we announced the closure of 6 magazines earlier last month. We've also made sure we reviewed our cost base, and that included making sure that we've cut down discretional spend and noncore activity. We also -- we're delighted to see that many of our colleagues offer to take a pay cut from March when we realized the deepness of the sharp impact of the pandemic. And while it was great to see everyone respond in that way, we were much more pleased to be able to actually restore pay this month and actually refund them that pay cut as we realized that the business is robust enough to trade through the extraordinary times at this moment in time. However, I should call out, the Board have continued to take a reduced pay during this period.

And then finally, within the business model itself, we've also looked to review our subs distribution models to make sure we can satisfy consumer demand.

And then the final area we will look to address is around stakeholders, and that has ranged from encouraging our staff to volunteer to the NHS, through to revisiting our distribution model for magazines, to making it easier for shop staff to handle our product, through to trying to quickly make decisions about event cancellations to ensure we don't have any of our suppliers incur additional costs. And then finally, we very quickly sought to identify additional working capital facilities to ensure that we could support our business both in the short and long term and also provide flexibility as required for any of our partners.

So I'm going to hand over now to Penny, who'll take you through the financial highlights.

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Penelope Ladkin-Brand, Future plc - CFO [2]

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Thank you, Zillah, and good morning, everyone. This is actually going to be the last set of results that I have the honor of presenting at Future. So it's a fun challenge and a real pleasure to be able to do so in this new format over Zoom and also pleasing to have a really strong set of results to be able to present.

As you can see, if I move on to Slide 5 with the financial KPIs. You can see a really strong set of KPIs across all of our key measures. But what's particularly pleasing is the measures which are a reflection of the business strategy, which is to create operating leverage by creating the platform and have that flow through to high cash conversion. Those metrics are particularly strong, with our adjusted operating profit up 77% to GBP 39.9 million. And the operating profit margin has increased 7 percentage points over the comparable period to 28%.

Now in preparing the results, so I went back to the FY '17 results just to kind of see the trajectory over the last 3 years. And if you look back to FY '17, we achieved an operating profit margin of just 11% in that year. So you can really see the growth, not just in the year-on-year, but the really stellar growth over the last 3 years in these results.

Similarly, we've had very strong cash conversion. So free cash flows are up 45% to GBP 40 million, and that's pretty much 100% free cash flow conversion of the operating profit. At the end of the half, we were sitting in a net cash position, so with no leverage. We subsequently completed on the acquisition of TI Media in April. So we're now sitting with a net debt position of around GBP 85 million, so under 1x leverage on a pro forma EBITDA basis.

So if I move on to Slide 6, just to cover the results in a bit more detail and got here the detailed P&L. And you can see here the benefit of the operating leverage. As if you look at the table, the percentages on the right-hand side increase as you walk down the table. So we see revenue growth of 33% on total revenues. But that flows through to an increase of 46% on a gross contribution basis, which is a 7 percentage point increase in the gross contribution margin. And then that flows through to a 77% improvement in adjusted operating profit, and again, that same 7 percentage point improvement in the adjusted operating profit margin.

Now that improvement in the margin is a result of 2 different factors. The first one is the change in the revenue mix. As the Media revenue streams grow, offsetting the decline in magazine, those margins are much higher within the Media revenues, particularly in digital advertising and e-commerce. So you see a big improvement in the margin effect as the revenue mix changes. So you can see the overall gross contribution margin in the period was a very strong 81%.

And then the other factor is, as we scale, we don't think we need the same proportion of overheads as the revenue growth. So you can see that admin costs and overhead as a percentage of revenue decreased by 1% in the period.

We continue to invest in editorial, however. So sales, marketing and editorial costs remain constant as a percentage of revenue. But the overall margin impact still is a growth.

