Good morning, everybody, and a very warm welcome to Netcare Limited's presentation of the audited group results for the year ended 30 September 2023. A warm welcome to the Chair of Netcare, Mark Bower, members of the Netcare board, our executive committee, and our senior management teams. Let me express my sincere thanks to our management teams and the Netcare staff across all of our divisions for their incredibly hard work, collective efforts, and commitment over the past year in producing what is certainly our strongest performance since emerging from the devastating COVID-19 pandemic. Thanks go also to our board for their support and sage guidance. I'll begin with an overview of the group's performance, as well as that of our operating divisions, before handing over to our Chief Financial Officer, Keith Gibson, who will unpack our financial results in more detail.
I will then conclude by providing more detail on the progress we have made on rolling out our unique, person-centered, digitally enabled and data-driven strategy, and present our outlook and guidance for the 2024 financial year. Just a quick reminder of the comprehensive and growing array of facilities and services we provide within the Netcare ecosystem across 10 unique divisions. Looking at our overall performance, despite what has been a very challenging macroeconomic and inflationary environment, Netcare has produced a robust financial performance and excellent traction on our strategic projects.
This was largely achieved through an ongoing recovery and activity of a largely organic base, strong operating leverage, supported by improved occupancies and efficiencies, maintaining a strong balance sheet and excellent cash generation, with cash conversion of 100.5%, returning, in line with our capital allocation policies, ZAR 1.1 billion to shareholders in dividends and share buybacks. Our strategic projects, which remain on track with tangible benefits and savings, realized. We also concluded a power purchasing agreement in line with our environmental sustainability strategy. Finally, the rollout of electronic medical records, which is nearing completion, with gross financial benefits of ZAR 104 million this year, exceeding our expectations. And this, colleagues, the solid operational performance translated into our financial metrics.
Turning to the numbers, the equally strong recovery and financial performance can be seen across all of our key metrics when compared to last year. Revenue rose 9.5% to ZAR 23.7 billion, and we achieved excellent operating leverage, as evidenced by the 17.7% increase in EBITDA to ZAR 4.1 billion. Our EBITDA margin, excluding strategic costs and generator diesel costs, increased by 150 basis points to 19%. Adjusted headline earnings per share rose by 27% to ZAR 1.057.
As a result of the improved performance, we are pleased to declare a final dividend of ZAR 0.35 per share, which, together with the interim dividend, amounts to a total distribution of ZAR 0.65 for the year, 30% higher than last year and representing 61.5% of adjusted headline earnings per share. Finally, our net debt to EBITDA ratio strengthened to 1.2 times versus a ratio of 1.4 times last year. Let's unpack the operational performance of our respective divisions in more detail. Total patient days grew by 6.7%, which comprises a 6.1% increase in patient days across our acute hospitals and 12.7% growth within our mental health facilities.
Total average four-week occupancies have steadily improved and rose to an overall 64.4%, representing 63.5% in our acute hospitals and 72.7% in our mental health facilities. The graph on the bottom left-hand side of the slide depicts 6-monthly occupancies achieved in our acute hospitals since the first half of 2020, prior to the COVID pandemic. And as you can see, we are now exceeding those occupancy levels over the last six months. The graph on the bottom right-hand side of the slide demonstrates a similar pattern for mental health with average occupancies over the last six months reaching 75%. Let's take a look at our hospital and emergency services in more detail.
Revenue grew by 9.6% to ZAR 23 billion, and we achieved excellent operating leverage, resulting in an EBITDA growth of 18.4% to ZAR 3.9 billion. Operating profit rose by 24.2% to just under ZAR 2.8 billion. Unpacking the elements that impacted revenue, we experienced a solid patient day growth, notwithstanding changes in designated service provider networks. Acute hospital revenue per patient day grew by an overall 2.9%, 0.7% in the first six months, and 4.9% in the second six months. Acute length of stay increased slightly to 4.4 days, compared to 4.3 days, driven largely by higher complexity of in cases. An EBITDA margin for the segment expanded due to increasing occupancies, efficiencies, stringent cost management, and lower COVID-19 costs.
EBITDA margin rose 150 basis points to 18.7%, excluding strategic costs of ZAR 253 million and generated diesel costs of ZAR 117 million, versus similar costs of ZAR 36 million last year. I'm very pleased to announce that Netcare Christiaan Barnard Memorial Hospital was awarded Level 1 Trauma Accreditation, one of only four hospitals in South Africa, alongside Netcare Milpark, Alberton, and St. Anne's hospitals. We've also grown our specialist base by granting admitting privileges in acute and mental health facilities to additional net 124 specialists. Turning now to our primary care division, revenue grew by 4.6% to ZAR 663 million. Medical and dental patient visits declined by 3.1%, down on the prior year, when the Omicron variant drove increased GP visits.
EBITDA increased by 3.1% to ZAR 168 million, while operating profit rose by 13.9% to ZAR 82 million, and EBITDA margins declined by 40 basis points to 25.3%. However, EBITDA includes a ZAR 2 million capital profit on the sale of property and generated diesel costs of ZAR 7 million. Excluding these items, EBITDA margin of 26.1% was achieved, some 20 basis points higher than last year. I'll now hand you over to Keith to unpack our financial performance in more detail.
Thank you, Richard, and good morning, ladies and gentlemen. We're now going to turn our attention to Netcare's financial performance for the year ended 30 September 2023. The business continued to deliver steady growth, with the operating environment now largely normalized from the impacts of COVID-19, along with resilient demand for private healthcare services. Increased occupancy levels and tight control of costs in a high inflationary environment have delivered excellent operating leverage. The business maintained its healthy statement of financial position and improved its return on invested capital, or ROIC, to 10.8%. At the same time, our operations continue to generate strong cash flows, achieving cash conversion of just over the 100% mark, with net debt to EBITDA at a solid 1.2 times.
