Welcome to XLMedia's full year results 2023. I'm David King, the CEO, and I'll talk you through the results, including the finance section, following Caroline Ackroyd's departure. Marcus Rich, the Chair, will join me to take questions later. Business highlights. 2023 was another challenging year, full of change. We continued our strategy of exiting non-core activities and streamlining the cost base. By focusing on premium European brands, we're able to see them grow in 2023. In North America, we continued our partnership strategy, and we continued to diversify our revenue streams in what was, and is, a rapidly changing market from that which we saw in 2021 and 2022. Headline financials.
In line with our February 8 trading update, we delivered revenues of $50.3 million and an Adjusted EBITDA on our continuing business of $12.1 million, both down on the prior year. We've seen substantial cost savings and, as I said, growth in our premium European brands, but in North America in 2023, it was not as strong as 2022. The New York launch in January 2022 and heavy operator investment in H1 of 2022, in acquiring new customers, meant that 2023 did not replicate that level of investment and the scale of the New York launch went higher, launched in January 2023. This is reflected in both revenues, profits, and a reduction in Real Money Players that we were able to deliver during the period.
Albeit, that represents a very good performance when we consider it in the light of the ever-increasing competition that we saw in 2023 as new media entrants grew the scale of competition in the marketplace substantially during the course of the year. Let's just cover off some of the splits of the business and how it sat in 2023. As I said before, the number and scale of state launches, in particular, impacts period-on-period performance and comparison. Europe as a whole was down 2%, and while the changing market conditions in the U.S. has shifted the business mix with sport, North America, and CPA reducing as a percentage of the whole, gaming revenue share in Europe grew as a percentage of the whole, which is reflected in the chart that you can see in front of you.
However, this does not change the business fundamentals, but does reflect the period-on-period impact, in particular, of state launches in the U.S. Partner revenues were 39% of group revenues, 90% of which was in the U.S. Post-balance sheet events, I wanted to highlight for you, which many of you will already be familiar with, that we announced the sale of our European assets as a post-balance sheet event in early April this year. We received the first installment, as you will know, of $20 million on completion, and as a result, we are now focused on the North American business, while continuing to support the buyer of the European assets in the transition from us to them.
In the information that we've provided today, both in the presentation and in the RNS and CEO and CFO reports, we've attempted to increase the visibility of our North American business, as that will be our continuing operations going forward. I mentioned the real money player trend earlier and the slight reduction that we saw in 2023. Well, this chart seeks to show you the trend over the 3-year period, and in particular, draws out the impact that I referred to of New York in 2022, H1. You can see that we've delivered growth in H2 2023 against H1 2023, which had the Ohio launch, and that followed the entry into the market of ESPN BET, managed by PENN, having previously removed Barstool from the market from an affiliate point of view earlier in the year.
I think the chart highlights the benefits of a regular flow of state launches, as you can see, right along the bottom, and critically, demonstrates the importance of a highly competitive operator market, buoyed, of course, by the re-entry of, Penn with ESPN in H2 2023. The North American regulation is obviously an evolving picture, so a brief update, if I may, on that. Sport is legal live in 30 states, and we participate in 21 of them for sport. 20 states are yet to regulate, and this is an important part of the potential future of the business, as that includes the largest states, Texas and California. Online casino, a much smaller part of our business, is legal live in 6 states, and we participate in four of them.
44 states are yet to regulate, and those include New York, California, and Texas. Again, three of the largest states in the U.S. We don't participate in states, where there are operator monopolies, where there are other restrictions, or indeed, where we judge that the state, is too small to, to justify the investment in servicing that market. And examples of a very small market might be, for example, Rhode Island or Vermont. But critically, and I think this is an important part of the, of the future of the business, as states legalize, this presents a very significant opportunity for XLMedia, both in sport, but also in growing our proposition in online casino. Our priorities for 2024 have obviously, been reset, as a result of the sale that we made earlier this year.
We are at this moment in the NFL off-season in the U.S., and as I think you all know, everything slows down when the NFL season ends. However, we are focused on preparing ourselves and our partners for the new season. By way of example, we're working on paid media app trials with a number of operators, and we're looking at upgrading our content and our pages across both our sport and our casino sites in anticipation of the new season. We're working very closely, perhaps even more closely, with all our partners, the majority of which I would flag, have not been affected by the recent Google adjustments. We are working with them to ensure that their content and promotion offerings meet with the evolving requirements of the recent Google adjustments.
