Good morning, everybody, and welcome to Korian's F ull Year 2022 Results. We are delighted to be back here in the room, in presence tien, as they say in French, to be with you all. So we have Sophie Boissard, our CEO, with us today, and Philippe Garin, our CFO, who will be presenting the results. We will then be taking your questions here in the room, of course. Then I would like to remind you, we have a web chat that you are all very used to after the last after the last couple of years, in which you can post your questions, and we will be delighted to pose those directly to Sophie and Philippe for you, if you are on the webcast.
Without further ado, I'll pass you over to Sophie.
Thank you, Sarah. Hello, everybody, and welcome. I'm really delighted to see you all in person this morning, and also would like to welcome the one that are connected. I'm really happy to be able to present in person the activity and result of Korian with Philippe here next to me, as well as some of the member of the group management board present today. Actually, I would like to start with some personal note. We were all expecting 2022 to be the year of normalization post-COVID, and actually it was not exactly the case with the fallout from both the war in Ukraine, economic tension, and last but not least, for our industry, the turmoil in elderly care in France.
Nevertheless, if I try to take a step back, the year we just went through clearly demonstrates not only the resilience of Korian's business model and operation, mainly, and most of all, the resilience of Korian's teams. I would like to start this presentation by expressing my warm thanks and all my gratefulness to all the members of our community, the Korianers, who are showing day after day such a level of kindness and dedication, and a steadfast commitment to the care and well-being of the patient and resident and their loved ones. I dare say this is probably our strongest asset in all the Korian community. This morning, I will try to take you through Korian's 2022 main highlights and our professional performance.
I will hand over to Philippe for a detailed financial report before turning to our outlook and, of course, taking your questions. Definitely, let me try to kind of frame the year. You see that on the next slide. 2022 brought, as I said, challenges we share actually with all other sectors. Rampant inflation, differentiated between countries, but all in all, we scored above 9% average in the seven countries. Tight labor market, of course, as well as lingering effect from COVID. Not to be forgotten, that we had several smaller waves all along the year 2022 to face. It was also, and mainly, a year of extreme scrutiny for our industry, following the devastating accusation against Orpéa former management.
As you see reflected on the slide, I really have the feeling that we were experience a kind of huge contrast between what was happening within the company, and as you see on the picture, there has been a lot going on in terms of further transformation, a lot of great achievement, both extra financials and also financial resilience, and the perception from the outside, with the perception of mistrust generated in the media headlines and among the general public. If I just try to frame what we did, as a company, we continued in 2022 to pursue the strategy you all know of becoming more diversified and more specialized in order to be able to better address the growing care needs in our societies, care that are related to aging and also to the surge of non-communicable diseases.
This continuous transformation can be measured both by our progress done on ESG roadmap by the repositioning of our networks, as well as through our financials. Before I turn to our full year figures, I would like to say some more words to speak about a topic that I know is top of mind for most of us. I mean, of course, the turmoil that we have seen in the French elderly care sector since the accusation around the ethical and financial practices of Orpéa . This accusation that's pretty clear has tarnished the entire sector with actually probably at least four areas of concern that are reflected on the slide. First one is mistreatment accusation. Second one is about family relation management. Third one is about compliance with public regulation, compliance with public funding. The fourth one is about asset valuation.
Of course, when we discovered this with the other stakeholders, we decided to take actions proactively. First, I ordered actually several internal audits in order to check the quality management system. This was performed by Deloitte, in order also to check the contract with main suppliers. This was performed by Accuracy. Second, we pushed on the increased dialogue with families within all care homes across the French network, and we decided proactively to publish transparency indicators. If you go on our website, for each care home, you now found several indicators related to quality, related to family perception, related to features of the facility.
We are, at this stage, the only one to have reached such a level of transparency, and this was very important for us in order to re-initiate trustful dialogue with family locally. Last but not least, we put a lot of emphasis on awareness and trainings, because everything when it comes to mistreatment prevention starts with the people on the field. We did not start this last year. It was already ongoing for several years, we started again to increase the level of awareness and to make sure that everyone within our company knows about the whistleblowing and alert system that we have. That's what we have done on our side. Of course, in the meantime, the public authorities took a lot of initiative, and this was really a great need that they did so. What did they do?
They increased the level of control, this was a must, actually, because in France, the level of control was too weak. Second, they decided about a new regulation framework for elderly care. This was needed because the regulation framework was too weak to imprecise. Last but not least, they engaged with the professional organization called the CNAPA in France into a so-called responsibility charter, which has been presented to the minister in December and agreed by the minister and will be followed up. What came out of all this control and inspections? Just to give you some insights. As you know, the Care Minister in France announced that they would be able to control 100% of the care homes within the next two years.
When it comes to Korian network, we have already 110 facilities that have been audited by the ARS, Agence régionale de santé. It represents 40% of the network. We have already 60% of the reports drafted or finals. Until now, no major findings emerged. Some recommendation, of course, and this will fuel the continuous improvement cycle that we are deploying at no major findings. Second, we had a lot of, I would say, standard ongoing inspections on the tax, on consumer protection, and all these did not show any significant findings when it comes to our practices. I have the impression that this is actually also the case for the other players. For me, this is a clear sign that actually the former Orpéa was an outlier in the industry and not, as it has been said, the industry standard.
This is very, very important. Looking forward, I expect clear regulation, regular external controls as there need to be an attentive dialogue locally with all stakeholders to contribute to rebuild the bedrock of trust that our care industry needs to function. For sure, it will take some time, but we are on the right track. For me, this is a very important statement to start with 22 presentation. This being said, let me go back to our 2022 operational performance, and I would like to start with some words on the extra financials, as in our industry, they are necessary conditions for our financial performance. As you may remember, we presented in 2019 a comprehensive ESG roadmap with 15 indicators, and this roadmap made the external certification of our facilities across Europe a key target.