So as Zillah touched on, obviously, we need to touch a bit on COVID, which did start to have an impact in the first half, particularly as the U.K. and the U.S. went into lockdown that last week in March. We did a shut of travel retail outlets. And also, that's where the social distancing measures were put into grocery stores. So we saw a reduction of around GBP 1.2 million in March from newsstand revenue on magazines.

We also postponed 3 of our consumer events, which were due to be held in March. We have subsequently canceled those events apart from the B2B event, which took place in April as a virtual event. So that is -- was also a shift of GBP 5.5 million of revenue. However, we did see an uplift in digital revenue streams, which offset approximately half of that.

So if we move on to Slide 7, we can cover revenue streams in a bit more detail. And overall, we've seen really strong revenue growth -- total revenue growth of 33%, of which the organic growth was 11%. And that's really driven by the strong performance in Media revenues, up 21% on an organic basis year-on-year. That offsets the decline in magazines, which declined 11% in total, 12% on an organic basis. So you can see that with that heavy impact of the reduction in revenue in March, the trend was actually performing ahead of previous periods. The comparable period in FY '19 was an 11% organic revenue decline. So we were trending ahead of that before the impact of COVID at the end of the period.

And so the overall strong growth is due to the Media growth of 21% on an organic basis, and that's really the on-platform advertising growth, which is digital advertising on our website. And those -- that grew by 14% on an organic basis. And then e-commerce, which, again, is continuing to see a very strong performance with organic growth rate of 68%. The off-platform revenue is principally new revenue streams that we've added this year from SmartBrief, which is the e-mail newsletter publishing, and also the video revenue streams from Barcroft. And then Media Other principally reflects events, and that's where we can see the decline due to those cancellations.

So the other highlight, which is worth touching on here, is just that the mix overall of revenue significantly changed to an 80% Media to 20% magazine change. So again, if you look back 3 years to FY '17, we were at just 40% of Media revenues in that year. So you can really see the significant change that we've been able to do in just that 3-year period.

So then if we move on to Slide 8, we can see the mix by geography. And again, this is a reflection of the real change that we've seen over the last 3 years, with U.S. revenues now 60% of the group, up from sort of 23% 3 years ago. And that growth is very much driven by the high-growth rate in the U.S. revenues with the organic growth of 19%. The U.K., which has a bit more magazine and also the events, the organic growth rate was 3% here but 11% on an underlying, if you normalize for those event shifts.

And again, we can see here the real benefit of the operating leverage coming through with the gross contribution growth more than double the growth in the organic revenue. So the 11% revenue growth translates to 26% growth on a gross contribution basis. And that's really where we see the platform effect coming through.

So I just wanted to include, on Slide 9, a bit of the impact of TI, which, as I mentioned, completed in April. So this shows the half 1 pro forma revenue, so what the revenues would have looked like if TI had been part of the business for the whole period. And you can see a bigger swing towards magazines and also U.K. revenue.

So as we look forward, we think that Future's results, with the growth in our Media revenue streams and the heavier weighting, will actually never see reported results which is below 60% Media. And as you've seen on the previous slides, the growth trajectory really helps reinforce the opportunity for the TI assets within the business.

Moving on to Slide 10. I just wanted to provide a bit more detail on the organic revenue growth performance. So I provided here a reconciliation of the organic revenues, which is a slide we looked at, at the Capital Markets Day back in February, if any of you attended that event. And this shows the total revenue broken down into the 2019 acquisitions of SmartBrief, Mobile Nations and then the cycling titles that we acquired, and then the 2020 acquisition, which is Barcroft in this period, bringing us down to the underlying organic revenue growth on a constant currency basis, which gives us that 11% growth and the 33% total revenue growth.

Moving on to Slide 11. You can then see what that looks like on an operating profit basis. So the chart here bridges the FY '19 first half adjusted operating profit through to the comparable period in this financial year, broken down into the organic growth and then the impact of acquisitions. So you can see here the organic growth on an operating profit basis. And so within this bar is included all assets which have been owned for at least 1 full financial year, net of any increase in the central cost centers. And we can see here GBP 9.1 million of operating profit growth or 40%.