We don't have good visibility at the moment of operators' plans, but we will get some visibility of that as we get closer to the start of the NFL season. Spring and summer, we will see us support the migration of assets to Gambling.com, while we seek to take out as much cost from the business as is appropriate, commensurate with the scale and size of the business that we have in the U.S. market, making sure that when we enter 2025, the cost base is reduced to the levels appropriate for the business going forward. In early October, we expect to receive the next payment of $10 million from Gambling.com, following the sale of the European assets. At that point in quarter four, we will seek to make an initial distribution of proceeds to shareholders.
If I can now, I'll move on to the financials and talk you through the finance section of the deck. You've seen the headlines already, but if I can just draw your attention to the cash balance, you'll see that we had $4.8 million of cash at bank at the end of 2023, having paid down significant prior year acquisitions costs, and of course, some tax liabilities in respect of 2016-2020 in Israel. A little bit more information to give you some dimensions around the splits of the business between the European business and the ongoing North American business. North America represented 55% of the business in 2023, with sport being 98% of the US revenues.
In short, you can see that we remain a sport-led business with an opportunity to grow our casino business over time. On the left-hand side of this chart, you can see the split of our revenues between revenue share, hybrid, and the light green of CPA. So in addition to being a sport-led business, we're also a CPA-led business, paid upfront, a one-off payment when we introduce a new customer to an operator. CPA represents some 93% of North American revenue in 2023. Going forward, the business as a whole will not enjoy the same level of hybrid and revenue share, largely driven by the European business in 2023. And so income will fluctuate with the NFL season and with operator investment plans and state launches, as we have previously indicated.
On the right-hand side of this chart, you can see that we have given you an estimate of the breakdown of profits for 2023, split between the North American business and the European business. In order to arrive at these Adjusted EBITDA numbers, we've obviously had to allocate shared costs, PLC costs, across the two regions in order to get to the estimates of Adjusted EBITDA. But we think that's helpful in guiding you to the scale of the ongoing profitability of the business. The business, as I said, has historically been run on an integrated basis, sharing and leveraging cost and resource. Tech, finance, PLC costs, as I say, have been allocated to North American and to Europe.
The result has been that North America will deliver this year or delivered last year, I beg your pardon, about $5.5 million. Going forward, as I've already said, and I will say a little more later, we are going to take out more cost commensurate with the scale of the ongoing business, therefore, improving potentially the overall profitability of the business. I've spoken a little bit about costs and cost reduction, and you can see here that we've been quite effective in the year at reducing the cost base of the business. 2023 saw us take out some $8 million of costs from the addressable cost base. That's something around 23% of the costs.
In technology, which had always been, and still is to an extent, a major cost line, we'd cut spend by some $3 million, $2.5 million of which benefited the profit and loss account. Staff costs in the period fell from $19 million to $16.5 million, again, shift, saving some $2.5 million in the period. As I said, there is more to do on that front as we move from a European and North American business into a US-only business. In getting to our Adjusted EBITDA numbers, having reported a group operating loss of $44.9 million, we have to make a number of adjustments, so let me talk you through that. We made an operating loss as a result of a non-cash impairment of our European and US sports assets.
There is more detail in the statutory accounts on the detail breakdown of that. The decision to impair these assets reflects the uncertainty over the timing and the level of future revenues, and critically, the discount rate that we're applying required to apply to future cash flows from our owned and operated assets, which is 25%. It's also worth noting, of course, that these assets performed very, very well in the early years, and we have already generated significant profits from operating those assets. Now, in arriving at this Adjusted EBITDA, we've also removed, as you can see, $3.1 million of exceptional minimum guarantee costs in respect of one partner contract.
This contract expires in the summer of 2024, and what I refer to as top-up payments, the difference between what's generated from normal trading and the additional payment to match the minimum guarantee, are being treated as exceptional. The reason for that is the contracts are short in term, the amount is large in scale, and it's not a reflection of the underlying profitability and ongoing performance of the business. In terms of cash generation, the group generated approaching $10 million of cash in 2023, but it had to pay $3.5 million in terms of tax in Israel in respect of 2016 to 2020.
