Good afternoon and welcome to the XLMedia four-year results investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Just please simply type in your question at any time and press send. The company may not be in a position to answer every question received during the meeting itself, however, the company will review all questions submitted today and will publish those responses where it is appropriate to do so. Before we begin, we'd like to submit the following poll, and I'm sure the company will be most grateful for your participation. I'd now like to hand over to David King, CEO. Good afternoon.
Good afternoon, everybody, and welcome to the 2022 results presentation. You'll be aware this is my first full-year presentation, and I very much hope you've had a chance to look through the RNS statement and the additional information that we've provided this year to aid your understanding of the performance of the business. As you know, I joined in 2022, so I've been present for about six months, and what I'll do is I'll talk you through a little bit of the strategy and headlines, and then I'll hand over to Caroline, who will talk you through the numbers in a bit more detail, and at the end, we can then step through some questions. Just to repeat, I think something we've already made clear: that what we are is obviously a global digital media company, principally operating in Europe and North America.
And importantly, what we do is to create unique, compelling content that attracts highly engaged audiences with intent, and we connect them to relevant advertisers, principally betting operators, but also display advertisers. Caroline will say a bit more later, but the headlines are that we have seen 24% year-on-year growth in revenues and 18% growth in year-on-year Adjusted EBITDA. Now, we're presenting here continuing revenue for accounting reasons, namely that the decision to sell the personal finance business means it no longer forms part of our continuing operations and, as a result, is excluded from these numbers. Personal finance sale process, as you'll have seen from the RNS, is at a well-advanced stage, but at this moment, it is not concluded, and we can't therefore provide any additional information until and if it ultimately closes.
And we will obviously report back to you as soon as there is information to share. Importantly, as you can see from the slide, North America has seen significant growth and is in line with our strategy to focus and prioritize growth in the North American sports market. Now, importantly, we thought for a greater increase of transparency, we would split out the core business. The difference between continuing and core is the marketing agency that we acquired, BlueClaw, and a small sub-affiliate business that we own, which provides deals through two sub-affiliates, and subsequently, we share in the revenues. We have, since the year-end, effectively closed down the external revenue side of BlueClaw, and in line with the original intent, we've focused the business entirely on optimizing our internal business.
So the difference between continuing and core is the sub-affiliate activity and the marketing activity, which has now ceased. So again, good growth here, up 27% year-on-year in revenue and 25% in EBITDA. Now, this is the business, effectively, that we will ultimately be reporting going forward once we've completed the restructuring of BlueClaw and having shortly expected to complete the reduction in the sub-affiliate activities. If I may, just for a moment, just touch on something we will have spoken to before, where XLMedia and what its proposition is to the betting marketplace. What we do is we operate a number of our own brands, owned and operated as we refer to them, both media brands such as Saturday Down South and betting brands, pure betting brands in sport, such as Freeb ets in Europe and SBD in North America.
So we are able to build brands which have authority and trust, and by owning brands in both the media space and the betting space, we're able to use media content in the betting side of the house and equally take our betting expertise into the media side of the house. Now, our content is, again, created for our own purposes with insight, entertainment, and opinion at its core. And critically, in sport, our writers are fans who write for other fans and hence have credibility with them. Our media partners critically have similar values. So we look for media partners that have those same values we have in terms of quality of content, authority and trust, and, as we will say later, have strong Google rankings and strong presence in their marketplaces.
Finally, our audiences, our sports audiences, are fans, some of whom, many of whom are bettors, who come to enjoy both the content and, on occasion, to place a bet. In the gaming side of the house, this is much more a fun activity, people coming to play the slots or to play bingo, and they come with that specific intent. As I think I've said before, XLMedia is actually a new XLMedia, and as you can see from the numbers, we are now prioritized and focused principally in North America with our principal focus on sport, albeit we continue to have a very significant gaming business and the gaming business we actually intend to grow further. With 69% in the U.S. but only 2% in casino, we think that presents an opportunity for us.
Importantly, 97% of our sports audience is in regulated markets, with a very small percentage coming from the Finnish market, which currently is monopolistic but is looking at opening up the regulation to enable a more competitive environment going forward. If that happens, then we're very well placed to take advantage of that when that happens. If I may briefly talk through some of the core elements of the strategy, some of which we will have already outlined for you in the CMD earlier this year. We are expanding and have expanded our North American footprint both through our owned and operated activities but also through our partnership arrangements. It's very important, as we see it, that we have and gradually build our own organic growth, as well as making sure that we have meaningful partners in each of the key new markets as they open up.
Where that's appropriate, there will be times when we judge them not to be so, but in large part, when a large state such as Ohio goes live, it makes a lot of sense to have a significant market-specific partner in place, as was the case, as I said, in Ohio. In European sports, we're focusing very much on Freebets.com as our leading asset, which is a betting site across multiple sports, and we are already starting to see the benefits of the actions that we've taken over the last few months to regrow that asset. Most recently, Cheltenham was very profitable for us, and we've launched recently dynamic ads on those pages and similarly a racing widget as well as signing a new race jockey to provide our racing tips and to become a draw for new customers and bettors.
We're very pleased with the way Freebets has started the year. As I said, we think it has the ability to be expanded beyond its current market into new markets, and we will, over the next year or so, explore and implement that. In casino and gaming, as we've specifically said in the past, our focus now is on a small number of high-quality sites where we've significantly increased the quality of the content, and we offer bettors a much greater choice of the games that they can play. For our own purposes, we are ramping up the optimization of those sites to make sure we maximize the click-outs. I'm going to move on, if I may, to just again a little bit of a reminder.
You will recall, those of you who have been invested in the business for a while, that in 2019, this business had no participation in sport in North America and was in no states at all, and in 2022, four new states were added, taking us up to 17, and since then, Ohio and then Massachusetts have gone live. Each year, we are looking to find, as I've said, new partners, and you can see an array of new partners being added, where we look for new partners in states we believe are going to go live. Now, at this moment, the only states we know are going live in 2023 are Cleveland, sorry, Ohio, and Massachusetts, and hence our partnerships with Cleveland.com and MassLive.