We then add the GBP 5.4 million, which is the acquisition-adjusted operating profit. So this relates to the pre-acquisition reported operating profit from those acquisitions. And then we can really see the benefit of the platform coming through in the platform effect, that additional GBP 3 million, which is principally the growth from the acquired assets as they become part of the overall Future portfolio. So you can see really strong growth across all of those different elements.

So looking at cash flow on Slide 12. We can see how that flows through to cash with very strong operating cash inflow. So an adjusted operating cash inflow of GBP 42.2 million, which compares very favorably to the GBP 39.9 million of adjusted operating profit.

The other things just to highlight here are exceptionals, which relates to the deal fees, principally for the acquisition of TI Media, which we announced in October; and also the national insurance on the exceptional share scheme that we had, which vested in November.

As Zillah has touched on, we continue to invest in future growth but remain capital-light. So we're very efficient with those investments. So just GBP 2.2 million of CapEx investment within the period. So overall, adjusted free cash flows of GBP 40 million.

If we move on to Slide 13, I've just provided a bit more detail here on the impacts of COVID in the business. And we can see that breaking down into sort of 4 key elements. The first is the digital revenues. So I touched on the growth that we saw in March. So as the sort of world really went into lockdown towards the end of March, we saw huge acceleration in audience as our audience communities search for advice and recommendations of the products that they need and how to operate in this new operating environment. And we saw a 40% month-on-month uplift in March audiences.

And we then -- consequently, we saw digital revenues benefit from that, although at a slightly lower monetization per user, but we did see a big uplift as a result of that audience growth. And this is where we really see the benefit of our Hawk e-commerce technology as we have dynamic linking through to retailers. So as various retailers work through distribution supply issues, the feeds link automatically and repopulate with where there is stock availability. So we're really able to help our audiences find the product that they need.

The second element is clearly the impact on magazines through shop closures. And principally, the Future titles are sold with a bigger mix of sales through the travel retail outlets, so WHSmith and Barnes & Noble. The TI Media assets are sold a bit more through grocery. So those are stores that continued to operate but with social distancing reducing footfall. So we have seen some volatility overall in grocery sales and a net reduction in magazine sales. So overall, we've seen the market trend at a 24% year-on-year volume reduction.

The third element is the cancellation of events. So we've touched on the 3 events that we canceled in March. And we now expect, actually, to cancel the majority of our events for the rest of this financial year other than the B2B events, which we're able to hold virtually; and the Decanter Awards, which we're very excited about as part of the TI portfolio, which we're expecting to be able to go ahead across the tail end of September and into October.

And then the fourth element is just the impact on working capital. So we cautiously increased our bad debt provision at the end of March with a GBP 1.8 million increase, which is a 60% increase in that provision. Although we've actually found that across April and May, collections have remained more in line with the historic norms. But this has enabled us to be able to offer some working capital support to customers who are more impacted by the pandemic, such as caravan parks, to be able to offer them to sort of return to advertising as they reopen. And then we are expecting, in the second half, to refund some events revenue that we collected, so totaling around GBP 4 million of refunds.

Moving on to Slide 14, though. We can just see these digital revenue trends that I was just touching on in the previous slide in a bit more detail. So the chart shows the digital revenue by month, tracked against the green line, which is online users over an 18-month period. So you can see here that a significant uplift across March and April of online users, and consequently, an uplifting in March and April but not quite to the same degree. As we look forward to half 2, we do expect the audience to normalize more in line with the historic growth trajectory and monetization to normalize it to the same effect. So we remain confident around our digital outlook for the second half.