While cost savings, as I've already discussed, contributed substantially to the cash generation, we have had to invest in order to deliver those cost savings, i.e., invest in restructuring. CapEx reduced year-on-year as large projects were completed in Europe in particular, and in shared services. With the US-only business going forward, CapEx will fall further in 2024 as part of the right-sizing work that we are currently undertaking. As you can also see from the chart, proceeds from the disposal of assets during the period, namely, some marginal casino assets and personal finance, generated $6 million, and that was contributed to the funding of paying $7.4 million of historic acquisition payments. This is a little summary of our historic acquisition payments, both in 2023 and going forward.
You can see that we paid $3 million in respect of CBWG and $4 million in respect of SDS in 2023. And we have already paid $3.5 million in 2024 in Q1 in a final payment in respect of CBWG. There is a further $4 million payment, a further final payment for SDS, still to pay at the end of Q3 2024. We have a strong balance sheet now as a result of the cash that's been injected following the sale, and critically, the clearance of these outstanding liabilities, as there are no further acquisition payments in respect of previous acquisitions due after the end of this year. So we no longer carry, at the end of the year, any further liabilities for acquisitions.
If I can just move on to summarize, I think where we're at for 2024, obviously, our purpose remains, that of maximizing the value of the business. But just to give you some context, as we seek to do that. Apart from North Carolina, which launched in the middle of March, there are currently no further confirmed state launches in the U.S. in the rest of this year, either for sport or casino, albeit there are four states that are currently looking at regulation. Now, while we support the European transition to Gambling.com, we are seeking, as I said previously, to minimize the short-term use of cash, and to reduce costs in advance of 2025.
We're looking closely or working closely, more particularly, with all our partners, as I said earlier, most of whom have not been impacted by the recent Google adjustments. And we expect to make, as I said earlier, an initial return of cash to shareholders following the sale of the European business in quarter four 2024. If I then move on to outlook and give you a flavor of the direction of travel, we've had a good start to the year in quarter one. North Carolina, as I said, launched in mid-March, but that's critically after the NFL season, and despite a good performance, we anticipate there being further opportunity within North Carolina when the new NFL season starts. Therefore, quarter one this year is not going to be at the same scale as quarter one last year, Ohio having launched in January....
Right-sizing the business will see us invest again in reducing cost, as I say, that in order that we can end 2025 with a reset cost base and a tech infrastructure commensurate with a US-only business. We will ensure that our O&O, owned and operated, websites and our partners take advantage of opportunities that are being created by the changing competitive landscape in North America. Clearly, some of our partners, will have to change the way in which we present information, and as I said, other of our partners have not been impacted by the changes to date. And finally, following the sale of our European and Canada assets, we anticipate, that we will deliver adjusted EBITDA for the continuing operations of the American business of around $5 million for full year 2024.
2025 will benefit from the full year effect of cost savings that we're implementing in 2024. Thank you very much for taking time to listen to this presentation. We'll now move to questions and answers. Marcus Rich, our Chair, will join us for those questions and answer sessions. Thank you.
Thank you very much, everybody. As I say, once again, can we now move to questions and answers? I have a couple of questions in front of me. I will pick them up and ask Marcus to answer one of them as well. So if I read them out for you, and then we'll go into answering them. So the first question, thank you, from James Rayner.
Would the company consider selling the U.S. assets, and does the media partner business have value for potential buyers? Let me take the media partner business, and perhaps Marcus can answer the question about selling the U.S. assets. James, yes, we consider the media partnership to be extremely valuable. Clearly, it has no value on our balance sheet. It is a profitable activity. It gives us access to markets with scalable partners in a way that you wouldn't otherwise achieve through some of the owned and operated assets. As I say, it allows us to leverage our skills in terms of both the delivery of content and promotional content to a wider audience in order to generate additional revenues.
And as you've seen from the charts earlier, they do deliver significant revenues. There is a cost to that, of course. In the period, the revenue share, i.e., the percentage received by our partners from the revenues generated, was about 59% wasn't about, it was exactly 59% in 2023. Nevertheless, leaving 41% of the, the revenue to contribute to our profitability. So very much, valuable to us, and of course, a potential buyer would have to look at that, how it fits with its business, but we would judge it to be, a very significant value, not least, that we have a very good relationship with our partners, and critically, to date, have always been in a position to roll, contracts when they come to an end, into, extensions.
Marcus, do you want to pick up on the, question of whether we would sell U.S. assets?