Now, we've had a very solid start, indeed a strong start to the year in Ohio, and we look forward to finding new partners that we can operate in existing states and in new states when they finally launch. Now, as you know, states create significant revenue spikes when they launch because of the pent-up demand. Now, as you can see from this slide, which we gave you an earlier version of in the CMD, that we had four new U.S. states go live in a year, plus Ontario in Canada, which was a very small launch.
And what we've done here is to try and give you visibility of the impact and benefit we get from state launches, but also, importantly, the value that we've had from them, but knowing that when they don't exist, there is obviously a core underlying business that we're working on in order to generate sustainable revenue. Now, if you look at the green bars, you can see that, as we've previously said, in period, there has been a stabilization of our gaming business, and that's the combination of growth in new first-time depositors, as they're called in the U.K., and that has offset, combined with the growth in America, the decline in what are called tail revenues or revenue share from older assets that are no longer part of the group.
The dark blue shows what we consider to be the core business, the sports business, and again, is showing the gradual growth of that part of the business. Of course, as you know, quarter 1 benefits from not only New York State launch but also benefits from the Super Bowl and what was an extremely busy period with a lot of competition from a new operator and existing operators taking market share in the first quarter of 2022. Now, what this chart shows is about 10 million, light blue bars, of our revenue in 2022 was from U.S. state launches and was effectively earned in the first 10 days, excuse me, of those state launches.
Now, the significance of that is that the spike that we describe peaks in a well-managed state launch by the local legislator to allow us to do pre-registration and to allow us to maximize the very immediate revenues and monetize the pent-up demand, as I've said. It then drops down to what we're calling a normalized level or normalized rhythm and then runs on a normal basis throughout the remainder of the year and then on into the future. Now, spikes vary in size and timing considerably based on the nature of the state. As you can see, New York was considerable, whereas Kansas and Maryland are much more modest in their size, reflecting the relative scale and nature of those states. So a big focus for me and for the company, indeed, is building sustainable revenues.
As you can see from the spikes, they don't lend themselves naturally to linear annualized growth nor half-on-half growth because big state launches and then if a big state or equivalent state doesn't launch in the same period, you don't get the same linear path to the growth, so focusing on building sustainable revenues is fundamental, and one of the things we are now doing and in negotiations with a couple of the operators in the U.S. is to move to revenue share deals and away from CPA deals, so CPA deals are one-off upfront payments in round dollars of about $300, varies by state and operator, but around $300, to an environment in which we'll be paid a smaller upfront amount, exact amount under negotiation, and then an ongoing revenue share.
And we believe after about 18 months, we will have earned back the circa $300 that I refer to, and then anything we earn beyond that is effectively incremental revenue. Now, at the moment, we get the one-off payment, and we never see any revenue from that bettor again unless they take another book with another operator. So this is about driving long-term value for shareholders and to drive a more predictable and a more forecastable revenue stream. The other thing I would like to draw out, if I may, is that we are, in my view, significantly underbaked, for want of a better expression, in the U.S. gaming business, where we have no dedicated gaming assets at present, and we currently earned $1.3 million in the period, largely from our Crossing Broad sports asset. We think this is a big opportunity for us.
It will take time, of course, as these things always do, to start building those revenues, but we are in the process of relaunching two of our existing websites into the gaming market, specifically focusing on particular states in the U.S. There are seven states currently allowing online gaming, and we're going to focus into initially five of them because we think that's where the greatest opportunity is. And then we will talk to you more about that in the half year in terms of how we're getting on, but the real benefits from that activity are going to come towards the end of this current financial year. As I said, we are doing all of these things to drive increased revenue, increased profitability, and to significantly drive growth in our sustainable markets rather than rely on CPAs in new states.
I think you've seen this slide or a variation on it before, and I'll just mention it in briefing. The current asset base that we have, particularly our media assets, so things like Saturday Down South, are extremely well placed, to be judged, for revenue sharing, so where we enjoy the upfront payment but also, critically, revenue share from those activities. Because we engage with our audiences both pre-game, in-game through social, post-game, and between games, there are many touchpoints that will allow us to, not rather than suggesting necessarily taking out a new book with a new operator, we can encourage that to take a small bet with an existing operator. If I may, I'll briefly touch on some of the major developments, although we have touched on a few as we've gone through.
We continue to focus, as I've said, on developing our own in-house organic brands or owned and operated, as we refer to them. We have and continue to sign new media partners, as you know, and as we, when a significant media partner is signed, we do a short statement so that you're aware of it. And if I move across, then we talked a little bit about BlueClaw. Well, as you can see, our priority here has been very much to rebuild that around our own activities rather than providing advice to third parties and other betting operators. And so there are two sides to the team.
One is to ensure some of the issues of the past are never repeated, i.e., to protect us from the downside risks, at the same time as to help us ensure that we optimize our sites, optimize our search words, and maximize the, as I've said earlier, the click-out from those sites. And also, importantly, during the year, we've continued to make significant progress in replacing, but have not finished yet, the old technology and, sorry, old legacy technology, I beg your pardon, that we inherited. And then finally, on the right-hand side, as you know, there's an entirely new management team in place. We've only been in place for a relatively short time. We've obviously picked up the reins and a number of issues from history, and we're very focused on addressing those issues and creating new growth for the business.
As I keep saying, that will take time. Finally, of course, we've already talked about refocusing the business and removing non-core, and as I've said, we've all but completed that as we speak. If I may now, I'll pass over to Caroline, who will talk you through the numbers.
Thanks, David. As per our trading update, we have outperformed group-Adjusted EBITDA, and we initially had indicated it would be $16.1 million-$16.6 million, and we're pleased to say we achieved $16.7 million. This was from all activities, including discontinuing operations, and discontinuing operations with personal finance assets included. Revenue was met at $73.7 million. Our financial highlights for the full year from continuing operations, that excludes those personal finance assets, we generated $71.8 million, which was 24% up year-on-year.