Achieving this ambition required that we design European-wide procedures to be a hallmark for Clariane quality care in the form of an ISO 9001 standard, that we train all our teams in 760 sites to this new standard. To date, and this is for me a key achievement of last year, 2/3 of our facilities, 68 to be precise, have been already certified by external bodies, and we expect to reach the 100% targets by the end of 2023. In 2022, this was also part of the ESG roadmap, we increased the level of people engaged in qualifying paths. Actually, it's now around 7,000 employees that were beneficiaries of the training and graduating programs we offer for professional development.
This reflects our commitment to providing meaningful and fulfilling careers in care and Korian's long-term investment in people. Probably looking at 2022, this is the achievement I'm the most proud of. On average, and this reflects increasing loyalty and commitment of our teams, the tenure of teams is now 7.3 years. When we started tracking in 2019, before COVID, it was at 6.7. If I look now at the operations, the past year, the network cared for over 800,000 people through in and out patient care. We were able, in this very shaky environment, to maintain and even to improve the Net Promoter Score up to a level of 36.
Nursing home occupancy is up 230 basis points at the end of December. This increase has fueled organic growth together with added volume in healthcare and community care and uplifts in tariffs. Offsetting, not fully, the increase of costs toward the end of the year. This is why we were able to post strong organic growth at 6.2%. We were also able to post a resilient EBITDA margin down by 50 basis points in the face of the unheard of inflationary headwinds. You must remember that all our revenues are regulated. This is why we cannot adjust top line as fast as price increase. Operating free cash flow is particularly strong, also due to quality of earnings, first, and second to the reversal of working capital needs.
Let us now go through the main ESG KPI. That's on the next slide. I start with quality. I've always maintained that it is beneficial to have regular external evaluation from our care facility. This control must come from the public authorities, as the Orpéa scandal clearly demonstrated, it has to come also from self audits performed by the operator themselves. This is why we started this ISO certification process from scratch in 2019, and we aim to have the 100% certification by the end of 2023. Second, this reflects the fact that we are also controlled by public bodies, our healthcare activities, the clinics, are also audited on a regular basis by the Haute Autorité de Santé.
I'm proud to say that again, 100% of the clinics earn marks of A or B, which is a very, very strong and good rating. Positive Care, which is our internal approach for ethical and patient-centered care, is now rolled out to 97% of our facility, as you see on the slide. All this initiative, certification, control, and the Positive Care standard deployment contribute to the high and resilient level of satisfaction, which is reflected in the regular surveys that we perform across all of the network, be it reflected in the net satisfaction score, the Net Promoter Score, or what we call the consideration score, which measure the way our residents, patients, and their loved ones feel considered and supported from Korian and the Korian teams. Let us now move on to talk about our people and our HR policy.
Definitely, my strong belief is that good care mean, first of all, good caregivers. It goes by making sure the caregivers feel supported in their daily jobs. This is why, as a company, we long had an ambitious human resources policy, putting the consideration and the development of all our people as a central element of our strategy and as a key differentiator as an employer brand. Training at Korian not only mean being training about daily task. That's we have to do, that's a must. It also means by Korian being supported in the development and being supported through graduating training programs. As I said, close to 7,000 employees participated in the more than 125 programs we now offer.
We have a wide graduating offering everywhere, and we have now a very strong buy-in, more than around 12% of the permanent staff participating to those program. As you may remember, we have not only invested in training, we have also invested in health and safety at work, and this is a second major dimension of HR policy. We have been the first company to sign a charter both in France and at European level, as well as to undertake concrete action at our facilities. It starts to bear fruit at last. We see work-related accident decrease by 21% since 2019 and by 15%, so it's really an acceleration this past year. Last but not least, we have also strongly invested in social dialogue with 15 agreement signed in 2021 and 2022.
We launched the sector first employee shareholding plan. You might say that the environment was quite adverse from a stock market point of view, but I think it's very important to have our people being shareholder of the company. I'm very proud to say that we have now almost 10,000 shareholders who are Korian employees, amounting to 3% of the company's capital. If you see this reflected in the commitment and engagement score of our employees, it continues to rise. Last year, as I test our 78% engagement score. We also received, once again, Top Employer recognition in our four core countries. That's for the HR achievement. Looking now at the full ESG roadmap, so the ESG issued in 2019 to be delivered by 2023, we are actually very close to the full achievement of the targets.
There are only five dimensions that still deserve some further miles to go in 2023. This is for the ISO certification program, the Positive Care deployment, 3% missing, social life council and family committees, and also the HQE certification of buildings. We are missing one last stakeholder committee at country level in Germany, but they will start to work in the weeks to come. We are presently working pretty intensively on the next ESG roadmap, aligned with our ambition to become a purpose driven company, and this roadmap will be presented to you in one month from now. Let's now go back to the current situation of our portfolio and activity footprint. We have years after.
Year after year developed a unique footprint that makes us the European leader of healthcare services in Europe, being able to provide, in selected geographies, a full continuum of care to fragile patients from high dependency care in nursing homes and specialized medical care in post-acute rehabilitation and mental health to innovative solution for the less dependent and the new baby boomer generation. This commands a leading position in the largest and more attractive European markets and help us to anticipate market shifts for the decade to come. Our presence in these seven markets and three main segments is supported by differentiated and well-recognized brands such as Korian for care homes, now Inicea for medical services in France, Ita and Grupo 5 for psychiatric care in Spain, or Petits-fils, Âges & Vie or Casa Barbara when it comes to community care offering.
We have been developing our network all along those years with two main focuses. First one is to say we want to have recognized field of expertise at local level on one hand, expertise that are tailored to the evolving and growing needs of the population locally, of course. The second dimension is that we want to have definitely a cluster or hub approach, being focused on providing care pathway within communities through, of course, our own network, but also by being able to team to partner with local care providers and especially with hospitals. This is what we can do if you look at our footprint across 700 local communities that we are able to serve. You see that reflected on the map. This is why we were able to care for over 800,000 people in 2022.
If you look at the figures, this is pretty striking to see that actually most of the people we support are actually using our medical service offering or more and more the community care service offering that has been doubling in terms of number of clients. We are now serving more people at home than the number of people we serve in our care homes. I think this figure reflects the huge shift in our market positioning that we've been preparing, anticipating, and deploying along the last years. Let us have a look at the transformation, the physical one we had to do in order to support that shift. Actually, 2022 has been a record year for transformation.