Looking at the sequential performance of the business by half over the past three years, a steady progression towards a largely normalized environment in 2023 is evident. The graphs on this slide reveal how the sequential improvement translates into rands at revenue, EBITDA, and operating profit level, and how, in turn, this performance translates into net debt. Revenue in the second half of 2023 grew by 7.4% against the same period in the prior year. EBITDA in the second half of 2023 strengthened by 12.2%, and operating profit improved by 16.7%, demonstrating pleasing operating leverage.
The group's net debt was ZAR 4.9 billion at September 2022, and it increased marginally to just over ZAR 5 billion by March 2023, and notwithstanding the share buybacks effected in H2 2023, remained at this level at 30 September 2023. Turning to the group statement of profit or loss for the year ended 30 September 2023, and to aid comparability, the numbers reflected in this slide exclude the impact of exceptional items, unless otherwise indicated. Revenue for the year amounted to ZAR 23.7 billion, compared to ZAR 21.6 billion in the prior year, representing an increase of 9.5%.
EBITDA for the year grew by 17.7% to ZAR 4.1 billion, against ZAR 3.5 billion in 2022, aided by sustained higher occupancy levels, as well as tight control of costs. However, these efficiencies were partially offset by strategic costs of ZAR 258 million, against ZAR 249 million in 2022, as well as higher diesel costs of ZAR 124 million compared to ZAR 37 million in the prior year. The group EBITDA margin improved by 120 basis points from 16.2% to 17.4%. EBITDA margin has been influenced by a number of factors, and I'll cover this in more detail in my next slide.
Operating profit has increased by 23.9% to ZAR 2.8 billion, compared to ZAR 2.3 billion last year. Other net financial expenses of ZAR 464 million increased from ZAR 358 million in the prior year, and reflects the impact of higher interest rates, notwithstanding lower average net debt balances. The IFRS 16 interest charge attributable to lease liabilities of ZAR 454 million increased from ZAR 411 million in the prior year. Profit before tax increased by 25% to ZAR 1.9 billion, and the group's tax charge amounted to ZAR 504 million at an effective rate of 26.1%, benefiting from the reduction in the corporate tax rate to 27% and the partial utilization of tax losses within the group.
Profit after tax, before exceptional items, amounted to ZAR 1.4 billion, representing a 31.6% improvement from just under ZAR 1.1 billion in the prior year. In the prior year, exceptional items comprised of property impairments of ZAR 11 million, and the impact of the change in the corporate tax rate and deferred tax balances of ZAR 24 million. In the current year, the exceptional items comprise property impairments of ZAR 125 million, with an offsetting ZAR 33 million rand tax impact, and this reflects the current softness in the property market, which is facing the dual challenges of a struggling economy and interest rates currently sitting at fourteen-year highs.
Profit for the year, inclusive of exceptional items, amounted to ZAR 1.3 billion, being 27.2% higher than the prior year's profit of just over the ZAR 1 billion mark. As mentioned on the previous slide, the group's reported EBITDA margin for the year improved by 120 basis points from 16.2% to 17.4%. This is after absorbing operational costs of ZAR 258 million related to the implementation of various strategic projects, which, if excluded, lift the underlying EBITDA margin by 1.1% to 18.5%, compared to a similarly adjusted EBITDA margin of 17.3% in the prior year.
Given the large increase in diesel costs brought about by the need to run generators when the national load, grid is load shed, it's also appropriate to unpack this impact on margins. The ZAR 124 million rand of diesel costs incurred in the current year, against only ZAR 37 million rands in FY 2022, have had a detrimental impact on EBITDA margin of 0.5%, and if also excluded, increase the underlying EBITDA margin for FY 2023 to 19%, which is a 150 basis point improvement on the prior year. Next, we move on to headline earnings per share, and as usual, we've presented the standard HEPS metric, and we also present an adjusted HEPS in which we strip out exceptional and unsustainable items, noting that this is the primary measure used by management to assess performance.
HEPS amounted to ZAR 1.01 for the year, which is a 36.5% improvement on the ZAR 0.74 in 2022. Adjusted HEPS for 2023 financial year amounted to ZAR 1.057, increasing by 27% from the prior year's ZAR 0.832. The board has resolved to pay a final dividend of ZAR 0.35 per share for FY 2023, and along with the ZAR 0.30 declared as an interim dividend, this takes the total dividend for the year up to ZAR 0.65, equating to 61.5% of adjusted HEPS. In addition, we embarked on a share buyback program in the second half of 2023, and by the financial year end, we had acquired 24.4 million shares at an average price of ZAR 13.11 per share.
After the year end, we continued the program and acquired a further 9.3 million shares at an average price of ZAR 13.19 per share. So collectively, 33.7 million shares were bought back on the market for ZAR 444 million. Between the 2022 final dividend and the 2023 interim dividend, as well as the shares bought back to September 2023, ZAR 1.1 billion was returned to shareholders in the 2023 financial year.
If we add the balance of the share buyback program, effected in October 2023, of ZAR 123 million, as well as the ZAR 463 million in respect to the 2023 final dividend that will be paid on the 29th of January 2024, a grand total of ZAR 1.7 billion will have been returned to shareholders. Moving on to the group statement of financial position. Firstly, remind you that Netcare's capital management policy is to maintain a strong statement of financial position and to retain an investment-grade credit rating while reducing the cost of capital with a safe level of debt. As at 30 September 2023, total assets amounted to ZAR 27.8 billion, increasing from ZAR 26.3 billion at September 2022.