Yes, I will do, David. Thank you for your question, James. We've, we've had interest for the U.S. assets, in particular, since the announcement of the European disposal. There is an active M&A market in the U.S. as we see consolidation happening. As David said, we see further growth in the marketplace, with 20 states still to regulate. The board's responsibility is to maximize shareholder value, so we, as a board, would have to consider any serious offer for the American business and benchmark that against what the ongoing P&L looks like for the business in the U.S. moving forward.
Thanks, Marcus. We have a second question. Again, I think possibly also from James. The question is: What sort of capital allocation the company plans to do in Q4, dividends or buyback? Also, what's the reason for delaying that for another few months? So I'll pick up that one, Marcus, you may want to add to it.
Yeah.
We obviously received $20 million. You may pardon it, but it had a bit of a small frame. We received $20 million, and as we said, we needed to, in the announcement of that sale, that we would use that cash to fund short-term working capital requirements, the US business, and indeed, as I said earlier, to invest in reducing the cost base commensurate with the ongoing US business. That will take place, and that will use a level of cash over the coming few months. We will then receive a further $10 million in end of well, at the beginning of October.
We judge that once we have received the bulk of those revenues, and once we have completed all our tax work, as we did say, there will also be confirmationally level, if any, of tax payable on the transaction. That work is obviously across multiple jurisdictions. That work is ongoing. We don't expect that to be insubstantial, but until we finish the work, we can't be definitive. And therefore, we think it most suitable to wait clear on our liabilities, including the $4 million payable at the end of September, and then we'll be in a position to make an initial payment. The question of whether it's dividends or buyback, we've actually had lots of inbound information from a number of shareholders.
But in the event, they would prefer to see a tender offer. We are taking advice, of course, on what the best options are. The, the sense we have from our shareholders is that dividends is not the most attractive way to return funds. They would either be through buyback or through tender offer. And nearer the time, we will obviously confirm which route we are proposing to take. So this is primarily about getting our ducks in a row, as I said before, getting our liabilities cleared, getting the clarity of the costs needed to bring the business into size for the future, and then making a significant distribution in quarter four to shareholders in the form, we think, of a capital sum, rather than a income sum. Do you want to add to that, Marcus?
Yeah, I think the only thing to add is we want to firm this up, and we'll update people on the mechanic in July, when we do the interims, because we'll have done, as David said, most of the pre-work up to that point.
Yes. I have those two questions in front of me. Are there any more questions? I hope very much we were able to give as much clarity as we need, both in the words and that we've presented in our documents and in the presentation itself, give people a clarity. But are there any further questions that anybody would like to ask? There is a live Q&A link in the webcast, so anyone on the call can pop their question into that and submit it, and we'll see it immediately. If there are no more questions, obviously, we are—if you were to think of a question, or are finding it difficult to get into the Q&A, to raise the question, then please do email.
You've got the contact details in the recent RNS, and then, so that you're able to contact us. Please do that, and we will attempt to respond to your question and, and provide an answer if you are having any difficulties, either getting in, as I say, or indeed, at this moment, have no more immediate questions. Marcus, anything else? We've got one more question that's just come in. Andreas Dennis. Thank you, Andreas. Do you think the most recent Google update will have a positive effect on the brand and traffic of your own assets for a potential buyer? Andreas, yes, it's very early days yet, and I, I think you will have seen announcements from some of our affiliate competitors. We are seeing, upticks in the rankings of our owned operated, profit, properties.
You'll be aware over time that as large media players have come into the marketplace, indeed, we work with one or two ourselves, but there are a large number of other very large media players in the U.S. They obviously have very, very strong authority and therefore Google ranking, and therefore, they have a very strong presence in all the markets in which they present their content. And that has had, in the short term, historically, an impact on the visibility of some of our own operated sites. We're talking about things like Sports Betting Dime, Saturday Down South, Crossing Broad, et cetera. The changes that Google implemented over the last couple of weeks has definitely resulted in an increase in visibility of our pages and of our websites.
And indeed, some of our smaller partners, we have obviously a very broad range of partners, some very large ones and some medium, and indeed, some very small. We've also seen significant improvement in the rankings of some of the pages of a number of our partners, too. So there is definitely a potential significant improvement in the value of our own operated profit, owned and operated properties, as a result of the Google changes. And of course, there is no payaway on an operated revenue stream. Too early to call, if I'm honest, in terms of how that will impact in terms of improving performance, either on these small number of partners who have been affected, and indeed, how much impact it will have in terms of positive impact.