What you see on the left-hand side of the slide is actually the number of facilities in the core networks that we have been upgrading, refurbishing or building, rebuilding actually along the years. As you see, we were of course, it had been a very significant acceleration in the last two years and especially in 2022. Why do we do that? It's because we are convinced that we have to anticipate the changes in the need of our residents and patients. These changes are not only driven by a baby boom generation that is eager for personalized solution in the community care. These changes also reflect, and COVID was a major game changer, the increased level of dependency prevailing in long-term care and a surge in chronic disease leading actually to new type of need in healthcare service offering.
Today, I think we have done 90% of the repositioning and investment program we had in mind. A large proportion of CapEx have been deployed, amounting to EUR 1.5 billion, including real estate. This has enabled us to adapt almost 40% of care facility network, 40% refurbishment and 56 disposals or closing done last year. 8% of care homes network. While in healthcare, we've been able to upgrade 50% of the network to provide more outpatient care. We had practically no outpatient care in 2016. We have now outpatient care everywhere. To provide also more specialized care with better equipment and better features. During this period, we have been also able to open new clinics, 26 last year, and we have also delivered 21 new long-term care homes.
Let's now have a look at the activity in the three main segments. Starting with long-term care. Definitely, we are progressively back to normal with this +230 basis point in terms of occupancy, supporting a significant organic growth in that segment, +9.3%. When it comes to healthcare activity, it is already fully normalized. Actually, there is a significant care backlog under acute care, so this is fueling further activity in the post-acute and also in the mental health segment. I dare say that further growth may be expected in 2023 as post-COVID disruption, acute care is really progressing again.
As our outpatient capacities have been significantly expanded, we are able to take care of more patients with the same number of facilities. This will support the growth in healthcare looking forward. Coming to community care, demand continues to run high with occupancy of the small concepts like Âges & Vie, post ramp-up above 95%. Home care networks like Petits-fils now caring for an average of 15,000 people in their homes. Actually, the only constraint we have there in home care is to recruit the right number of people. We could do probably twice more. We want to be selective in the way we choose, support, and train our people. This is why we try really keep a very close eyes to the quality of home care.
Some really, some more insights, segment by segment. Long-term care first. What I want to highlight today is the underlying trend in that segment. This is not the same industry anymore. We have really to cope with higher dependency, mainly cognitive disorder, and growing care intensity, therefore. Here are reflected on the slide some statistics from the French network to the current situation. 50% of our residents are above 90 year old. 56% of residents are rated or ranked with the highest level of dependency. 2/3 suffer from soft to high cognitive disorders, and 20% of entries are referrals from hospitals. Definitely, we are shifting into the long-term intensive care model, and I think it will remain so.
We have to adapt the organization and the network to this new environment, and that's what we have done by reinforcing the staff ratio. The staff ratio is at 0.8, so eight caregivers for 10 residents, average at Europe level. We have done, as I explained, a huge network adaptation in order to be able to have specific areas for Alzheimer care and to offer living spaces on each floor. Smaller units, more medicalized. If you have a look at the satisfaction score, which is not an easy one for care homes, especially for this type of long-term care homes, Net Promoter Score increased by 100 basis point from 30 to 31, which is in comparison with peer scores, a pretty high and very resilient score. Let's have a look at the second segment, the healthcare.
Definitely this is more diverse. We are now covering an extended field of specialties, including geriatrics, neurorehabilitation, pneumology, and cardiology. In mental health, we are leaders in the treatment of mood disorders, eating disorders, and addictions. These are really the sweet segment we focus on. In 22, we again reinforced our network with targeted acquisition in Italy that have high level of outpatient activity and that are well-recognized in their segment and that help us to reinforce regional hub near Rome and Milan. We have also recently closed an additional acquisition in mental health with Grupo 5 in Spain following the integration of Ita Salud Mental in 2020.
Now we have built a significant mental health platform in this important market, and we are now really one of the top player at European level in this mental health segment. We in total, we operate more than 110 mental health facilities in three market, France, Spain and Italy. If I look at the level of satisfaction or promotion done by the patients that come and use our services, it is indeed very high. We perform on a continuous basis, a survey after each stay, basically. You see, Net Promoter Score is at 46, very high. Some last words on the smallest segment, but from a growing demand point of view, a very dynamic one, I'm in community care. For us, it actually encompass two sub-segments.
The first one is living, assisted living concept and community living concept, and the second one is home care. Given the high demand for prevention and assistance to maintain autonomy, we have really tried to innovate and to create new solutions to address these challenges. We clearly see that tailored innovative concepts Âges & Vie aids people sharing a home and sharing assistance at home in rural areas or such as Petits-fils, with really a high quality positioning in terms of home care, are really meeting the demand and very successful, both from a quality rating point of view and from economic and financial point of view. That you see reflected here in the slides with the some further details.
On that note, I will now hand over to Philippe, who will share how these factors contribute to our performance with an update detailed on our financials.
Good morning to all of you. Let's start with our main KPIs. We delivered EUR 4.5 billion of sales last year with an organic growth of 6.2%. Our EBITDA margin is 24.1%, decreasing by 80 basis points compared to 2021. EBITDA margin, thanks to our real estate management, decreased by only 50 basis points. The net result of the group from continued operation is EUR 67 million. The significant decrease is due to transformation costs we supported in 2022. Let's move to the cash and the balance sheet. Thanks to the working capital we have been able to recover, we delivered EUR 371 million of free cash flow. Our liquidity stand to EUR 1.2 billion. Despite our strong free cash flow, our leverage is 3.7.