If we move on to Slide 15, I've just got a bit more detail on our headroom on our facilities. So as I mentioned, we're sitting with current net debt at around GBP 85 million. At the beginning of March, as we looked at the impact of the pandemic, we reached out to our banking partners to look for an increase in our RCF facility and secured an additional GBP 30 million on to the GBP 135 million core facility that we have. So total facilities of GBP 165 million but GBP 30 million for the next 12 months. And that gives us significant headroom of unutilized borrowing, which places us well to be able to deal with any challenges.

So Slide 16, just to sort of wrap up. We've had a really strong first half, strong EPS growth and really good free cash flows. And we start the second half with a strong balance sheet. So we feel well placed to be able to navigate the challenges of COVID.

So I'll hand back to you, Zillah, on that note.

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Zillah Byng-Thorne, Future plc - CEO & Executive Director [3]

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Thanks, Penny. Just making sure I unmuted myself before I started to launch into my update. And first of all, I just obviously wanted to say, thank you, Penny on behalf of the business, for your contribution and support as our CFO. You've certainly helped us get to this exciting place in our journey.

Moving now to Slide 18. And as you see, this is a very familiar slide to all of you, so I'm not going to dwell on it at all. But I just wanted to make the same statement that I make every set of results, which is there is no change to our strategy, and our focus continues to be very much about the execution of that strategy instead.

Moving, therefore, on to Slide 9 (sic) [Slide 19]. I just wanted to focus a little bit more about how we are executing our strategy, not just for today in Horizon 1, but also the things we're doing today that we think help deliver the growth in the outer years.

It's quite a busy slide. So just let me orientate you for a moment. Going from left to right are the core pillars we've talked about, which we think underpin the execution of our strategy: growing our existing audience and brands, ongoing diversification, delivering operating leverage and then continued investment in the business.

And then top to bottom are the 3 planning horizons that we think about when we think about how we run our organization. So Horizon 1 being the activities that we're working on today that we think benefit the business in the short term; horizon 2, very much about the things that we're working on today that have an impact in the next 12 months; and then Horizon 3 is more around planning for the longer-term growth.

Now there's a lot in here, and I'm not going to go through each bullet point, but I just wanted to pick a few highlights. In terms of growing our existing brands and audiences, one of the things we've been working on and which we mentioned before has been our investment in forums. We think it's very important, with the passionate communities that we serve, to make sure that we continue to invest in the forums, not just in the Purch brand but also in the wider Future portfolio, and that's been a key area of investment in the last 6 months.

In terms of ongoing diversification, there's a number and things in here you've heard us talk about before, including language formats, TechRadar Español, broadcasting and then particularly interesting just now is some of our trial around image and video commerce.

Thinking about the operating model and how do we continue to support the operating leverage we've seen in the results this half year, I think it's partly about critical investments in our back-office systems. In order to grow the business at the pace we have, we have to have systems that can scale. And during the last 6 months, we've made investments in finance systems, voiceover telephony and also within our BI function. And we certainly think that leaves strong foundations for the growth we see coming ahead.

And then finally, on the point of continued investment, there's lots of different things that we're going to talk about in this deck and that we've talked about with you in the past. But I just wanted to call out that our headcount actually grew period-over-period by 27%. And including in that would be roles like our new Director of Data Science in BI, which I alluded to a moment ago.

Moving on to then Slide 20. I just wanted to quickly recap around the 3 content verticals that we organize ourselves around the business. So we operate 3 divisions: Future PASSION; Future LIVING; and Future Pro, which is our B2B division. And within Future PASSIOn, we then got 7 verticals, which is a specialist audience group that we talk to and try to make sure we implement the Future wheel. So each of these verticals is like one of our wheels. And they very much -- as you all know, our model is all about adding more wheels and then more spokes to the existing wheels.

Future LIVING reflects some of the changes we anticipate making as part of the TI acquisition. And then B2B reflects the historic Future portfolio but also the addition of SmartBrief into the business.