CapEx spent during the year amounted to ZAR 1.5 billion, which is slightly below guidance. ZAR 136 million relates to expansionary projects, and the balance of almost ZAR 1.4 billion relates to replacement CapEx. Working capital remains well managed. Total shareholders' equity has increased marginally to ZAR 11 billion from ZAR 10.9 billion last year, with the benefits of an improved operating performance being offset by dividend distributions and share buybacks of ZAR 1.1 billion made during the year. And finally, the group has experienced a further steady improvement of 200 basis points in ROIC to 10.8%. Next, we'll take a more in-depth look at our debt position.
Gross debt amounted to ZAR 7.3 billion at 30 September 2023, offset by cash balances of approximately ZAR 2.3 billion, and therefore, net debt totaled ZAR 5 billion at the year-end, increasing marginally by ZAR 153 million from September 2022. Remembering that ZAR 1.1 billion was outlaid in the current year in dividends and share buybacks. Our net debt to annualized EBITDA strengthened to 1.2 times coverage at September 2023, from 1.4 times at September 2022, and this metric is calculated on EBITDA measured after the adoption of IFRS 16 against bank debt only. Inclusive of lease liabilities recognized under IFRS 16, net debt to EBITDA coverage is at 2.4 times, and this has improved from 2.7 times at September 2022.
In line with our policy, we retained our credit rating of AA- for long term and A1+ for short term, as published by GCR in February 2023. The cost of debt has increased by 120 basis points, from 7.7% at September 2022 to 8.9% at September 2023, as a result of the rising interest rate environment, with rates currently at a 14-year high. Currently, approximately 45% of the group's debt is at fixed interest rates, which is achieved with the aid of interest rate swaps. Netcare is compliant with its banking covenants, which firstly require the net debt to EBITDA ratio to be below 2.75 times, where EBITDA is measured, excluding the impacts of IFRS 16 on a 12-month backward-looking basis.
The second covenant metric is EBITDA to net interest cover, which must be greater than 4 times, and both of these covenants have been met with ample headroom. Moving on to our debt facilities. At the year-end, Netcare had cash balances of ZAR 2.3 billion on hand, and we also had committed, but undrawn debt facilities of ZAR 1.4 billion, and we therefore have access to resources of ZAR 3.7 billion of cash on hand and committed debt facilities from which to fund our future needs. Our debt tenure reflects a manageable and appropriately staggered maturity profile, and the group, therefore, has sufficient capacity to manage our future capital needs. And finally, just a quick word of recognition and appreciation to our finance staff across the group for their extensive application and energy in preparing the results and the related materials.
I'll now hand you back to Richard, who will update you on the progress of our key strategic projects.
Thank you, Keith. Let's now take a closer look at progress across our key strategic initiatives. Given that we are almost at the end of laying the foundations of our person-centered, digitally enabled, and data-driven strategy, I'd like to briefly review our journey over the past six years, and remind our investors of the principles underpinning our allocation of capital. I will update you on the progress made on the digitization of our ecosystem and the potential uses of the rich data now at our disposal, as well as provide updates on NetcarePlus, Netcare Diagnostics, progress on our transformation journey, and the further progress on our environmental sustainability initiatives and new power purchase agreement. Just a quick recap of Netcare's strategy.
Our strategy responds decisively to the three global healthcare mega trends of customer centricity, digitization, and data, and leverages off our unique ecosystem of assets and services to allow Netcare's service offering to deliver person-centered health and care that is digitally enabled and data-driven. And intentionally, through all of this, to ultimately create a sustainable competitive advantage for the group. Today, you will hopefully gain a clear understanding of the first part of our strategy, which is nearing completion and enables us to embark on the second and very exciting phase. Fundamentally underpinning our strategy are the principles of determining capital allocation. Netcare remains prudent in managing its capital resources. Our investment strategy focuses on identifying opportunities linked to our group strategy.
All opportunities must meet at least one or more criteria of our internal Netcare litmus test, which requires growth above the market and/or differentiating the services or care experience we provide, and/or growing our margins and improving returns. In terms of our return on capital, this must safely exceed the cost of capital. For example, phase one of our environmental strategy, which successfully completed over the past ten years, with an IRR of 40%. In terms of the digitization of our business, Care On will be accretive from H2 2024, with a projected IRR of greater than 21%, comfortably above the cost of capital. Our strategic investments also include investing in business enablers and continuously maintaining and upgrading operations. Maintenance CapEx is expected to average 4.5% of revenue going forward.
Given the demand for mental health, we're investing in an Akeso pipeline of 164 new beds. Strong cash generation and balance sheet metrics underpin our entire approach, and we target an annual cash conversion of 100%. In terms of capital distribution, we aim to pay a sustainable dividend to shareholders of between 50%-70% of adjusted headline earnings. And finally, in the absence of investment opportunities within the business, excess capital will be returned to shareholders, preferably through share buybacks or otherwise by special dividends. This table serves to provide an update on our investment in strategic projects, both from a CapEx and OpEx point of view, and pleasingly, they all remain within budget and timelines.
CapEx declines to ZAR 123 million in 2024 due to a decline in rollout costs of Care On, however, offset by an increase in spend on environmental sustainability. OpEx spend drops significantly at the end of this financial year, as most projects near completion. There will be a relatively smaller amount of rollout CapEx and OpEx for H1 2024, as we complete the Care On implementation in the remaining seven hospitals. And as you'll notice from this table, the majority of specific CapEx spent to date has largely focused on our environmental sustainability program, which I'll, I will unpack in more detail shortly. We are forecasting to spend ZAR 132 million in OpEx in 2024 versus ZAR 258 million spent this year on all strategic projects.