Adjusted EBITDA was $17.8 million, again, 18% growth year-on-year, and our cash balances all were reduced to $10.8 million. We generated free cash flow of $10.1 million in the year, which has supported the business's ability to fund $21.3 million of deferred consideration and earn-out payments from those prior year acquisitions. Moving on. Excluding the non-core activities, and as a reminder, the non-core activities are the marketing agency, personal finance, and the sub-affiliate business, we generated $69.6 million of total group revenues, which were up 27% year-on-year. We've grown our North America vertical to $46.4 million, which was 112% up, and Adjusted EBITDA from those core verticals was $18.2 million. The business has continued to remove those loss-making verticals in Q1 2023 and has closed the external agency in February and shifted the talent internally to support SEO for the XLMedia brands.
Moving on, to give you a bit more information about the individual geographies, North America and Europe. U.S. sports generated $46.4 million. That was from both its owned and operated sites and its media partnerships. The media partnerships have grown year-on-year, with successful partnerships from am New York, which outperformed its expectations at the start of the financial year and generated $28.4 million. Our owned and operated sites have also grown year-on-year by 25% to $28.4 million. And the website ESNY performed really well in New York, Saturday Down South in Kansas, and Sports Betting Dime in Maryland. So we've got that kind of coverage to cover the states across the U.S.
Our U.S. revenues were predominantly generated by CPA deals in the year, but as David's explained, operators are starting to look at acquiring customers through revenue share deals and also around customer retention and away from new customer acquisitions. The business has also started to invest in its gaming content to attract customers in the legalized states in gaming and has generated $1.3 million revenue from that gaming content. European sports has declined overall, largely due to the websites being closed and are no longer in operation and cost-prohibitive to continue with. Positively, we've seen U.K.-focused assets, Freebets, recover since the migration to the new tech platform and are growing quarter-on-quarter in Q1 2023, despite Q4, including the World Cup. Gaming revenues declined by 38% year-on-year.
This was largely impacted by the decline of tail revenues from websites affected by the Google penalties, which we no longer operate, but our Finnish websites, which we continue to maintain, have grown 26% year-on-year, and WhichBingo has also had a positive growth into Q1 2022. Moving on. The group also saw strong growth in North America, and we've split this out into defining spike periods as the first 10 days, including any pre-registered accounts. Those spike periods for financial year 2022 included the launches of New York, Louisiana, Kansas, Maryland, and Ontario in Canada, and a mobile registration launching in L.A. In the financial year, revenues for the states' spikes were $10.3 million versus prior year of $0.9 million, where we had the newly acquired assets in 2021. The spikes contribute about $4 million-$5 million of EBITDA in 2022.
Our organic revenues from both U.S. and Europe, which includes the new and mature states, generated $59.3 million, and that's grown 10% year-on-year. Moving on. Our core revenues split by verticals in 2022, we saw significant progress in the U.S., with the revenue mix shifting to 78% from sports and 22% from gaming assets. Sports increased by 72% year-on-year, and 86% of that was from U.S. assets, with 14% from European sports. Sports as a whole now is around 97% of the revenues generated from regulated markets. It's significantly more of that revenue is generated from CPA deals. Gaming revenues overall declined in Europe, so tail revenues declined from websites impacted by the penalties and subsequently closed. Our gaming websites remain a priority for the business, and they're growing new tail revenues through a mixture of hybrid and ongoing revenue share deals.
In the U.S., we're focused on creating gaming content as we believe this will be a valuable up-and-coming vertical in the future. Moving on. In both our half-year results and the Capital Markets Day, we spent some time talking about the component parts that made up the gross margin. As a reminder, that's defined as margin as a percentage of revenue, after deducting associated content, technology, marketing, and people costs. North America generated 50% gross margin for the full year. That's split into two areas: owned and operated, which was 61% margin, and we expect this to improve as revenues grow, not necessarily with costs growing. For media partners, these have lower associated costs but higher revenue shares, which we share with our media partners. That was 40% for the full year.
The mix of owned and operated revenues and media partners will vary year-on-year, and those partners in legalized states and our own coverage from owned and operated sites will impact that gross margin percentage. EU sports gross margin performed below expectations at 55%, which was largely impacted by sporting results such as Cheltenham, affecting the tail revenues because they're impacted by the sports results, and a short drop in revenues impacted by the migration to the new websites. But we expect this to return to the level within our range. EU gaming gross margin was 75% and benefited from the tail revenue share and strong management of costs. Moving on. On costs, we've had a large program of works on cost reduction. Our operating and sales marketing cost base, excluding those media partner revenue shares, transformation costs, and share-based payments, fell from $39.8 million to $37.6 million.
That was a cost saving of $2.2 million, and that was while absorbing the full year costs of staff, marketing, and technology from the acquisitions we made in 2021, and also launching two new brands under the Saturday brand. We made significant progress during the year to reduce costs, staff costs in particular, reduce staff heads from 267 to 193 by moving roles from costly geographies, removing any unnecessary management layers, and this has brought senior leadership closer to the operations of the business. We've also rationalized our content freelance costs, paid the social media marketing costs in order to optimize this year-on-year, and we've invested in that technology to remove the legacy technology and improve process systems and data, which were end-of-life. Moving on. We're now seeing growth in Adjusted EBITDA year-on-year, growing from $15.1 million to $17.8 million this year for continued operations.
The transformation program that has been run over the last couple of years, which cost $4.6 million in this year versus $6.5 million the year before, has been largely completed. So we've moved the staff from costed jurisdictions and delivered the new platform. Our websites will be moved to that new platform over time, but this will now be part of BAU technology costs. Annually, we've benefited the group by an ongoing saving of $5 million-$6 million, offset by the additional costs from the acquisitions, which brings us to a $2.2 million impact for this year. Moving on. Our operating cash flow, which is cash from continuing operators' activities minus CapEx, excludes any payments relating to acquisition, improved year-on-year from an outflow of $4.4 million to generating $2.1 million. That was from improved trading performance, positive working capital benefit from media partnership payments, and robust working capital management.