Now just moving on to Slide 21 and bringing that a little bit more to life. We've long focused on the strategy around diversification and why that's important to us. And what you can see in this pie chart is the mix of revenues by revenue type within our business. Obviously, I think one of the key things to call out is that 80% of the revenue in the period were from nonprint-related assets, so that's obviously a really strong progression in terms of where the business has come from and I think is a good indicator of what we'd expect to achieve in due course over time with TI.

I think the other thing is that you can really see from this pie chart that we have a genuine mix of revenue streams at different stages of the growth cycle, which I think is really pivotal in having a portfolio strategy, which includes e-commerce at 27% of our mix growing at 68% organically, as Penny already mentioned; and then our digital adds, accounting for, in total, around 46% of revenue growing at around 14% organically. So again, really exciting growth rates there.

Now as we've already mentioned, the pandemic did have an impact on the results towards the end of the period and during March, and we think that reduced the overall growth rate in the period by around 3%.

Now moving on to Slide 22, where we talk a lot about our passionate audiences, and we talk a lot about our revenue diversification. Fundamental and at the heart of our model is content. And we can only achieve these great performances through the quality of editorial resources that we have in the business. And I just wanted to highlight the degree of editorial investments we've been making over the last 3 or 4 years. You can see that we've invested in editorial hasn't grown by 28% on a CAGR basis over the last 4 years, and it's been a real area of focus for us. Now that includes hiring new staff into the organization where we have skills gaps or where we want to launch new brands, but also include some of the acquired talent we brought into the business.

Now moving on to Slide 23. This is a new slide for us, which I'm particularly excited to share with you, and I think it really brings to life the virtuous circle of our editorial model. And we've talked in the past about the fact that, as we invest in new editorial resources, they drive the content that we're going to monetize in the coming years, whereas the legacy content we've created in prior years continue to support good revenue streams just now.

So what you can see on this chart is the colored bars basically tell you what proportion of revenue came from content created in what period. And you can see that more than half of the revenue we monetized in April, in fact, probably more like 3/4 of it, came from prior periods, which is really a strength to the quality of the content that we create and the fact that we really do understand the needs of our audiences and what is important to them.

Now that investment in editorial, coupled with the quality of the archive, is what fundamentally underpins the audience growth that you'll see on Page 24. And what we try to do, on 24, is just look at that in a little bit more detail. You can see on the right-hand side, our bar chart over the last 4 years, and the dark gray is the historical Future brands. And what I wanted to call out is, while we've added significant audience through our acquisitions most noticeably through Purch and through the Mobile Nations acquisition, the actual Future historical portfolio has almost tripled in the 4-year period and certainly more than doubled.

Now the impact of that growth, the combination of acquired plus historical growth, means that Future today reaches over 0.25 billion people online. And we actually talked to just over half of all American men online, which is just a great opportunity for us. And I think when we talk to advertising partners, that's what stands as aside from other large sites, for example, like Facebook, where our audience is coming to us because of the high-quality editorial content that we have and with specific needs and interests in place rather than just that kind of "Entertain me. I'm a little bit bored." And that's what underpins the value of the audience that we have.

Now I talk a lot about audience, how the brand leadership is also a key part of our strategy. And one of the lessons that I learned from my time at AutoTrader, nearly 10 years ago now, was about the power of a leading market position. And that's particularly true in defensive markets, where there's a flight to quality. During recessions, people consider how and where to spend their ad dollars. And there's a real genuine flight to ensuring that money gets spent, will be spent where it works. And that's where being in the leadership position really matters. And you'll see here that we hold 7 leadership positions across our verticals. And within that, we have 18 #1 brands. So not only do we have large scalable audience with direct intent, we also have leadership positions, which I think sets us up really well for the coming months.

Now on Slide 25. I thought it would be interesting just to look at this in specific detail a little bit more. So I've added 2 case studies: one which is Tom's Guide, one of our acquired brands, which we acquired in September 2018, so around 20 months ago; and the other, on the right-hand side, is GamesRadar, which is one of our oldest brands, well over 10 years old.