Looking specifically at the Care On project implementation, which completes in April next year, cumulative total CapEx of ZAR 352 million and rollout costs of ZAR 364 million will have been incurred. Efficiency savings of ZAR 122 million have been achieved over the past two years. As mentioned earlier, Care On is on track to achieve an IRR in excess of 21%. The graphic here demonstrates the break-even in the second half of 2024. As you can see, ongoing operational costs will be incurred to maintain the Care On system. However, these will be comfortably offset by the growing efficiencies achieved. And just to correct a mistake I made, implementation costs to April will amount to ZAR 348 million and not the ZAR 364 million that I mentioned just a bit earlier.
As we near the completion of this project, I want to share a brief synopsis of the key elements of the journey we have been on. In 2017, it became clear that our organization understood we needed to embrace a different model, and instead of a pure focus on asset-heavy bricks-and-mortar investments and the building of new facilities, we needed to embrace a person-centered approach to healthcare. We were also beginning to understand the power of data and some of the potential clinical benefits of digitization. However, at that stage, it was always going to be an enormous leap of faith for our board and shareholders to believe that digitizing our entire network and providing electronic medical records, leading ultimately to improved engagement and outcomes, would alone be sufficient in justifying the spend and enormous execution risks associated with such an endeavor.
Compounding this was the common view in 2017, that most IT projects cost three times more than originally budgeted, took twice as long to complete, and produced a fraction of the benefits. And so, in order to get this project over the line, it was clear that we also needed to demonstrate financial benefits in terms of returns or efficiencies. And so we began scouring the world for potential partners, and in particular, for organizations that could demonstrate significant efficiencies from digitization. Alas, what we discovered was that thanks to the Obama Plan, which was the subsidy scheme that President Obama introduced to help U.S. healthcare company organizations to digitize, there was no real example of a healthcare company that could demonstrate tangible benefits as a result of efficiencies. And so we began building our own business case.
Testing our own assumptions of what could be achieved. We essentially divided these into quantifiable and non-quantifiable benefits. We have, in the past, on several occasions, elucidated in detail on the quantifiable benefits, and as I demonstrated earlier, we have met our financial efficiency targets on the tin, and in fact, comfortably exceeded them this year. However, in terms of the non-quantifiable benefits, as you can see at the bottom of the screen, we recognized that these would become quantifiable over time, and I will, in today's presentation, show you shortly the exciting benefits that are now beginning to emerge. At the outset, we realized we needed partners who could help us deliver a seamless, completely digital and mobile solution that would be POPIA, GDPR, and HIPAA compliant. And so we chose Deutsche Telekom because of its seamless, it seamlessly integrated into our SAP ERP.
I want to pay particular tribute to Fabian Berger from DTCS, who introduced us to the program and has personally led it from DTCS for the past seven years. We partnered also with Apple, as we wanted to move away from a fixed computer or PC at the bedside and wanted a completely mobile solution, one in which nurses and clinicians and healthcare workers could access a patient's record from any place at any time. We also wanted a fully digitized system, not half paper, not hybrid, half digital, and so we sought out Capsule, who were able to link all of our equipment, monitors, ECG machines, cath labs, and anesthetic machines seamlessly and automatically to the electronic record.
And finally, from the outset of this program, enhancing patient safety and outcomes framed all of our thinking, and so we invested heavily in IBM Watson Health's Micromedex, today known as Merative, the largest drug database in the world. And this allows us to check every drug prescribed by a clinician in terms of its dosage, drug interactions, or side effect in real time, as it's prescribed, and to issue a drug alert if need be. I put this, slide up to give a perspective of the type of challenge we faced. In 1963, Professor Christiaan Barnard returned from Minnesota in the USA and introduced the concept of ICU medicine to Groote Schuur in South Africa. The picture on the right is of the handwritten ICU chart of the very first heart transplant patient, Louis Washkansky, in 1967.
Now, take a look at the typical ICU chart at Netcare Milpark in 2018. More than 50 years later, despite huge advances in medicine and surgery, very little, colleagues, had changed in our record keeping. So, despite the extraordinary advances, we were stuck in an antiquated, manual, paper-based, time-consuming, and error-prone recording of clinical notes. When we challenged our doctors, clinicians, and nurses on this, the answer invariably given was, "But this is the way we have always done it." So the task was enormous, moving from being totally paper-based and manual to becoming fully digitized and mobile. This slide depicts graphically the enormity of the task of converting this voluminous amount of manual, paper-based record keeping into a digital record available on an iPad. From the outset, this program represented the highest risk project we'd ever undertaken in Netcare.
We had to fully integrate all of our equipment into the EMR and link all radiology and pathology requests and other reports seamlessly into the record as well. With ultimately more than 12,000 iPads in circulation, we were concerned that iPads would go missing or be stolen. But by far, the most significant risk was, and remains, that of adoption by our healthcare workers. At first, we thought the greatest problem would be our nurses. Like so many of us, we held pejorative, stereotypical views about nurses and their understanding and ability to adapt to a digital world. In fact, many of our nurses had not used computers on a regular basis, or iPads, and so we had to start with the very basics and use the game Candy Crush to familiarize them.
To our great surprise, our nurses took to digitization like fishes to water and have embraced this digital revolution with passion and commitment. During our first pilot at Netcare Milpark, an experienced nursing sister came up to me and said with pride, "Richard, I'm 54 years old, and this is the first computer iPad I've ever had." To date, we've hardly had any thefts of iPads. Doctors have also adopted the EMR, but it has definitely been more challenging. Fortunately, we've been able to persuade all of our doctors to use and adopt it. We use specific metrics, which we measure daily to ensure adoption and track where problems or challenges arise. Our nurses have fully embraced using Care On. This is a beautiful picture taken at Garden City the day before we went live a few weeks ago.