Moving on. In the full year, we funded $21.3 million of acquisition-related payments, $17.6 million of deferred consideration from the U.S. assets we acquired in 2021, and a further $700,000 relating to the BlueClaw acquisition. The earn-out for CBWG for 2021 was achieved and paid in 2022. That totaled $3 million. And in future years, we'll continue to fund from cash reserves, deferred and earn-out payments of $7.4 million and potentially up to $7.5 million in 2024. We've taken a prudent approach to cash and continue to fund these acquisition payments. In addition to that, the Israeli tax liability that relates to 2016 to 2020, $2.6 million ahead of an 18-month period. And the business currently has no debt arrangements in place, but this remains a consideration for future working capital or acquisition purposes, and the board will choose to put that in place. Thank you. Moving back to you, David.
Okay. Thanks, Caroline. So the outlook for the year, well, as I said, we've had a solid, indeed strong start to 2023 with the launch of Ohio, and performance has been trading in line with expectations in the early part of the year. The big focus in the immediate term then was the launch since March was to drive Massachusetts, which was a slow-burn state launch for reasons of the legislation being implemented very late in the day, which meant there was very little time for pre-registration.
Massachusetts has not seen the big spike that we had anticipated in a normal state launch, but it's a much more slow-burn launch, and we anticipate there will be a significant spike later in the year when the new football season starts because this was launched clearly post the NFL season, having come to an end and therefore into a relatively quieter period of the North American sports season. Looking forward, I think, and this is the big thing for me, as I've said to you, moving to sustainable revenues, diversifying our revenue streams into revenue share in North America is so fundamental to building a more sustainable, less spiky, and allow for more linear growth rather than the sort of, as I said, spiky growth.
And the visibility we've given you of the sort of value of these spikes and the impact on our profits, I'm hoping will allow you to see what the underlying core business is driving and then think about the spikes on top as incremental value, albeit year-on-year. Unless those state launches are repeated both in scale and volume, you might get a little bit of variation period on period. So two state launches this year so far, more to come, we very much hope, but we do not know definitively when they will be or indeed which state they will be. And for last year, the revenue share, as I said, progressing and negotiations underway with a couple of operators. Again, until they're done, they're not done, but we will obviously let you know when that has happened.
We do see a real opportunity, as I said, in building our gaming business, but clearly building that will take a bit of time. But nevertheless, it will pay dividends ultimately in terms of increased profitability and increased sustainability, and as Caroline has spoken about, we have delivered significant savings in the period in cost, and we have been extremely effective and delivered substantial growth in our year-on-year cash, which again is, at the moment, as we understand it, hugely valued by the market, a strong cash generation, and a strong cash balance sheet is obviously very, very important given what's going on in the wider market out there while we continue to drive performance. So thank you very much.
That's great. David, Caroline, thank you very much indeed for updating investors this afternoon. Ladies and gentlemen, please do continue to submit your questions using the Q&A tab just situated on the right-hand corner of your screen. Just while David and Caroline take a few moments to review those questions submitted already, I'd like to remind you that the recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your Investor Meet Company dashboard. David, Caroline, as you can see, you've had a number of questions both pre-submitted and submitted during today's event, so thank you for all your engagement this afternoon. If I may, just hand back to you to read out those questions and give a response where it's appropriate to do so.
Yes, thank you very much. Well, look, thank you to everybody who's submitted some questions. We do have a long list of questions, and we'll try and address as many of them as we reasonably can. So let me start with some of the pre-submitted questions on the full year results. Can the company achieve organic book growth? And the answer is yes. We are very focused on growing our European business, which fell into decline last year. So we believe that we've had a very strong start, again, a strong start to the year in our European sports business. We've had a strong start to the year in our European casino business, albeit, as you know, we continue to suffer the impact of the reduction in tail revenues from old assets. So the challenge is always to grow the new assets and the new revenue streams, i.e., create new tail revenue, meanwhile having the offset, the negative offset of the reducing tail.
But we'll make sure we give you visibility of the growth that we're achieving in those assets going forward. So the answer is yes. And in North America, once again, the impact of spikes will always have a bearing on the top-line revenue and the top-line profitability. So as I've just said, my focus will be very much on giving you visibility of, and indeed we've done that in these results here, of the growth in the ongoing business and the move to revenue share. How is the sale of publishing assets progressing? Well, I did mention that earlier, that we are at an advanced stage, and I can't be 100% certain of signing. It is always that one has to always make that statement until it's actually signed and completed. Once it is signed and completed and the assumption it is, I will obviously update you on that then.
Has the company reached a stage where it can consistently produce and grow profits? Well, as I say, I've spoken at length on the impact of spikes, the huge value of those spikes, and then the impact on the performance period on period, year-on-year. So I won't repeat it at this point. What is the board's policy regarding dividends? At the moment, the business judges that it is better to retain cash for working capital, to take account of the fact that we do have at the moment a spiky income stream, and to take account of the fact that we have those significant acquisition payments still to make of $7.4 million and $7.5 million. So in the short term, I don't anticipate that we would be bringing dividends back to the table, certainly not in 2023. Are there plans for any share buybacks?
I mean, for exactly the same reason as we're not in the short term planning dividends, we are not planning any share buybacks. Are there any plans to make additional acquisitions? As we stand today, there are none. However, we will always be looking for attractive, sensibly priced assets, and we'll keep an eye open for that as part of the growth plan of the organization. However, as we stand today, there are none. Are there any plans to change the management again, or do we now have a management that will be around to fulfill the promises? Well, as I think I've said, new management team you have in place have only been here for a relatively short period, and we are committing to staying around as long as you will have us, clearly, and to implement the things that we have outlined going forward.
I have no plans to change any of my team, and to my knowledge, the board has no plans to change any of the team either. And I think you can therefore assume for the moment the management team will stay in place. How has inflation impacted on the revenue and costs of the company? Our revenues are largely unaffected by inflation in the sense that it's not a cost-plus arrangement or where we charge based on a previous price + 5% or anything of that kind. It's very much what we can negotiate for delivering the valued customer that we deliver to the operator. That's our primary source. And as we've said, in the past, largely, this type of income stream has not been affected, i.e., the revenue-sharing income stream has largely been unaffected by deterioration and recession.