But we are tracking that very closely. We're working very closely with the partners who have been impacted, and we are working very closely with partners who have not. All of them are seeking our guidance and support, so we think that net, net, net, there is certainly for our avenue, a value increment. I have another question, actually, from BP. Is the goodwill valuation on the US acquisition a realistic value we might achieve on any disposal? I think, in the event there were a disposal, clearly, the value of that asset would have to be determined relative to what was acquired. And you'll recall when we sold the European assets, that we sold them absent the corporate costs.
And when you're doing a valuation in internally in a business, as we do for our U.S. assets, we have to apply the corporate costs, by the shares, technology, finance, and PLC costs. So the valuation of both the European assets and the U.S. assets shown on our balance sheet is having absorbed, what I would call shared and corporate costs, which in the event of it, there was a buyer may not acquire, and therefore one would expect the value to the buyer to be more on a marginal benefit basis rather than a fully absorbed basis. Are all outstanding tax issues resolved or any future potential which may still come out of BP? We've made a provision in the balance sheet for the full estimate of the maximum liability that we would incur on trading profits.
We obviously are working to ensure that we don't actually incur the full level of that tax liability. We're also working to ensure that the costs of acquiring the assets that are being disposed of are able to be offset against the proceeds of sale to minimize any tax liabilities from the disposal. So, there are no unexpected tax liabilities out there. Well, by definition, we've provided for what we know. Would the whole company be more likely than the sale of the assets? I mean, Giovanni, Marcus, would you like to pick up the question on the sale again?
Yeah. I mean, we had conversations about the full PLC disposal. The dilemma was really threefold. One is people were pegging the price to the share price, with the aim generating probably a 45% premium, where we were quite clear that the asset value of the business was significantly greater than the aggregated share price. Secondly, the assets were clearly the incoming identified separation, so partners were more interested in the individual assets. And the third component is, we felt that we could deliver significantly more shareholder value with the sale by doing it as an asset sale rather than a full PLC sale, as we proved with the European one, where we got 2x market cap.
Thanks, Marcus. The next question has come in: Do you think the USA assets are worth more than the EU assets? I think it's always, well, not entirely appropriate for others to be attributing estimates of value, other than to do so is form part of the formal annual terms and valuation review using the appropriate tools. So, clearly, the value of the European assets reflected the shape and nature and the market and the value to that buyer at that time. I personally think these assets are good assets with significant potential, as I've already said.
Market is increasingly competitive, but as a result of these recent changes, our owned and operated assets, which there are things that are on the balance sheet, their valuation could and would improve if their trading improved as a result of these recent changes. But we remain very enthusiastic about the potential, both for the in trading terms, but also in value terms for the US assets. It says: Can you give a little bit more color on the earnout from the recent disposal, BP? So you will recall that in the transaction with Gambling, there's a $37.5 million fixed price, and there's up to $5 million of earnout.
That $5 million of earnout is based on the business in the, in Gambling.com's hands, achieving certain revenue, performance levels. Again, we, we have some visibility, clearly, of, of how that's performing at the moment. And I can say that for the first month, we are very pleased with the, trading performance of the business that is now owned by, obviously, by another party. And if that were to continue, then we would, expect to see some form of payout from that. But at this moment, we, we have to wait until the full year outturn at the end of this financial year, the nine months, and that will ultimately determine, what the, what the payout from that earnout is.
We don't, we no longer control, obviously, the revenue stream, but we continue to support them, and as I said, we believe that performance is good so far. All right. Well, thank you very much again for those additional questions. I think we have one more, actually. Sorry, let's just roll with the screen. Can you clarify how you currently hold cash flows are retained in U.S. dollars or have you converted? BP. We have retained them in US dollars. We obviously accept the report, and I mean, most of our transactions are in US dollars, and going forward will be in U.S dollars, with the exception of a small number of Israeli costs and U.K. costs.
Those cash balances that we currently enjoy are currently on deposit, earning interest, and make the maximum use of both short and slightly longer-term rates. They remain in U.S. dollars. Okay. Thank you very much for those questions. Very helpful questions. If there are no more, we will end this session, but I'll repeat, if there are any further questions that come to mind, please do send them in and we'll attempt to resolve and answer them. Okay, we'll close down the session. Thank you very much, everyone, for your time. Marcus, thank you very much.
Yes. Thank you.
This presentation has now ended.