Now you can clearly see from both charts that our -- whether the brand is old or new and acquired, our approach results and audience is engaging with us. Tom's Guide has seen 28% CAGR growth in the 24 months since March 2018, where GamesRadar has seen a 70% CAGR growth during the same period.

Now when we originally cut this slide, we actually cut the bar charts to April. But April was unprecedented in the growth we saw because of the online audience demand, and so we thought it was more appropriate to actually align this chart with the March period. But I think quite compelling, you can see the degree of audience growth we've had over the last couple of years. And I think that's one of the things that makes me so excited about the opportunity that we see ahead of TI Media. More of that later.

Moving on to the next slide, Page 26. I'm just going to briefly call out on our tech stack. I think if we all know that content sits at the heart of our business, it's technology which greases the wheel of our Future's wheel.

Over the last 6 months, we've added 8 additional sites to our Vanilla platform. So just to think about that in context, that's 1 every 3 weeks or so. And that also includes the Christmas embargo period, where we wouldn't do anything to our sites during that 8-week period from November to January. So very clear velocity within the team around migrating websites onto the Vanilla platform.

During the year, we also continued to innovate with the addition of both the SmartBrief technology into our monetization stack and the creation of our new lead generation technology, Falcon, which I'll talk about a little bit more on the next page.

So if we could just move now to Slide 27, what you can see on the right-hand side is an example of our new Falcon technology. One of the things that we've identified with our e-commerce proposition is that where we are very good at meeting users' needs, some instances, there is actually a requirement to have a follow-up conversation. And so we felt the need to build leap generation technology, and the team somewhat amusingly decided to brand that product Falcon. That's currently live on some of our sites as an MVP, and we are currently taking lead generation revenue on that proposition. But it's very early stage in our life cycle. And I think our drawn analogy, which is that our e-commerce Hawk platform initially only generated GBP 100,000 of revenue in its first year, over 5 years ago and today, it's around a GBP 70 million business. So I think this is a really exciting opportunity for the business over the next few years.

We also clearly have continued to invest in our B2B portfolio, which included 2 new launches in the period, which was the Tech & Learning University and Next TV, which deals with streaming and TV. I think that we couldn't have known when we launched Tech & Learning University how pertinent that would be as we moved into the lockdown period, and you can see the audience engagement significantly grew in March as teaching professionals looked for advice around how to run lessons and class plans online.

Moving on to Slide 28 and touching briefly on our recent acquisitions. I wanted to update you both on SmartBrief and Barcroft. I think the headline here is we're really pleased with both of these acquisitions and how resilient they've been proving through the current crisis. They're certainly really strong additions to the Future portfolio. I think that I can just call out here at the moment is that both of the integrations have been completed, and both businesses are operating within the BAU within the Future portfolio.

I think one of the key things Penny mentioned is that SmartBrief and Barcroft together significantly increased our revenue mix of platform, which is now over 13%, which is really pleasing. SmartBrief also helps diversify our business into B2B adds and new audience and highly engaged leadership; where Barcroft, as you'll remember, brings in a much younger demographic to the portfolio. So not just adding a different revenue stream, but also adding different audiences to our business.

I think a quick call-out to both these businesses in terms of the response to pandemic. You can see here a picture of the special report on coronavirus, and the SmartBrief team quick to pivot into creating a new daily brief in response to coronavirus and readership and engagement that has been really significant.

Well, the Barcroft team have quite amazingly reengineered their workflows to ensure that they can continue to create 40 original films for the AVOD channels during the lockdown period, which I think is pretty amazing when you think of producing roughly 2 per day, and yet we're all maintaining social distancing.