Therefore, at the moment, we don't believe our revenues have been affected. Obviously, our costs, to an extent, have had to absorb a certain amount of inflation, a small amount of salary inflation, and some inflation, for example, in the very small number of rents we pay and similar. But generally speaking, as you've seen from the numbers, we've been able to cut costs by far more than the inflation impact. It seems that acquisitions have not benefited the company as the gains from acquisitions have been offset by declines in other sectors like personal finance and gaming. When can we expect to see some stability and consistent growth in earnings? So first of all, you are right that the original assets for the business online casino were severely impacted by penalties.
You are equally right that the gaming assets that were acquired were also severely affected by penalties that were imposed around your money or your life. Those impacts have not fully gone away for the reasons I described, where there is still a small amount of tail revenue share that we enjoy. That is inevitably and in natural form declines over time, but obviously declined much more rapidly as a result of those penalties. I think it's fair to say that we are now in rebuild mode and in any few-week-three turnaround situation, which effectively is what this was and to some extent is. It is very hard in those circumstances to be very exact as to exactly how fast the regrowth will take place. But we are, as I said, seeing positive growth, as I described earlier, in Freebets and our casino assets.
We do expect to see an improvement in the stability of our European assets. In North America, I've talked at length around the impact of spikes. Once again, I think we will be able to deliver an improving and more consistent revenue flow in the core of North American assets. However, as I said, number one, we will still see big spikes. That is going to be attractive, but nevertheless will cause peaks and troughs. And similarly, when we move to revenue share, we will gain a long-term value, but we might see a small short-term dip. What's the typical length and structure of your revenue share deals? They do vary significantly, but a not untypical deal is one where you continue to for the life of that better.
So if you introduce a bettor, pay the small upfront fee, and that bettor continues to lose $100 a year by way of example, you can continue to enjoy a percentage of that over the remaining life of that bettor until they stop betting with that operator. So unfortunately, it is quite, there's no definable standard term, but that is a fairly typical arrangement in Europe. Clearly, in America, that's still evolving. Shareholders have lost around $10 million due to the impairment charge. Are the assets reflected at fair value? Is there any need to make adjustment? So the impairment charge was entirely in personal finance and reflected the fact that we were running the personal finance business not at a small loss in the prior year.
We cut that and indeed advised our brokers that we had cut the loss down so that it no longer affected future projections because we took out costs commensurate with the revenue streams that we were expecting on an ongoing running basis. So this is an original cash purchase where we've seen significant profits from personal finance in prior years. Indeed, last year, we made, I think, about $2.8 million in personal finance in 2021, making a small loss in 2022. So we have now written down the personal finance assets to reflect the loss in value, and we do not see a need to write down any of the assets any further. What is the logic of having operations or teams based in Israel and Cyprus?
Israel is where we have our European casino team, largely, and it is where the business was originally created, and it is where many of our talented casino teams live and work, and that's why we retain a presence in Israel. In terms of why we have a presence in Cyprus, we were looking for a lower-cost environment that was still closer to Israel in order to site one of our finance processing and accounting centers, and so hence the choice of Cyprus. Given that the company makes a net profit of between $2 million and $3 million, has a market cap of around $40 million, it does not pay a dividend, and there are no share buybacks. Shareholders have lost substantial capital value.
With little prospect for recovery currently in sight, what would be the investment logic for further investment in a company for existing shareholders who had put their faith in management? Well, personally, I have to repeat, and you'll forgive me for doing so, that as a new management team, we are focused very much on driving future value and resolving issues that we identify in terms of what has happened historically. And we believe that the results we've just presented demonstrate good progress in making that change, indeed, in particular, focusing the business into North America. We are not currently looking for investment by existing shareholders into the business at this point. So at this moment, there is no call for additional capital from shareholders.
I would just point out that the $2 million-$3 million that I called out is obviously the P&L after the impairment of, I think it was actually some, may have been as much as $13 million. I can't remember now the full number. Sorry? $13.8 million. $13.8 million. So once you add back the impairment, you do actually come back to the, and the other adjustments for transition costs, you do come back to the $16 million-$18 million range of the Adjusted EBITDA that we have reported. Right. Thank you very much to those individuals who asked those questions. I have got a very long list of questions in front of me, so please bear with me. They're coming in thick and fast. So I'm just going to pick them up and try and cover off as many that I haven't already covered.
Can you specify what percentage of your web traffic comes from Google? Well, like many, many organizations, a very high percentage of our traffic comes through Google Search, either through us putting confirmation out and calling traffic in, or more particularly through natural search, searching against the keywords and/or the promotions, which is the predominant source of. So yes, Google traffic accounts for the vast majority of our traffic. Can you please provide some light around customer concentration? What proportion of revenues comes from companies' top partners? Well, as you can see, we have partners in North America, and about $28.3 million, I think, or $4 million came from partners, and as you will have seen, about $16 million was paid away as their revenue share from those revenues. The single largest partner last year was amNY, that accounts for approximately 50% of those revenues in round dollars.
And then the remaining revenues are spread across the remaining partners. Apologies, I should say who asked that. That was Slavan V. I do apologize, Slavan. Those were two of your questions. I'd already covered one of your previous questions. Andreas Hennes, what do you read from the fact that the company is trading at an all-time low despite the company's recent efforts to communicate its strategy? I think it's fair to say that too much weight is being put on history and the historic problems of the organization. And in my view, a business that generates $10 million of free cash and $18 million of core EBITDA could well be and should well be valued significantly higher. We are providing significantly improved transparency and information, but a very small number of shares are being traded.
And it's those very small number of shares that are being traded that is driving the share price. The vast majority of shares are not being traded. And therefore, unfortunately, the minority is impacting the majority. Slavan V, in the U.S., why isn't XLMedia live in all legalized states? We have to decide whether a state is going to be economically viable for us. And there are a number of states in the U.S. where the local arrangements don't lend themselves to our type of affiliate revenues. And for example, where you might have to go into a casino in order to open up an online sports betting account that simply doesn't lend itself to what is an SEO and content-led online strategy. So that's the reason why we're not in all the states.