This is above expectation, as we did not complete any real estate partnership in 2022. This agreement should take place in the months to come. To complete this overall picture, our real estate portfolio amounts to EUR 3.5 billion, showing an increase of 10%. Some more information on our growth. If we focus on the scope we are maintaining, excluding disposal and compensation, our growth is quite strong at 11%. Regarding organic growth, we have a solid 8.1%, quite well balanced between volume and price. This slide shows quite well the momentum of growth and the negative impact of the end of COVID compensation. We have 8% of growth in Q4, with a negative impact of EUR 20 million of compensation decrease compared to last year. The growth by country evidences the impact of disposal in France and Germany.
The growth of activity we maintain in these two country is above 8%. If we shift to activity on the right-hand side of the slide, we can appreciate how strong the growth of the three activity is, excluding compensation. Thanks to the recovery of occupancy rate, long-term care is growing by 9%. Healthcare, fueled by ambulatory activity, delivered growth of 5%, 5.1%. Community care, thanks to the huge emerging demand, gained 7.5%. Let's move to the performance by geography. Two countries, France and Italy, thanks to their large portfolio of activity, are showing an increase of their EBITDA margin. In these two country, we have a regular recovery of occupancy rate, a network which has been renovated, a strong increase in healthcare activity with a large share of ambulatory care, and efficient cost management despite the increase of staff costs.
The picture in Germany is different. The COVID crisis continued to impact our activity in 2022, and consequently, the occupancy rate is recovering slowly. The very significant increase in salary of 25% implemented in September had a 40 basis point impact on our margin rate. This increase was priced into care, but without any margin. We experienced a similar situation in 2022 in France with the Ségur de la Santé. In Benelux, the margin is impacted by the ramp-up of our activity in the Netherlands following the delivery of 14 facility in the two last year. Let's move back to the group. Staff costs now represent 60% of our sales as a consequence of a constant increase of staff ratio, sorry, for the reason Sophie described earlier.
The increase in care staff costs we mentioned regarding Germany, but which is also true in most of other countries. Some remaining cost of the RM related to COVID disruption. The margin rate, as we said, of both EBITDA and EBITDA decreased in 2022, mainly due to a slower recovery and of occupancy and a time lag in inflation. EBITDA is more resilient thanks to the increase in real estate ownership and some lease management. This bridge shows quite clearly the impact of recovery equal to the decrease of COVID compensation. The huge impact of cost increases, which represent EUR 190 million, partially compensated within our latitude to increase price. The difference is a net impact of EUR 27 million and a 100 basis points of margin rate.
2022 was also a strong year for disposal of asset with a net capital gain of real estate of EUR 30 million. A quick focus now on cost increases. Obviously, staff represented our biggest increase with EUR 140 million. This equates to a 6% increase of salary. We also face a 10% increase in food cost and a 30% in energy. Overall, as I said, we had to face EUR 190 million of cost increase, compensated partially by EUR 163 million of price increase, which covered only 85% of the increase of our cost. Our EBITDA has been quite resilient with a net increase in value, our net result was impacted by an increase of our transformation costs with capital losses in Germany and restructuring in Belgium.
An increasing depreciation as a direct consequence of our expanding real estate ownership. Our level of investment in 2022 is comparable to 2021. Development CapEx are still significant and mainly dedicated to the renovation of our network, notably in France. M&A was largely deployed in Italy and U.K. A new year of acquisition of real estate with a high level of greenfield and buyback in France and Germany, and built on in U.K. Overall, we are completing a cycle of investments, which has allowed the group to renovate 40% of its network, to diversify its activity in healthcare, and to double its real estate ownership rate from 14% to 28%. These investments will generate significant growth in the year to come. 40% of this investment have been this year financed by our cash flow, and most of the remaining by debt.
In 2020 and 2021, we welcomed three investors in two real estate vehicles for EUR 3 million and EUR 100 million respectively. Further operation of this kind are under discussion, were not completed in 2022. Our real estate partnership approach will allow us to improve our leverage in 2023, and we expect the group to self-finance its activity as soon as 2024. This year, we also completed a huge task of reorganizing the group with now 90% of own facility located in a dedicated legal structure. Our structures are ready to welcome equity partner for EUR 400 million of external investment. Our real estate value has been quite resilient this year with an increase of 0.1 of cap rate, mainly related to U.K.
The stability brought the overall value of the portfolio to EUR 3.5 billion, increasing in line with our investments. I am quite proud to point out that our set portfolio is more and more qualitative, with 50% of the facility new or renovated since 2016. Thanks to the improvement of EBITDA during the second half and the strong free cash flow, our leverage was stable since 30th of June. We have maintained our 55% of LTV ratio, and our debt remained balanced between PropCo and OpCo. After years of exceptionally high liquidity, having seized the opportunity offered by the low interest rate environment, we are back to a more normal but still comfortable level of liquidity.
We continue to raise debt in 2022 in the amount of EUR 620 million, of which 215 in the second half. Thanks to our hedging policy, the net cost of debt remain low, in line with last year at 2%. I take this opportunity to highlight the EUR 135 million of positive mark to market of our interest rate hedging instrument. Looking ahead, our maturity in the first semester of 2023 are real estate related. We are refinancing these one by one using our debt-free assets. We are working with both our bank and institutional investor to refinance our Euro PP, Schuldschein, and bond maturities later in 2023 and in 2024. The board is proposing a dividend of EUR 0.25 per share with the possibility of payment in share.
I will now give back the floor to Sophie for the outlook. Thank you.
Thank you, Philippe. Let's turn to the outlook for 2023 and beyond. When it comes to operating performance and margin in an environment that we expect to remain pretty challenging from a macroeconomic point of view, we have defined four key priorities for 2023, and you see them reflected on the slide. The first one is to further streamline the operating model to support performance in terms both of quality and financials. We have undertaken significant work to improve and optimize selected overheads and support functions in the largest country. The second dimension is definitely to work further about HR and ensuring that we can fill in a timely manner all our position with qualified candidates.
We expect to recruit again more than 10,000 people in 2023, and we have been working hard to plan with the utmost care for recruitment in each profession, each region at a group level, with a clear target to be able to fill at least 50% of the needs with our internal sourcing channels, notably through the development of our training capabilities, which we will further push forward. The third priority is about digital transformation, and I see that Anne-Charlotte Dymny, our Chief Digital and IT Officer, is present here today. Definitely, this is a critical priority too as we are preparing for the future. 2023 will be about reinforcing technology foundation as we have completed our move to cloud computing in the main country.