And so what does this all look like today? On the right-hand side of this table, you can see the progress made since our last update at the half year. We've now fully digitized 38 hospitals, representing more than 8,600, or 90%, of our beds. We've digitally connected more than 13,000 pieces of equipment into the EMR. Over 28,000 active users have been registered and importantly trained, with 4,100 concurrent active users at any one time. And importantly, from a medication safety perspective, you can see the number of drug alerts being automatically issued to clinicians and pharmacists. And I can safely say these were zero prior to go digital in 2018. And also, you can see the size and scale of the integration of radiology and pathology reports.
And lastly, we are producing a vast amount of clinical data, some 28 GB per day. And today, Netcare has become Apple's largest customer of iPads in Southern Africa, something I don't think any of us could have imagined at the start of conceptualizing this project some 7 years ago. And while I've been largely focusing on our EMR, EMR system in our hospital division, we have now implemented EMRs across our entire ecosystem and seven delivery platforms. This is a graphic representation of the EMR systems we have implemented in every division. I'm also delighted to inform you that just 10 days ago, Netcare Digital, our partnership with Mohamed Simjee and his company, A2D24, won the 2023 BCX Digital Innovation Award. Netcare Digital was responsible for developing the EMR of Medicross, as you can see, called HEAL, on this graphic.
As the digital foundation of our ecosystem nears completion, we are now embarking on the next phase of person-centered engagement that will be fully digitally enabled and data-driven, providing improved access, ease of use, and engagement across our ecosystem. We are intentionally moving away from a siloed and episodic-based model of care towards an engaged and retention-led model of care over a person's lifetime. Mobile phones, as we know it, are rapidly transforming their primary function from that of a telephone into that of a data device, within which, in the next few years, all of our data containing everything about us will be stored. And so the race to own the real estate on mobile devices is already underway. And as Netcare, we too are embarking on that journey.
In late July twenty of this year, we launched our Netcare app with more than 50,000 of our patients already downloading it and using it. The first phase of this patient engagement is purely focused on ease of use and improved convenience. For instance, you can book an appointment to see a GP or specialist of your choice, do an online pre-admission, and avoid queuing at reception on the day of your admission. And importantly, by registering on the app, it will allow us to geolocate you in an emergency. This is critical because we, as we all know, time saves lives, and often, people in an accident have no idea exactly where they are or which is the nearest intersection or, off-ramp to the accident.
And more importantly, we are now starting to share discharge summary, or what we call a summary of care, with you and our patients. Here are three examples of the summary of care now available from our cancer care division, Netcare 911, and we are currently piloting the summary of care in our mental health division, Netcare Akeso. We're planning to launch our summary of care for acute hospital admissions early next year. In terms of future non-quantifiable benefits of digitization and the use of data I spoke to early, earlier, I've chosen two exciting examples we are currently busy with and have submitted to international peer-review journals for review and publication. The first example demonstrates the power of big data and machine learning in providing what we call clinician decision support. The most common cause of death in ICU is sepsis or bloodstream infections.
This is associated with a mortality or death rate of up to 25%. However, early intervention may reduce this mortality by 5%-20%. Machine learning models can detect the risk of sepsis in ICU patients 8-10 hours before clinical onset. From our own model using Care On, we measure 4 real-time clinical variables, automatically collected on a continuous basis. This allows the flagging of at-risk patients and provides immediate and early intervention opportunity for our clinicians. The model is currently running in our development environment, with projected group rollout by September 2024. The second example combines our data with that of the patient's own experience or voice to measure the true effectiveness of our care.
We all know depression is pervasive, ever-increasing, and a leading cause of disability on a global basis, and so understanding how effective the programs we provide in Netcare Akeso are for the treatment of depression is absolutely critical to us. On admission, patients to Netcare Akeso complete an assessment to determine the severity of their depression. This is repeated on discharge. The score range is 0 to 27, and a score of 15 or greater usually indicates significant depression. Patients admitted to Netcare Akeso demonstrated a median score of 19 on admission. However, this improved by 75% on discharge to a score of 5. However, how do we know if this clinical improvement really matters to patients? And this remains, for us, the quintessential question.
To measure this, Netcare utilizes an internationally accepted minimally clinically important difference, known as a MCID, to determine if the improvement in a patient's symptoms was significant to them as patients. Incredibly, 88% of our patients experienced a change that met or surpassed this threshold, and this allows us to further modify and improve our treatment protocols to achieve even better and higher patient scores. Finally, in terms of the examples of non-quantifiable benefits, digitization can have a profound impact on enhancing patient safety. Up to 60% of all prescribing errors in hospital arise from the misinterpretation of a doctor's written script. The provision of electronic scripting can eliminate these errors of legibility or misinterpretation. Netcare's digital e-scripting model was approved by the South African Pharmacy Council in 2020, a first in South Africa, and established industry standards for e-scripting.
With the introduction of IBM Watson Health Micromedex, all drug dosages, interactions, duplications, and allergies are now electronically checked. So, in our organization, digitization will help eliminate up to 60% of potential medication errors across 1.8 million in-house scripts per year in Netcare, and importantly ensure correct dosing through Micromedex, eliminate duplications, interactions, and alert clinicians to potential allergies, an enormous improvement in the safety of a medication in our hospitals. Let's leave that now and turn to an update on our other strategic focus areas, and let's start with NetcarePlus. Aimed at providing affordable access to Netcare's ecosystem, we've launched additional prepaid procedures as well as primary care insurance in this financial year. We've also completed enhancements to our existing products.