Slavan V again, are you still optimistic about growing revenue share after the decision of the Massachusetts Gaming Commission? I am still optimistic about growing revenue share because it's not simply about, obviously, Massachusetts, although Massachusetts are still working their way through exactly how they intend that this market should operate. As you'll probably be aware, it wasn't until a few days before Massachusetts went live that they actually confirmed that they were allowing both revenue share and CPA. There will obviously be an appetite, certainly from some of us, to continue with revenue share. But depending on the decisions they make, we will continue to prioritize or not operating in Massachusetts, as will the operators. In the end, the tax revenues will reduce or increase depending on the decisions they make. Why are brokers forecasting no revenue growth in continuing operations for 2023?
I think that comes down very simply to the spikes and the number of markets and the need for us to grow our underlying core business and the reality that we need to build ourselves a more sustainable basis. The new management team, as I said, have only been in place for a relatively short period. I'll focus very heavily on delivering those sustainable revenues. But in the meantime, we are and do need state launches of a similar number and magnitude year-on-year to maintain top-line revenues. XLMedia and Slavan V again. Thank you, Slavan. I beg your pardon. Mazin S was the previous question. Slavan V again. XLMedia is smaller than other listed peers. Can you elaborate on the importance of scaling the industry?
I think without getting too specific to specific competitors, the thing I note about both of them, both the two obvious candidates, and there are others, of course, is they both have not suffered the same level of impact of penalty on their casino assets in the past. And therefore, they continue to enjoy substantial casino revenues, both in terms of new deposits and in terms of tail revenues, both of which are obviously very high-margin activities and very valuable to them. And again, without naming names, some have been very acquisitive over the last few years and very successfully so. So once again, they have used scale and the power of their balance sheet.
At the moment, we're in the process of trying to build our balance sheet slowly by putting more cash on the balance sheet in order to put ourselves in a stronger position and grow our organic business and invest in our organic business. I do apologize if I don't pronounce your names all correctly, so my apologies in advance. But Tushar H, the stock price has fallen almost 60% in 12 months. What do you think is driving this, given your year-on-year metrics? Well, I have, to some extent, answered that already in the sense that we believe the profitability of the business and the EBITDA ratio to share price is extremely low, in our opinion.
And as I say, I think this is because there is too much attention paid to historic issues that we have no longer faced and that we are, and as we move into a new business, we should be focusing our attention on the opportunity in North America in particular, but other markets as well. Is the U.S. listing under consideration? The answer is no. We have taken advice, and we have judged that our activities are too small at the moment for a U.S. listing. Andreas Hennes, another question asked many times by him. Why don't the board of management buy significant stakes in the business despite their claim that the company is significantly undervalued? I think I've seen comments from you, Mr. Hennes, that you also judge it to be undervalued.
However, we have acquired, I have acquired stakes in the business, and I have significant share options in place, and I'm highly motivated by the share price, but like you, I'm very frustrated by the fact that the underlying trading and the performance and profits and cash generation is not currently reflected in the share price. Again, because I think too much attention is now, understandably to some extent, but focused on historic issues rather than future opportunities. Mazin S, given the full-year benefit of cost savings, why is market expectation expected to be low in 2022? Again, we obviously discuss with our brokers the opportunities, and they then assess, in light of what they know about the marketplace, what they think is reasonable, bearing in mind what they've already assumed in their assessment of our future income stream.
Again, while we can build year-over-year growth as we expect to in a number of our core assets, we still face that spike issue that I think is probably impacting on some of the assumptions that are being made. I have another question from Mr. Hennes about the share price. I think that's a repetitive question, so I'll move on from that one. Mazin S, will working capital position limit your ability to move to revenue share? That's a very good question, as it happens. I think, as I've already said, it's very important to have a very strong cash position. And if we can realize revenues of profits and cash, as I said, from the imminent, we hope, sale of Personal Finance, that will give us additional working capital facility. Similarly, as you've seen, we are very strong cash generators of cash.
We don't have a level of transition costs to incur this year. Our CapEx is broadly flat. I emphasize the word broadly because it will swing marginally up or down year-on-year, so I think we're in a reasonably strong position to cater for the move to revenue share that we are anticipating. I'm going to throw this one over to Caroline just so I can take a glass of water. Mazin S, how much CapEx, including capitalized development, do you expect to spend over the coming years?
Thanks, David. We typically spend around about $5 million in CapEx, and we expect we'll continue to spend that into next 2023 financial year, and that's because we're still replacing some of the legacy functions and capability in the business, so I would guesstimate we will spend about $5 million only.
Thanks, Caroline. Giovanni D, have European revenues stabilized, or will they continue decreasing in 2023? Well, as we've said, we are very pleased with the start we've made to the year. We believe there is reason to be very positive based on that performance and the optimization program we put in, in example of being focusing our technology around it in last year in order to benefit this year and the SEO team's focus. Our expectation is to see growth year-on-year in our European assets, and we will make visible the impact tail if that's proved to be material in year-on-year performance. Florian S, what has happened to Veikkausbonukset? Well, I'm sure you're aware, Florian, that this is an asset that shares the same name as the state monopoly in that country, in Finland, to be precise. So that was, we think, to our disadvantage.
And so there has been recently a transfer of that asset back to them following a challenge from them about the ownership of it and a number of other assets in that market. So we have transferred the asset back to them, and we have launched another asset under a new name, which is much more relevant, we think, to what we actually do in that marketplace. It has the same content and is already live and was put live the same day that we transferred the asset back to the state monopoly. So thank you for that one. Andreas Hennes, given the market is not, this again, forgive me, is another repetitive question, however, and it tends to be helpful. Why doesn't the company sell itself?