We will also continue to automate key processes in the field and in the back office. It will support the operating model performance for sure. Last but not least, energy is becoming a critical dimension, as you saw through Philippe presentation. It has been a key topic in 2022, not the one we would have totally expected one year ago, with a 30% increase in total cost in 2022. We are making now very active effort to further reduce consumption, targeting a first step of -15% versus 2021 at the end of 2023, and a -30% of total volume by 2025, 2026. This will go with the launch of energy performance contracts covering all the countries.
For the time being, we have such contracts, in Belgium, but we want to extend the model everywhere. This is really a very key dimension of secured performance looking forward. Beyond these four near-term priorities, I look forward to speaking with you a month from now on the 31st of March about the new midterm corporate project we are actively working on and about the new ESG roadmap that goes with it, in line with our aim, I hope you recall, to legally become a purpose-driven company, which will be on the agenda of the next shareholder general meeting in June. Ultimately, all four of these priorities serve a single purpose: driving growth and performance at Korian. We have actually three levers to fuel a very dynamic top line, at least in 2023 and the years to come.
The first one is definitely very easy to guess, through the normalization of our long-term care network. We have still a way to go before getting back to the level we had minimum, in 2019. We are missing two more points of occupancy to be back above the 90% level and possibly to push further. This will be one of the strong growth drivers for 2023. The second driver is about pushing further outpatient and asset-light activities such as home care, supported by the recently developed or redeveloped capacities we just presented. The third level is definitely also through the ramp-up of the newly delivered facility.
We have been actually, we have more than 1,500 ramping up facilities delivered last year. We will add at least 1,200 more capacities, especially through the development of the small care community developments such as Âges & Vie. Let us come now to the guidance. We therefore expect to deliver at least 8% organic revenue growth in 2023, and at least with this embedded growth potential, 5% in 2022. That most of the price rates adjustment will have to cover significant further wage adjustment, of which most of them have already been decided or pre-decided in 2022. Also to offset further inflation of costs, we are guiding this year on an EBITDAR and EBITDA that will remain at least stable in amount in 2023.
In 2024 and 2025, we expect EBITDAR and EBITDA to grow again in line with revenue on the back of what we are doing to optimize and streamline the operating model. When it comes to leverage that we include in the guidance this year, because it will be one of our key area of attention in a higher interest rate environment. We intend to be back 2023 below 3.5x, notably thanks to real estate monetization, as Philippe explained. Looking forward, we intend to further reduce our leverage around 3x and to adjust loan to value between 50% and 55%. Thanks to CapEx adjustment to the level of operating cash flow generation, so the self-finance growth model that Philippe described. I'm confident that Korian will continue to demonstrate resilience and deliver sustainable performance in the new macroeconomic context.
Supported on the one hand side by the strong underlying demand and care needs in all our markets, and the strong commitment of all teams, and I would like to highlight the strong commitment of the group management board members that are really fully supportive of the company in this challenging time. Thank you very much for your attention. Philippe, myself, and also Nicolas Mérigot, Korian France CEO, and Charlotte, or Marion Cardon are now available for your questions. Floor is yours. I suggest maybe that Sara. Yes, Sara, if you
Just a reminder, the questions can be posed here, obviously in the room and through the chat on the webcast. We have the first question from Patrick from Société.
Good morning, Patrick Société Générale. One question regarding the EBITDA margins that you are expecting for 2023. You expect stable EBITDA with revenue up 8%. If I do the math correctly, it means an EBITDA margin down something like 200 basis points or maybe a bit more. Could you explain us the bridge to go from the 24% of this year to 22% or maybe a bit less in 2023? What are the breaks? What is the impact of pass-through without margin? Could you explain, please?
Is it working? Yes, it's working. You remember the bridge you had on the regarding the margin this year? You have the same kind of bridge for next year. You will have an increase of activity on volume on mainly on the related to ambulatory activity on the scale side and recovery and on the nursing home side. We will still have some decrease in the compensation. What is going to bring regarding new margin, the increase of activity next year will be quite low. We have still a huge increase of activity without any margin regarding cost.
We have been impacted this year in Germany by an increase of EUR 50 million of cost which has been directly translated in price. Next year it will be EUR 100 million because it has been implemented in September, so it's only 1/3 of the full impact. Clearly a new year. I hope we'll have good news. Overall we will have the same kind of trend that the one you are seeing for the 2nd year in this slide.
If I can complete, actually there are three levels there. There is the pass-through effect that Philippe just described. This is the main reason for margin dilution, definitely. there is the transformation in the model. We have more healthcare contributing. Healthcare is at even a lower EBITDAR, but a better EBITDA because it requires less square meters in order to be there. we are globally also cautious in the fact that we will have to face some further headwinds in inflation. This is why we decided to guide on stable EBITDAR and EBITDA in amount. Probably you might ask how we are going to offset the cost on the rental side.
That's for Patrick?
Sorry. I... It's just one question. I think you have answered the question, but-
Yeah, okay.
We have a question in the chat from Greta at Jefferies on the working capital. What's driving the significant change in working capital being positive inflow of EUR 33 million for this year compared to minus EUR 100 million in outflow last year? How do you see the development of this in 2023?
Yes. The answer is more in this fact that the two last year was quite specific. Part of the financing, which has been put in place, was a specific financing on compensation for COVID crisis, which were quite difficult to recover. If you remember, we were around EUR 240 million in 2020 and in 2021, when we were used to be more around EUR 300 million or small EUR 300 million, EUR 220 million. We have been impacted this 2 last year by a significant increase in our working capital in our balance sheet. It's the start of the reversal. We have been able to reduce the working capital by EUR 30 million this year, so it's a EUR 30 million improvement of the working capital and the free cash flow.
I hope we are working on this topic to do it again. We have room to do it again in the year to come.