Moving on to Slide 29. I wanted to give you an update on the TI acquisition, which we were fortunate to complete just over a month ago. As we flagged at the time of the deal, last November, we've been quite quick to act on the disposal of noncore or overlap areas, as indicated by the CME. And as we expected, that resulted in a reduction in revenue of around about GBP 12 million but almost no impact on earnings. We would probably anticipate there are some other minor changes to make in the portfolio over the coming months as we ensure that the brands and the business -- we have the brands and the businesses that we need to deliver the strategy in these changed times. We don't particularly expect that those changes will have any impact on earnings, but it may have a small impact on revenue. Today, TI brings to us 38 brands and over 21 million users online. And I think there's a real exciting opportunity to exploit the Future strategy within these audiences and brands.

Looking at that in a little bit more detail on Slide 30. As I'm sure you would expect of us, we've been working hard the last 6 months to just think through how we're going to execute on that strategy. And we've kind of segmented that into 3 distinct areas: people, processes and systems.

Within the people work stream, work is clearly underway thinking about how we can make sure we onboard and adopt our new colleagues well. And we're also looking to add 4 of the TI executives to my management team.

With regards to processes, one of the things we've pivoted into is to create the Future Online University, a picture of which I think you can see, which means that even if we're working from home, we can ensure everyone has the access to the training that they need during the process of the integration periods.

And then from a systems perspective, we've been spending lots of time diligencing both the Future systems and the TI systems to think about what best-of-breed looks like. And we are expecting to position to launch or migrate 6 to 8 brands prior to the Christmas period.

Now just moving on to Slide 31. I'm not going to dwell on this, but it's just a snapshot of some of the planning documentations that have been in place and that we've been working on as we think through our approach to the integration. And our approach here is consistent with what we've done in the past, whereby we split it within into 2 phases: Phase 1 being integration planning; Phase 2 being optimization, which is more about delivering the revenue opportunity.

The little screenshot you can see there on What To Watch is one of the new domains we've acquired, which is whattowatch.com, and which we're hoping to launch quite quickly. And as you'll remember, the issue we had was the existing TI brand didn't have a dot com domain available for us, so we're very excited about having acquired What To Watch.

And moving on to Slide 32. I wanted to just bring out the strategy for TI in a little bit more detail for you. Again, moving from left to right, we've kind of picked up the 3 core areas where we see opportunities for the Future strategy at TI. That's around growing audience and brands. It's about creating diversification across the business, and it's about creating operating leverage within the portfolio.

And then again, top to bottom, we're thinking about that in terms of what can we do for today? What can we do that we think will have an impact in 12 months' time? And what can we do which we think is much more longer term? Again, there's lots of detail in here, and I'm not going to pick up all the points. But I just wanted to highlight a few, which is one of the things we see that we're really excited about is the ability to deploy the e-commerce Hawk technology and our ad tech stack HYBRID onto the existing audiences that we have with TI and the ability to monetize those.

We're also really excited about the existing infrastructure we have within the U.S., which means we're able to deliver our U.S. growth plans quickly without having to significantly increase scale there.

And then finally, we really do see an opportunity to grow the audience reach of the existing brands through the execution of the best practice we saw earlier with the case studies for both Tom's Guide and GamesRadar.

So I think Slide 33 kind of summarizes where we see ourselves at this moment. These are really uncertain times. And I think the thing that I would want you to leave this call with is the certainty that we are very attuned to all of our dashboards, and we monitor everything in our business with very slight variations, which is why we were able to react very quickly as the lockdown happened or also how we've been able to equally unwind or put in more investment as you've acquired.

And we're very sensitive to the changes in the landscape, both with regards to our people, our products and the wider environment in which we operate. I think that operational focus in our business that we have, well also that real heartbeat about delivering strategy, is what's enabled us to deliver such a strong set of first half results. We have a real proven business model. And even in these unprecedented times in the downturn that we weren't sure to face, our colleagues have proved resilient, passionate and flexible, and that's resulted in our productivity and engagement being as high as ever. Our expectations at Board level for the full year profit remain unchanged, and we remain really excited about the operating model we've created as we think about the opportunities that lie ahead.