And the answer is that at any point in the cycle, we are, by definition, as a public company, open to have people with public information attempt to make a bid for the company. We haven't actively put ourselves up for sale as we believe there is significant value to be created by continuing to run the organization. And we believe, as we've said, that we believe the company's performance, financial performance, and cash generation and profitability is not currently reflected in the share price. And therefore, we believe it is appropriate to continue to run the business to improve value. And clearly, in the meantime, if someone were to make a bid, we would have to respond to it. And then we have another question from Andreas.
How do you justify the company pays circa $2.5 billion, I beg your pardon, $2.5 million to the U.S. board and management and is by far the highest paid board management when scaled by market? Do you think the compensation should be scaled back by 70%? No, I don't. When you join a company, as I did six months ago, I joined it on the basis that there were a number of issues that needed to be resolved. I inherited a number of issues, and I inherited a number of market forecasts and I joined the company, and I'm tackling the issues that it has and putting it back onto a path to growth, so no, I don't believe that I should take a 70% cut, nor will I, and as for the $2.5 million, I'm not sure where you get that number because I've never seen it.
But thank you for the question, Florian S. We already have April 2023. What about outlook for? We're already in, I think, if yes, big apart. We're already in it. What about outlook for 2023 as an investor? The words in line with management expectations are not popular. Well, as I said, we talked to where we are tracking in the first part of the year. I'm sorry that it's not helpful. However, you have Cenkos and Berenberg both issuing notes on the company, both remarkably consistent in absolute expectation, and both informed by discussions with management about trading historic and prospective to the extent that we're able to share prospective information.
So I'm afraid we can't issue any more information at this stage, but I have given you a lot of visibility this year to enable you to understand the impact of spikes and state launches and give you visibility of the underlying business. Another question from Andreas Hennes. I'm afraid, again, Andreas, this is highly repetitive and just a variation on the question you've already asked. How can you expect the market to buy into the company's strategy given its track record and given the fact the company does not provide financial midterm targets? Well, number one, as I said, we're a new management team inheriting a number of issues from history and are tackling those issues one by one. We've provided significant incremental transparency.
As I've just said, we continue to advise the brokers on our performance and expectations to the extent we're able and provide you as investors with visibility. We aren't in the position to do more than that at this point. But thank you again for the question. John Z, you seem to be overly focused on NFL. What is the strategy about NBA, baseball and NCAA sport, etc., which you could explain? So you're absolutely right, John. We do obviously focus heavily on NFL because that is the principal driver of new books being taken out in the NFL season by bettors in the North American marketplace. We do make revenues over the course of the summer when NFL is closed, and the baseball season, as you know, is hot at the moment, indeed.
But the amount of new initiation of new bettors in baseball is much lower than the initiation that comes through the NFL. So again, we continue to put out the promotions, and we continue to encourage the activity. However, I'm just using baseball as the example. The same is similarly true of basketball and the other main sports in North America. They simply don't have the same impact and the same draw in volume of bets and volume of new books taken out. But nevertheless, we continue to serve them throughout the year. We have a question from JM. If you see share prices being in the value range, would you be considering a share buyback?
So, I mean, the answer is we're not planning a share buyback, JM, for the reasons I've already described, namely that of maintaining a strong cash balance sheet while we still have the deferred payments to make. And I've also talked to the question of shareholdings. As I said, I do anticipate buying more shares, but I have already bought some and will continue to do so over time. Mazin S, again, excluding spike, rate of growth is reasonable to expect in the core. Again, I think I'm going to have to defer on that question for the reasons that we are in turnaround and we are showing the sorts of growth that we can deliver in the numbers we've reported. So we're not actually quoting at this moment until we have a little bit more water under the bridge, exact numbers going forward. There has been noise. Oh, right.
I'm not sure who this is from. Apologies. Bear with me. Oh, JM, another question from JM. There has been noise in the U.S. about regulation about revenue share negatively impacting media business like XLM. Any comments? Well, clearly, revenue share models do have a short-term impact in the sense that you receive less for the introduction of the customer. And of course, not all operators are operating revenue share models for a range of reasons. And as you say, there is discussion going on in the marketplace in North America. All I can say is that the experiences of the European market are that revenue share is now the hybrid model indeed, which is a combination of upfront payment and ongoing revenue share, is the chosen model in Europe. It is a highly successful model, which has seen betting companies in Europe make substantial profits.
As a result, we believe that will ultimately, if the objective from the regulator's point of view is to earn tax, from the operator's point of view is to maximize profits, we believe that the positive aspects that we can see in the European market, in our opinion, will ultimately, over time, be adopted in some shape or form in North America. I can't really say a great deal more on its name. So I think that's pretty much everything, but I do now have. Hold on. Hold on. There's a couple more questions come in, and then I've got a load from somebody else. John Z, yes, John, do you only gain from a revenue share agreement with the bettor losers? Do you also gain from winning bets? So the answer is yes, we only gain.
It isn't quite as simple as this because each deal could have different variations in it. But in principle, if a bettor bets, more often than not, there is a high chance of them losing. However, if they lose, we get a share. If they win, we get nothing. And until that bettor has gone back into loss, and then we start earning again. So yes, that's a good question, and that is the answer. And that was Florian's, I think, was it? No, no, I beg your pardon. But the issue is that competitors can give an outlook. I have answered that question in the sense that I've explained that our competitors have a much larger casino footprint with a much more regular and predictable revenue stream driven from that, i.e., without naming names, one of them is about 50-50 casino and sports.
We are heavily weighted to spikes, and therefore, it is much more difficult in the short term while we build up our sustainable revenue streams to give exact predictions in the way that some of our competitors do. Albeit, I would note, they tend to give fairly significant ranges and tend to be very active in the acquisition market, which will obviously help contributing to driving that revenue upside. I'm going to move off now because I think we're probably coming to the end. There seems to be a slowdown. I have got 13 more questions, nearly 13 more questions from Mr. Tim Laxton. Mr. Laxton has given me instructions that I should read out his questions in full, and so that's what I'm going to do. Do you expect 2023 to be a working capital positive, negative, or neutral? Will 2023 be stronger than H2, like the pattern in 2022? Caroline.