We have another question on the chat, this time on, the debt maturities for 2023 and 2024. Will there be some debt down payment, or will the syndicated loan and the real estate debt simply be extended? Have you already started these conversations?
I think regarding the debt, first topic is to speak about investment. We are reducing deeply our investment. As you have seen, you will be, as an appendix, you will see the pipeline. The pipeline has been divided by two, and it's one of the reason why we have a slight impact of our net results. We had to cancel or to postpone some investments. First, item is to reduce investment. Second item is the one I just shared with you, increase free cash flow. The way we are flowing is to be self-finance. Decreasing the investment, increasing the cash flow. Third, using real estate. We are running behind real estate debt.
We are not going to increase the real estate debt because we have a roof at 55%. We have some bridge. We have some debt which is allocated to real estate. We can renew significant part of it. After, you are fully right, we are going to enter in talk. We have already started. We are going to move again this way to talk with our bank and with some investor to renew the other maturities.
Any question here? Aram? Aram?
David Cerdan.
David Cerdan de Kepler Cheuvreux. I have a question regarding your real estate disposal. Which kind of volume of disposal do you expect for 2023 to achieve your deleverage plan? What is the mood in the market regarding property asset? Do you expect, I would say, a lower valuation for your asset? Is there a risk of a lower valuation? What is the alternative if you face some difficulties in selling some asset?
We are not directly selling asset. We are opening vehicles, which is a bit different because we are warrantying revenue, which is a kind of important floor for long-term investment. We are not expecting today less appetite from the market on this topic. Of course, we have talked about the value of real estate. As you have seen, the current valuation is equal to last year regarding cap rate, slight increase. It's mainly in U.K. Other market are quite resilient. We are expecting some decrease. I don't think we should face huge move as care real estate asset are quite resilient compared to other assets. We can always be extremely cautious and trying to face or to be scared about risk.
We are working with a lot of investor and we. Of course, the price is going to decrease a bit, but we don't see huge issue to open our vehicle and to refinance our real estate today.
Yes.
Bonjour. Yi Zhong, AlphaValue.
Sir AlphaValue. I've got a question on your real estate ownership. Do you still see a target of 30% for 2023? Thanks.
Percent as being a target, it's clearly we believe, we strongly believe that we need real estate. You can see this year, we have been able to deliver a EUR 30 million capital gain on real estate. Why? Because we are, we have, we are very well placed to buy real estate at a low price, at least lower price than the market. Today, a lot of people are asking us to buy their real estate. With the current interest rate it's less easy, but clearly, we have an access to real estate which is a good one. We can buy. We don't want to keep. It's why we have sold quite a lot of real estate. Too, it's the objective is to be flexible, to improve our asset.
When you want to be flexible and improve your asset, you have the interest to be the owner. If you want to modify your asset, you have the interest to owner, and if you don't want to commit for a too long period, I am unable to say that I will have the same kind of activity for 25 year in the asset. I can commit for 15 year because after I see quite well what I'm going to do during 10 year and after 10 year, if the duration of rent is 15 year, I am strong against the landlord to renegotiate. I don't want to commit for a too long period, and I want to stay flexible. That are my strategy regarding real estate.
When I buy asset at a low price or when I improve the EBITDA, I want to keep the full EBITDA. If I have a landlord, I have to share the EBITDA divided by two. It's now we are extremely opportunistic regarding real estate. We don't want to be a big real estate company, and we believe that being between 25% and 30% is enough for us.
A couple of questions still on the real estate theme. One is, how do you see the evolution of cap rates going forward, which is similar to the some of the questions we've had so far? More specifically, what's the valuation of our U.K. assets and are they still unencumbered?
U.K. asset, we most of them have been bought two years ago. We have seen an increase last year. We see a slight decrease last year. It's clear that the U.K. market is more volatile than the other market, we are still above the acquisitions price. As you may remind, we are booking our asset. We are not revaluing our asset in our balance sheet. We are keeping the historic price, we don't have any kind of depreciation to be booked, we have not book any depreciation, any impairment this year. We don't see because we have still significant room. Even though cap rate will probably increase, we have some room before booking impairment. Cap rate will decrease slightly.
Again, I believe that healthcare asset are stronger than the other, and we have a quite regular cash flow to come and to cover the value.
Cap rate, we expect, of course, cap rates to increase slightly, or to increase in the quarters to come. As Philippe said, our asset is mainly about the revenue they generate. Since we've been always very cautious in the effort rate we take, so the part of EBITDA that is dedicated to the rental part, when we do the valuation, we have still a significant role. We've been very cautious in the way we assess and evaluate our assets so far, and we have a resilient activity and visibility on the activity so far. This is why we don't expect major shifts in this very specific healthcare asset class.
Maybe, David, you were just asking how much we expect from the real estate monetization. This year, we have actually a very significant potential of further equity inflows. We have selected vital, so it's not going to be one operation, a kind of take it or leave it. We have actually, for the time being, three different partnerships that we are considering. You will know more about this in the weeks and months to come.
Good morning. This is Jean-Christophe Ganaye from Oddo. I have a few questions, if I may. First will be on your forecast and guidance. I'd like to have a view on the price effects that is factored in the 8% or 5% forecasted for the next years. Second point, still on organic, actually, can you elaborate a bit more on rate of occupancy, first per country for 2022, and secondly, the assumption that you have taken in terms of rate of occupancy on your forward-looking guidance, notably on 2024, 2025, when talking about +5%. That's the second question. The third question would be on M&A and CapEx more globally. Can you provide a split of the CapEx? You, if I heard correctly, Philippe, you said that there will be a decline of CapEx.
Is it possible to have a total amount of forecast plus the splits by destination as you have shown in one of your slide? That will be good.
I think you take that, Philippe.
Regarding the guidance, as you know, when we are giving a guidance, we give a kind of floor, so we see the kind of floor of 8%. For sure, we will have a significant share of price, probably 4%, maybe a bit more. Probably if we have a bit more than 4% of price, we will have a bit more than 8%. We see at least 8% and something which will be quite well balanced. Like this year between volume and price. Regarding rate occupancy, in fact, I would say everywhere we are a bit below what we were using to be before the crisis. Like in Italy. Italy is very high.