We continue to steadily grow our book of insured lives as we build a sustainable business, contributing to Netcare's ecosystem and, importantly, increasing access to private healthcare beyond traditional medical schemes. After a lengthy delay, we're delighted to announce that we've achieved a successful resolution of the Council of Medical Schemes challenge on our GP and dental vouchers. We're also pleased that NetcarePlus was ranked second in the medical insurance brand category at the AskAfrica Orange Index Awards for 2023. Now turning to another one of our new divisions, Netcare Diagnostics. We continue to make excellent progress in expanding our footprint and have conducted more than 186,000 tests this past year. We now have 192 points of care devices installed in Netcare Hospital specialized units, and laboratory services have been rolled out to 10 Medicross medical and dental centers to date.
Pleasingly, we're seeing a positive contribution to EBITDA. Focusing now on our ongoing transformation journey in Netcare, we currently hold a level 3 B-BBEE rating. However, it's so important to note that we would have achieved level 1 had the South African Nursing Council not imposed restrictions on nursing training. We began our transformation journey in 2007, and while we all recognize there is still so much to achieve, this slide demonstrates a few examples of our progress over the past 15 years across various pillars. We have been, and remain, absolutely intentional about doing business with B-BBEE compliant suppliers, who are equally committed to redressing the pervasive inequalities and supporting inclusive economic growth and social development in our country.
This past year, our procurement spend with triple B compliant companies reached ZAR 14.4 billion, as you can see in the top left-hand side of the slide. With enhanced procurement recognition, this translated to 114% of our measurable B-BBEE procurement spend versus a DTIC target of 18%. We grew our procurement spend on this on Black-owned suppliers to ZAR 6.5 billion, representing 52% of our total measurable procurement, and again, surpassing DTIC's target of 50%. Our procurement spend on Black women-owned suppliers increased to ZAR 4 billion, equating to 32% of total procurement spend versus a DTIC target of 12%. We also maintained focus on supporting entrepreneurship by improving our spend on small, medium, and micro enterprises, recognizing that these entities have high potential to create much-needed jobs.
This past year, we spent ZAR 1.2 billion, or 9.7% of our spend, on qualifying small enterprises versus a target of 15%. Additionally, we invested ZAR 72 million on growing SMMEs through our enterprise and supply development program. Besides our national nursing training programs, 26 doctoral scholars have been awarded the Professor Bongani Mayosi Netcare Clinical Scholarship, and 14 have since graduated with PhDs. This scholarship demonstrates our commitment to helping build a pool of highly qualified and specialized clinicians to serve the broader South African population, as we all require them to serve in the public sector after qualifying.
The graduates of this prestigious scholarship have grown to become leading National Research Foundation-rated researchers, affiliated to local and international medical schools, where they produce new knowledge and cutting-edge clinical research, and also, importantly, nurture new master's and other PhD students. We donated over 144,000 school shoes under the My Walk Made with Soul initiative, and in doing so, in the past year alone, diverted 25 tons of PVC waste from landfill to manufacture these shoes. And finally, we employ 856 persons with disabilities representing some 4.6% of our workforce. This against a national target of 2% and a national average of 1.2%. This is the second year we've been recognized as the top employer of people with disabilities in the health and pharmaceutical sector.
Turning now to our environmental sustainability program, we have completed the first phase of our environmental sustainability strategy and achieved a 39% reduction in energy intensity, surpassing our ten-year target of 25% set in 2013. Cumulative operational savings since 2013 amount to ZAR 1.5 billion, comprising both cash savings and cost avoidance, as demonstrated on this slide, and achieving an incredible IRR of 40%. We've now commenced with phase two of our strategy, where we are targeting to reduce scope two emissions to zero and reduce scope one and three emissions by a combined 84% by 2030. Our strategy is aligned with a just energy transition plan developed by the Presidential Climate Commission. We aim to achieve 100% renewable energy, zero waste to landfill, and a 20% reduction in water utilization by 2030.
Since 2022, performance remuneration is linked to environmental sustainability achievements, and over the past year, we've been awarded two additional awards, bringing to 32 the national and international awards our program has received since 2013. We have also concluded a renewable energy supply or grid wheeling arrangement with NOA Group Trading, known as NOA. The diagram here illustrates how the concept of grid wheeling works. Wheeling is essentially a financial transaction that allows an independent, renewable energy power producer, in our case, facilitated by NOA, to deliver electrical energy that is transmitted to the Eskom grid, then wheeled across to an energy consumer, in this case, ourselves, Netcare, without a direct or physical connection between the power producer and the consumer.
The consumer, in our case, Netcare, pays the renewable energy power producer a fee based on a negotiated tariff, whereas the grid connection and wheeling fees are paid directly to Eskom. The important features of this transaction are: firstly, it requires no CapEx from Netcare. It's a 20-year agreement for 6 Eskom-supplied sites. The tariff is provided at a discount to Eskom tariff and increases a link to CPI. And importantly, it'll double the proportion of Netcare's total energy consumption derived from renewable energy sources to circa 26%. We're now intending to expand this agreement to a further 12-15 municipal sites, increasing our renewable energy resources to circa 40%, and this will clearly support the goal of achieving 100% reliance on our resources by 2030. Finally, colleagues, turning to our outlook and guidance for the remainder of the financial year.