So from a working capital perspective, we expect normalized working capital. So that excludes any acquisition payments and excludes discontinuing activities and deposits through 2023. Will H1 be stronger in 2023 than H2? I think it's likely that that pattern will continue given we have explained that as of today, there are only two state launches that have been legalized that we know of as of 2023.
Okay. How much cash tax, apart from the settlement of the Israeli tax-related liabilities, does XLM expect to pay in 2023? Caroline.
So from a computation perspective, tax computation perspective, we have finalized the tax returns up to 2020. The tax returns remaining to 2021 and 2022 are still open, and we don't have a sense of when the Israeli authorities will review those tax returns. But we will be paying advanced tax payments through 2023. And to guide you, that will be around $1.1 million-$1.6 million for those tax payments.
Now that the external services for BlueClaw have been shut down, is it fair to say that XLM paid $2 million book value for the company in 2021 and now retains just a handful of employees with SEO skills? With the benefit of hindsight, would it have been much cheaper just to recruit employees with SEO skills directly? Obviously, I'm having to reach back into history to answer this question, but my understanding is that it was always the intention to acquire BlueClaw and the expertise that it brought to the table with the specific intention of focusing that business on internal revenue generation and was to slowly close down the external revenue generation.
We did retain the external regulation, as you know, for a while. It's very hard for me to say definitively that we would have been better off recruiting. We clearly brought in some very talented people, and we now have them focused internally to optimize our business. I don't know what other options they had at the time, although I do know the rate and speed at which they exited the Israeli business may have contributed to the need to move very rapidly and buy the skills in at speed. But again, I don't know definitively. The core point, however, is it was always the intention to bring in the business and ultimately focus it internally. The next question, do the founders of CBWG still retain their XLMedia shareholdings that were part of the consideration for the company?
For everyone else's benefit, CBWG was one of the assets we bought, which included Crossing Broad. To the best of our knowledge, these shareholders have now sold their shares as they always said they would. I don't know definitively how they're holding all of their shares because they are entitled to move those shares around. But to the best of our knowledge, they have now exited. Now, another question, Caroline. How did the FX loss on cash and cash balances of 1.3 million in 2022 occur? This is a very detailed question, Tim, but thank you anyway. Was this on translation of sterling cash balances from the sterling capital raised in 2021 into U.S. dollars? If so, why weren't the U.S.. dollars forward bought so that there were no currency exposure on settlement of the U.S. dollar deferred acquisition liabilities?
The translation of sterling cash balances from the capital raise is not the reason for the FX loss in cash of $1.3 million. We hold monetary balances in euro and shekel within the group entities, and those group entities have a dollar functional currency. As you know, both of those currencies weakened against the dollar during 2022. The FX loss mainly represents unrealized losses on translation of those U.S. dollars for financial reporting purposes. In regards to the question around U.S. dollars forward bought, I couldn't really comment on what the strategy of my previous CFOs were. I would have to be delving back into history on that question.
Okay. Thanks, Caroline. Next question from Tim. Does XLM's current ratio of about 0.75 at 31 December 2022 tell us that the group needs an RCF? If not, why not? I mean, actually, you're right in the calculation, Tim, but my understanding is that if you strip out the deferred payment element, the ratio obviously improves very significantly. At the moment, we do not plan to bring in an RCF. The reasons Caroline has already described, firstly, because we do anticipate bringing in some cash subject to ultimately signing the deal from personal finance. Secondly, obviously, we generate, as we've shown, very significant cash from the activities, and our demands on our cash for transition costs this year are obviously greatly reduced. So that is the principal reason why we at the moment have not got one and why the ratio, if adjusted for deferred payments, is slightly better than the 0.75 that you correctly note. Next question, again, for Caroline, one for you here.
Why did XLM incur finance costs on bank overdrafts, might be called brackets, note 6, of $138,000 in 2022? Why did it need this source of liquidity, and what was the maximum overdraft?
It's not technically related to bank overdrafts. Some acquisitions were recognized in terms of IFRS 3 business combinations. Accordingly, deferred considerations were recognized at fair value. And the difference between that fair value and the actual deferred payments deemed the interest to be amortized over the term of the settlement. So it's relating to acquisitions as simplistically as I can kind of explain it.
Okay. Thank you, Caroline. Number eight, what were the minimum total group cash balances during 2022? Memory serves, I think it was about $9 million. Number nine, during Thursday's presentation, the CEO said there are about 60 employees in each of the U.S. and the U.K., 25 in Israel, 27 in Cyprus. Where are the other 30-35? Well, apologies if I was less than specific. I think I said 60 in the U.S., 65 in the U.K., 25 in Israel. Hopefully, I said 27 in Cyprus. Apologies if I didn't, and there are 17 in Canada, approximately. I know that adds up to 194, but I think that's the correct split. Mr. Laxton, you've also asked a number of questions about the broker's forecasts, and I've already addressed those to other questioners, so I won't pick those up now. You've then asked another question, which is actually the final question I'm going to answer today, unless anything's more to come in new on the teleprompter. No.
So the final question: has the start of 2023 been solid, first paragraph of the outlook statement on page two of the financial results RNS, or strong, first paragraph of the outlook statement of the Chief Executive Review, which is the more accurate? Well, I think, Tim, you probably, Mr. Laxton, I beg your pardon, you probably understand that I tend to use the words strong and solid as being broadly interchangeable. I think both send a very positive signal that we've had a very good start to the beginning of a financial year. So I really do appreciate everybody's questions, and you'll forgive me for running through them at such high speed and only throwing a few over to Caroline, trying in the interest of time to address as many as I could myself.
Forgive me if I haven't covered every last bit of every last question, but you can see there was a very substantial number of questions, and I wanted to get through them in reasonable time. So thank you very much.
That's great. David, Caroline, thank you very much indeed for updating investors. Glad we ask investors on the call not to close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations. This may take a few moments to complete, but I'm sure it'll be warmly welcomed by the company. On behalf of the management team, I'd like to thank you for attending today's presentation. Good afternoon to you all.