We are at 94%-95%, but we were used to be at 97%. You know that in Italy we have half of the bed that we have in other country, so the situation is a bit different. In France, we are 88%, a bit more than 88%. We were at 91%, so sensing 2% or 3% below. The situation is a bit different in Germany. Germany is exiting from the crisis a bit later than in other country. During the first half of 2022, Germany moves through a period of disruption of organization of COVID. We had still a lot of absenteeism, a lot of disruption in the facility, and they started to recover, I would say, during the second half.
They are some delay, and they are more at 86% of occupancy rate this year. Occupancy in 2024, 2025, we have taken the assumption to recover equal to this year of 2%. I think it's reasonable. Probably, it can be a bit less, like, it can be a bit higher. We see quite a good trend today, but we know very well that we know how strong is the year during the summer as we have a huge level of short stay. The level of short stay during the summer and the translation of short stay to long stay after the summer is key to have a good indication of the trend of occupancy rate during the year.
M&A and CapEx, we have complete Grupo 5 beginning of this year. M&A, we're not going to do any other deal this year, or very small deal. M&A will be mainly Grupo 5. Most of the investments in the two year to come are going to be development and greenfield. That is going to be at probably EUR 400 this year, plus EUR 400 on M&A, so EUR 500 million this year. For 2024, it will depend on our ability to deliver cash because we will be self-financed. If we are able to deliver a lot of cash, we will be a bit higher than EUR 300. If we are not, we will decrease in due proportion the investment.
One point on ESG and notably HR. Actually, you've shown loyalty data. I'm curious about. I know that the most important rate is the loyalty on the first six months, because once a nurse or caregiver is inside, post one year, actually it seems that they are loyal. The key improvement for me would be the fact that people are increasingly loyal in the first six months. Can you provide some data on the first part of their career at Korian, if you have some data about the improvements? Thanks.
Actually, this is not something we measure. We perform a so-called pulse survey once a year for all the permanent staff. It's done on exactly 10 very easy question to be pushed through, directly through mail and SMS. So we do not. It's anonymous, of course. We do not measure the level of engagement given the tenure time. What we can measure is, of course, the level of fluctuancy in the first three or six months. Then you're absolutely right. If people do not feel well, welcome and supported, they might go very fast because actually there are a lot of open position everywhere in care industries in general.
This, I don't have the split of figures country by country on this, but definitely we see a average of one under three new hiree that are leaving in the first six months, and we have to improve that. That engagement score, it's a, it's a very classic way of measuring things. We are asking Ipsos to perform the pulse survey so that they can compare with their database. This is why, this is not, I would say, Korian own measurement. It's really, it's really something that is a market standard and done really on the market standard type of approach. It is what it is, but at least it gives, it gives a very tangible feedback from the teams.
Therefore, it, since, close to 60% of permanent staff answered to the survey, it's representative.
I have a question regarding your asset portfolio. What is the breakdown by geographies? A second question regarding your EBITDA margin decline in 2023 by around 200 basis points. What is the decline for just Germany? As a result, what could be the average decline for the other regions? Thank you.
Asset portfolio is following the split of the group. We have roughly half of the portfolio in France. I will say, the second place is taken by Italy for once, and not for by Germany. The second park, the second portfolio is Italian. After, it's a split between the other country, I would say at equal place, Germany, Belgium, and Spain. Regarding margin by country, we are not going to enter in a very detailed. You are right, Germany will be hit again by a decline of margin, thanks, due to this pass-through.
Overall, we have decided such a guidance and clearly, France will be hit too, because we have the completion of some compensation on the SCAC side. We are not going to see an increase of margin significant in France. It's an overall situation. Decrease will be a bit higher. I'm speaking about rate, because overall, I remind that we will see an increase in value of EBITDA. If we are speaking in rate, the margin rate will decrease slightly higher in Germany, but will decrease in other country too.
We have a couple of questions on the environment, generally, on the chat. One is, are we seeing any strong discounts on the pricing notably pushed by other players who may have a lower occupancy level? The second question, is there any view on a potential French dependency law?
I will take those two. One, yes, we see some players that are trying to push price down. That's for sure. Maybe, Nicolas can confirm, at least on, in the French segment, because this is definitely the way other players are playing. When it comes to Korian, we have decided all along the years to maintain our level of pricing because it goes also with the level of quality and stability we want to offer to the facility organization. This discount is not affecting us in the pricing policy, in the way we act. It might have slowed down volume recovery, but I think we did the right trade-off.
It's better to have the right positioning and to make sure that we have stable activity and progressive return to normal. I'm very confident that we will be back above 90% in the year to come in France. It's actually the underlying trend we are experiencing now. Market environment, what we have heard, but this is not official, is that there will be some kind of bill related to selected topics of elderly care being passed at the parliament in Q2, if I'm well informed. Of course, there is a yearly bill, a so-called La Loi de financement de la sécurité sociale , that may also contain some, I would say, selected topics regarding elderly care in general.
That's for the what we know. I think there is a very intensive work done on regulation, as I said, together with the professional organization and the ministry, in order to really make sure that we align both on the ethics and regulation framework and transparency level. We've done real progress with the entire industry on that segment, where definitely the regulation was too weak. On the economic dimension, I think that authorities are well informed that with such cost increase, inflation environment, margin are under pressure. This is why we were actually able to get a +5% price rate increase for elderly care in France, which is one of the highest indexation we ever had in the industry.
I think this shows the fact that the regulation framework is actually meant to support quality and sustainability in the sector and not to cut costs from a public funding point of view. What's the, definitely the regulator wants is to have quality and transparency for the funding and the support he gives, which is, I would say, absolutely normal.
Yes. Good morning. I had a question regarding your strategy on leverage, because you've developed a business model that is using quite a lot of debt in terms of internationalization, and you did a lot of acquisition and diversification, which all makes sense. In today's context that maybe you didn't accept in terms of higher interest rates and also the crisis we got in France, would you consider or it's not at all, you cannot consider at all to go the other way around in terms of M&A, selling some assets, would it be some countries or some businesses, which of course make a lot of sense in your strategy, but which may be?