Two critical issues weigh on this, namely, our operating environment and the question of NHI. In terms of the operating environment, the single most important aspect remain the health and sustainability of medical schemes. As these graphs and tables illustrate, solvency ratios remain high, membership remains reasonably stable, and demand continues to be driven by a growing disease burden and an aging scheme population. Disposable income pressures, however, are perpetuating a trend to downgrading from comprehensive medical schemes to cheaper partial cover hospital plans or efficiency discount options. Hence, our strategy to mitigate this with our comprehensive NetcarePlus products, such as gap cover, remains absolutely pivotal and critical to our strategy. Notwithstanding this, we expect no material changes to designated service provider networks in 2024.
Now, in terms of the NHI bill, we await finalization of the legislative process, as outlined here on the top left-hand side of the slide. However, irrespective of this, significant risks remain, which we have highlighted here on the right-hand side. These have all been well-ventilated in the public discourse on this matter. Our position as Netcare remains that we support universal healthcare and wish to participate as a provider of services in a sustainable fashion. We do, however, support a multi-fund mechanism to deliver on NHI on the principles of the social solidarity, which reduces systemic risk inherent in a single fund. We are supportive of the optionality of a substitute of private medical scheme, offering NHI benefits after members pay mandatory NHI taxes.
Finally, to our guidance, we are guiding towards a patient day growth of between 2.5%-3.5%, and a revenue growth of between 7.5%-9.5%, versus this past financial year. In terms of our strategic projects, we're expecting to spend ZAR 132 million of OpEx and ZAR 165 million of CapEx. ZAR 123 million of CapEx, forgive me. In terms of EBITDA margin, increasing activity will drive further EBITDA margin expansion, improving earnings and ROIC. Finally, we expect to spend ZAR 1.4 billion on CapEx in the new financial year. That concludes the formal presentation of our results, and we're happy to now open the webcast to questions. Thank you very much.
Thank you, Richard. Our first question: Given the near finalization of Care On, where does Netcare still see auxiliary growth coming from? Example, renal dialysis, mental health care, or PPPs with provincial health departments.
Thanks, Marcella. It's Melanie da Costa again. Good morning, everyone. So thank you for the question. It's greatly appreciated. So we're absolutely in agreement in the, the areas highlighted in terms of the renal care, mental health, and, and even the diagnostic business. But just in terms of the acute segment, as Richard has just highlighted, we do believe that our strategic initiatives, this will be the period, we believe that we'll see the extension of the value proposition coming through from the electronic medical record. Richard gave two examples, in particular, in terms of the value proposition that we'll be taking through to schemes. But we believe that the extension of the value proposition will also have, immense value to, to patients.
And following that, and Teshlin can also expand on the value proposition that NetcarePlus will be bringing, to the business, but also to the DSP products in particular. In the acute segment, what we do find in a steady state market, pre-COVID, you would continue to see growth, and the growth comes from the fact that you have an adverse risk that sits in the medical scheme market. And I think that that's been accentuated, over the last few years following COVID, with an increase, as we have seen in admissions in the higher age category. So we would continue to see higher growth, in the acute segment. So we do believe that we would continue to see growth, and I think that that links into the forecast that we've shown in terms of patient days. Thank you.
Thank you, Mel, and good morning, everybody. Thank you for the question. As we see our number of insured lives growing under NetcarePlus, what we are seeing now is a greater utilization of the Netcare ecosystem, which was the intent of the business, at the very onset. So we are seeing that we are bringing more lives that did not have access to a medical scheme or private healthcare utilizing the Netcare ecosystem. And where we are selling gap cover into an employee base, we are seeing more people utilizing Netcare as their preferred choice for healthcare. So that will help us drive some patient growth into the years to come.
Thank you, Teshlin. We have a question from Roy Campbell.
Is the PPD, PPD guidance of 2.5% to 3.5% a function of continued demand returning to normal, or is it acute demand already at normal, and your expectations of other services, such as mental health, that drives that volume guidance?
Good morning, Jacques du Plessis. As is previously alluded to, certainly, we see that there will be a further normalization in terms of acute patient days. We also believe that on a stable medical scheme environment, certainly helping that, and then certainly also a focus on our critical care patient days, and then we keep on benefiting from the burden of disease from an acute point of view.
Thank you, Jacques. We have three questions from Anusha.
Thank you for the presentation. Number one, can you please comment on the latest acute hospital occupancy? Number two, can you please quantify your guidance for EBITDA margin expansion in FY 2024? And then lastly, can you please update us if there's any progress or development in the matter relating to SANC's restriction on training nurses by private hospitals?
Anusha, in terms of November occupancy, it's looking quite good at the moment, at 65%. October was 64% occupancy. I'm gonna hand over to Keith in terms of the margin question, and then Richard will cover the SANC question.
Yeah. Thanks, Anusha. As we've indicated in our guidance, we do expect margins to uplift from higher occupancies and also from ongoing efficiencies. We haven't specifically quantified that in our guidance, but we would be comfortable to take increases that have been similar to what we've been able to uplift in the year gone by.
Thank you. In those regards, SANC, we have seen some positive movement there with the appointment of a new board at SANC, and together with the National Department of Health being far more pragmatic and finally realizing and agreeing that there is indeed a very significant nursing shortage in South Africa, both in the public and private sector. And to that extent, discussions are underway by all stakeholders as to how we bridge that gap and find a sustainable solution to that.
Thank you, Richard. We have a question from Jose Rahube.
Well done on a good set of results. Could you please comment on your network strategy? What would your target in terms of PPDs from networks be, and what would the potential impact on margins be? You have an unused tax loss of around ZAR 1.7 billion. Is it reasonable to anticipate a tax rate of 26% in the medium term? And then you spoke about ZAR 120 million targeted gross savings. What would be the overall net savings?