Financially, is a bit more difficult to keep going forward, or that's something you don't want to consider at all?
As I was saying, we are at the end of a very high investment cycle, which we had to do both because the core network had to be upgraded, that's for sure, and because we had to accelerate the diversification. I'm very glad that we did it in a low interest rate world. We are at the end of the cycle now we have to digest. Those acquisition integration are on the way, and we will, as Philippe explained, we'll be focused on that. We do not expect to have further M&A. I think the latest acquisition we've done are relevant ones, and they will bring, they will bring short-term returns because there is a lot of embedded growth, organic and asset light growth in it.
It's mainly healthcare with a lot of outpatient activity, so low, low asset or CapEx intensity and higher return. That's the, that's definitely the road to be followed in the semesters to come. I'm confident that we will monetize. We are accelerating the blended ownership model on the real estate side, which is actually the part that is very much asset intensive. As Philippe said, we are very pragmatic on that. With higher interest rates and if we find good counterparts, we are absolutely flexible to have also a different type of partnership on real estate.
You wouldn't consider selling assets, selling businesses or countries?
For the time being, we have the road, we have the strategy, we have a very focused geography and footprint. For the time that we are doing, of course, there will be some disposals. We've been demonstrating in the last months that we were able to sell or to restructure 56% or 8% of long-term care network. There will be there will be probably more selected disposals to come, definitely. Especially on assisted living, we are we are we are arbitrating some segment of activities there.
Christophe Ganaye again. Two additional questions. One on rental. Is there a specific trend that we should have in mind when modeling for the future? The second question is on ambulatory care. Can you update us on the proportion of the network which is able to provide that kind of service, and where should we land by the end of 2023, for example? Thanks.
On the first question, we have an increase which is reduced by, first, the increase of ownership, which is quite significant when we increase by EUR 400 million each year real estate. We are renegotiating quite strongly some in France, notably, but not only we have some new renewal of lease and we are quite, I would say, strong in the renegotiation, we can have some savings. We consider that the increase of rent should be below the one of the rare cost which will increase slightly below our top line.
On outpatient care and healthcare, I don't know, Nicolas, if you want to take this for the French healthcare segment.
Yes.
Let's swap that one.
85% of our net-
Yeah.
French network is proposing ambulatory care. In 2023, we will target 80% of our portfolio proposing this ambulatory care. In term of proportion of revenues, ambulatory care is representing an average of 10% of the total revenue coming from this activity of healthcare in France.
It went up by 200 basis points in the last two years. We expect the growth this year to be practically in line, inpatient and outpatient care, because there we have also rates adjustments. The contribution will be probably pretty much balanced.
We have a couple more questions on the different, the different impacts in 2023. In addition to the rental question we've just had, what might be the impact on the financial charges next year, particularly in a context of increased spreads and the increased base rate? How can you comment on the evolution of the other non-current in 2023, but also in 2024 and beyond?
As you have seen, we have been quite resilient regarding financial costs this year. We see another resilient year. It will increase a bit more than what we have seen this year, but we don't see huge increase. It will be, you are fully right, relative to our spread because we are fully hedged on the interest rate side. It should be quite limited for next year. Regarding other non-current. It's always a significant issue because there is some advantage to restructure when we need to do it. We had a big issue in Brussels now, and like any other, you have maybe heard what is happening to one of our competitor, which is obliged to close many houses in a facility in Brussels.
We have done this exercise since three years, so it's year after year, we still have some to close. I hope next year, restructuring and overall cost, non-current costs should decrease compared to this year. Maybe more thanks to some capital gain we could book next year.
There is another question on the CapEx. Is there a level of extra CapEx required to complete the refurbishment that we have been talking about?
I think Philippe was pretty clear by stating that we will be around EUR 500 million CapEx this year, and refurbishment CapEx at the end of the cycle is actually encompassed in that amount. Afterwards, we intend to be back around EUR 300 million.
There is also a question for next year. You've guided on organic growth. Is there any external growth to be taken into account next year?
Yes. We have Grupo 5, which has been bought in January. Clearly it will have a positive impact, roughly 2%. But we don't see any other significant impact, regarding an external growth, and we have some remaining negative impact from the disposal of this year. Again, for next year, a relatively low impact of variation of perimeter.
I think we may have covered this one, it has come in the chat again. Are you planning to separate the real estate assets?
I think we've been pretty clear. We have dedicated vehicles there. We are contemplating mainly to replicate the type of partnership we've done twice until now. It's with minority partners in, but we might also consider some sell and lease back, depending from the conditions. We are actually contemplating both both alternatives.
We have a final question that's in the chat at the moment. I would remind you, we can pose your questions there or in the room. We've talked about technology as a driver for the future. However, we don't necessarily see how that might affect either the CapEx or the revenue going forward. Could you comment on that?
That's true. This is why, I give you actually, I have given you an appointment end of March, where we will present a midterm, new, corporate project, and we will be much more precise on that dimension. This is fully embedded, in the level of CapEx I just mentioned, but we will explain more. More to come on the 31st of March. This is a teaser.
We have a last question from David.
I have a question regarding your net debt. It was around EUR 3.8 billion at the end of 2022. If you deliver your partnership program, at which kind of net debt do you expect to be? Can you also give a number on what you expect from the monetization of your partnership in real estate?
I think you have the number in the presentation. We have said that we have EUR 400 million which are open to welcome investors. It's the impact will be from 0 to EUR 400 million this year. Regarding net debt, if we should stabilize net debt, I hope we can decrease it a bit, but if we have EUR 500 million of investment this year, EUR 500 million around of cash flow, meaning we need to monetize EUR 200 million to be back to a stable debt. If we are able to do more than EUR 200 million on equity side, we should decrease the debt.
That concludes all the questions that we have in the room and in the chat.
Thank you very much.
Thank you.