Yeah, many thanks. Melanie here, and I will just deal with the network strategy. So, Jose, our network strategy has always been to be competitive, but we also intend to be commercial and rational. So we look at each deal on its own merits, and we don't have a particular target in terms of where we would like patient days to be. We currently trade at approximately 30% of our patient days come from networks. And, you know, over the last few years, networks have been in play now for, I guess, two decades. We've been absorbing it as it has been growing. So when you speak of what would the margin impact be, we've effectively been absorbing it over the last, you know, decade or so in the normal course of business.
What we would say is that there is, you know, there's a rational point in terms of where discounts go to. You know, each of these networks come with some level of co-payment, and, and that's really where the rationality comes in. You know, how do these discounts compare to those levels of co-payment? But yes, we would not just step into any network just for the sake of it. It would need to make commercial sense. Thanks.
Thanks. I'll take the question on the tax rate. I think, for purposes of future modeling, I would recommend that you still continue to use a rate that is just slightly higher than the corporate tax rate of 27%.
Thank you, Keith. We have a question from Wessel, from Oyster Catcher.
Congratulations on a good set of results. You've lost some networks in the year, but you seem to have replaced the volumes. Can you discuss where these volumes came from? Was this other network option wins, or did you come from strong net doctor adds?
So, Wessel, I think that the primary driver has been the normalization of the market. So the market obviously took a significant fall through the COVID period, and we have been seeing a period of recovery. Yes, there have been some network gains and some network losses, but I would say that the primary driver of the uplift in the broader market has been one of normalization in the broader industry.
Thank you, Melanie. We have a question from Andrew Koch. I think this is for Richard.
Is your EMR system something that you could license out to other healthcare providers in the future?
Yeah, I think that always remains a possibility. We still want to stabilize the system and fully embed it, and so this year, 2024, is critical in doing so, and then I think we could consider those kinds of options. We have a restraint from DTCS, that they can't utilize the system in any other competitive jurisdiction until 2028. But we do believe that there is merit on the NephrOn side, which is the system we developed with Deutsche Telekom for our renal dialysis business, for that to be used potentially globally. But again, that's in the early phase of conceptualization.
Thank you. We have a question from Flo, from Investec.
Can you please unpack the drivers in the overall revenue growth being higher than volumes? What is the expectation on tariff increases into the FY 2024 as a result? And then just combining a previous question, did you benefit from addition to doctors?
Thank you for that question. In terms of the revenue drivers, as you indicated, patient day growth clearly contributed 6.1%, but principally the price changes that we have benefited. And then materially, our WTE mix has actually stabilized. In fact, in the last six months, it's been positive, and that certainly helped in terms of overall growth in terms of revenue of 8.9%. And just back to the previous questions, in terms of doctors' impact, certainly in the acute division, we had a net of 109 doctors, which definitely impacted. The split is about 60/40, 60 to surgical disciplines, and more importantly, 56% of those doctors actually came from our competitors. Thank you.
Thank you, Jacques. I think we have one last question from Richard Sobel, from Avior.
Congratulations on the results. Can you comment on the headcount and employee costs, given the increased activity? Do you foresee the need to increase the headcount from increased activity in FY 2024, or do you feel comfortable with the current nursing capacity?
Yeah, that's a very interesting question I'll take, and I certainly don't see us looking to increase headcount from a nursing perspective. We're looking for further efficiencies as a result of digitization into the new year. And as you can see from the graph that we presented on slide 22, you'll see those efficiencies increasing, particularly beyond the second half of H2 2024. However, we will require people to support Care On throughout our hospitals and what we call clinical digital officers or clinical application support staff. And that's about anywhere between 80 and 102 individuals, certainly in the first year of rollout. And while we already have a number of them in the business, you'll see a rise of those employees, and,
However, those costs are more than offset by the benefits that we will achieve through the Care On program. The other area that we've got to get our minds around in Netcare is that we've become voracious consumers of data, that, to a point Melanie raised earlier, and I spoke about in our presentation, are going to be able to give us significant clinical advantage and benefit in terms of improved patient outcomes and improved patient protocols and clinician decision support. And to that extent, over the coming years, we do see our data analytics team increasing in size. We are currently negotiating with international companies that already do this kind of data analytics and do it very efficiently and have been doing it for some years.
To some extent, we hope that will mitigate the need of having to grow our own people within Netcare, but it is something to bear into the future. But if anything, with Care On coming on board, we do see a diminution of overall staffing requirements as we become, on an attrition basis, not on a retrenchment basis, I must emphasize, as we become more and more efficient, both in terms of our back office and administration, in terms of our billing, and also in terms more particularly of our frontline staff, our nurses. And I can give you an example that today, 64% of all patients coming into Netcare facilities for elective surgery do an online pre-admission, which obviates the need for them to stand in a long queue and wait 45 minutes to be admitted.
And so through the entire digitization process, there are ongoing efficiencies in this regard. I hope that answers it.
Thank you, Richard. We have no further Q&A. I'm just gonna hand back to you for some closing comments.
Yeah, thank you very much, colleagues. I know this was a longer presentation than normal, but we felt it was very important to be able to sketch what has been achieved in the last seven years in terms of our digitization journey and hopefully alleviate some of the skepticism and concern about the enormity of the risk and the capital and operational expense that was required to roll it out. And as you can see, we have met those efficiencies on the tin to date. We've exceeded them in 2023, and as you can see from the graph in 2024, we are expecting ongoing efficiencies right across our business in all divisions as a result of this.
But probably most importantly for us, is the competitive advantage it will give us in being able to intimately engage with patients and to retain them, and to help guide them towards better patient outcomes and ultimately, healthier lifestyles. Thank you very, very much.