Good morning, ladies and gentlemen. Welcome to the 2023 Annual Results Presentation for Health and Happiness International Holdings Limited. Before we start, let me introduce the management representatives who are with us today. With us today is Mr. Luo Fei, Chairman. Mr. Akash Bedi, Group CEO and CEO of North America, Europe, Middle East, and India. Mr. Jason Wang, Chief Financial Officer and Chief Operating Officer. Ms. Joy Tsai, Investor Relations Director. During today's presentation, Mr. Luo will first give some opening remarks, after which Mr. Bedi will present the group's business review and outlook. Following this, Mr. Wang will present the group's financial review for the 2023 full year. Following this, we will open the floor to questions. I will now pass it over to Mr. Luo Fei for his opening remarks. Mr. Luo, please.
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So the first goal was to accelerate the development of our high-growth and high-margin nutritional supplements, which have become the main driver for all three of our business segments. The second goal concerned our IMF business. Faced with declining demand and the challenge of transitioning to new series compliant with our new GB standards, we decided to focus on the healthy long-term development of Biostime. Although overall IMF sales volume declined by double digits, we stabilized our market share in super premium segment and delivered a healthy profit margin of 15%. Our third goal was to vigorously expand our PNC business in offline channels across North America, in addition to further developing our online business there, and we achieved very encouraging results. At the same time, we are actively expanding into markets outside of the United States, which includes the domestic Chinese market and also the Asian market.
The fourth goal achieved was to improve operating efficiency without sacrificing sales growth. We continue to reduce our net debt ratio while maintaining an overall funding cost of 7% in the year 2023, further optimizing our capital structure. Our fifth and final goal was obtaining B Corp certification for our entities in Mainland China, Australia, New Zealand, the United States, France, and the United Kingdom, thus laying a solid foundation for the entire group to obtain B Corp certification by 2025. This year marks the 25th anniversary of H&H Group, and I would like to take this opportunity to thank you, our business partners and other relevant parties, as well as employees and shareholders, many of whom have been with us since the beginning. We will continue to adhere to our mission of making people healthier and happier while also continuing to innovate and create greater value for society.
Thank you.
Good morning, everyone. Hope you can hear me. Before I start, I wanted to thank Fei, because this year is a special year. Not only is it the Year of the Dragon, it's also the year we are completing 25 years of H&H. And it's also thanks to Fei, who basically started this company and created the company where we are today. I think the numbers will speak for itself, right? That we have almost an 11x increase in revenue, one brand to seven brands, and also one market to 16 markets. This is a scale I think everybody, from the analyst or banking community, will say, "Wow, 25 years long, can we achieve this?" But we worked very hard.
Through the vision and the entrepreneurship that is going into the DNA of every employee, and that comes from the leadership skills that have developed, we have achieved this landmark. But today is not about past 25. What we created in '25, we need to replicate in the next 25. Hopefully I'll be still here in the next 25, but let's talk about 2023 today. I think speaking about our brands, I'm sure everybody who has been tracking us, this is not an unfamiliar page to you. Our brands remain consistent. We have three global brands: Biostime in our baby nutrition care, Swisse in our adult nutrition care, and Zesty Paws in our pet nutrition care, which are very much supported by the underlying brands of Aurelia, Dodie, Good Goût, and others to provide the regional support.
Our strategy remains consistent to make bigger and better of our global brands. Moving to the next page, this is about the strategic framework. One of the key things remains is that our strategy has been consistent, and that has proven superior performance not only for our business but for our shareholders as well, right? And our strategy can be divided into very simple three parts, which are winning in core, which, if we have to simplify, is about driving growth through our nutritional supplements business, which continues to be driving and accelerating our performance, maintaining our high profitability in IMF, as Fei mentioned. We are a leading player in China, and we want to make sure that not only we're relevant, but we're also profitable. And in our pet food and supplement business, we want to drive stable growth for Solid Gold, but accelerated expansion for Zesty Paws.
That, in summary, is about winning in core implies for us. We're also very excited. Globalization, as you can see, in the last 15 years, we have moved from one market to almost 16 markets. But that doesn't mean that we want to put the flag of H&H everywhere. We want to be in the markets where we have the right to win and where our brands are relevant. And that can be done successfully, and we have proven it through Swisse across our three brands. But as a CPG company or as any brand, we need to be investing for the future. And the future for us is not just M&A. It's also about innovation. We are a consumer-centric and obsessed company, so we want to make sure that we are launching disruptive innovation to our consumers and our customers.
We are a purpose-led company, through which we believe not only we can deliver profitable growth, but we can significantly enhance our shareholder value as well. Before we go into a deep dive, we have a quick video that we will go through just to highlight our performance in 2023 in just one minute. I always feel picture speaks louder than the words, so I have many presentations here, but I hope now the whole results are in front of us, right? So now going deeper dive, for the purpose we are here, is 2023 results, right? I think the guidance, we are very happy to say the guidance that Fei, Jason, and I gave to you same time last year, we have delivered on every metric. And that's thanks to the robust performance of our three business verticals.
So on an overall basis, we reported a 9% revenue increase for 2023, reaching a total revenue of just shy of CNY 14 billion of CNY 13.9 billion. We saw an accelerated growth on our EBITDA performance, growing by almost 12.4 percentage points, reaching CNY 2.2 billion. But most importantly, we were able to drive our EBITDA margins from 15.4% in 2022 to 15.9 percentage points. This has helped us to basically drive higher operating cash flow and be able to even deleverage our balance sheet. As many of you recall, post Zesty Paws acquisition, our leverage reached a peak of 3.87, and this year we were able to drive it to 3.42. And Jason is going to speak about our further plans, how do we do it. While we are also driving growth for our business, we also want to reward our shareholders.
We are very happy to announce a final dividend of HK$0.18 per share, taking our total dividend payout ratio to 0.62 per share for the year of 2023. Looking at our performance from our strategic pillars, right? If you look at winning in core, it remains the most important. And what does it comprise of? I think Fei mentioned about nutritional supplements. We're going to speak about throughout this presentation what does it mean for us. Nutritional supplements are comprising of our business of Swisse supplements, Biostime probiotics, and Zesty Paws and Solid Gold pet supplements. For period 23, this segment revenue increased by 30 percentage points, far exceeding our overall revenue growth rate for the group. And we believe the trend rate of the accelerated growth is going to come from nutrition.
This segment represented 60.4% in revenue contribution, almost a 10% increase compared to 2022. IMF is still the most relevant business. We get almost 30% of sales, while we saw a decline in the sales, but we were able to maintain our market share and market position at 12.4% and maintaining the number 4 position. Despite all the macro headwinds, we maintained very healthy profitability in line with the overall group EBITDA margins, just shy of that at 15.1 percentage point. We continue to drive growth rate across our key markets. Going deeper dive into nutritional supplements for our ANC business in ANZ and China, the overall revenue in ANC China increased by 37.4 percentage points on a like-for-like basis. We increased our market share from 7.6% to 8% at the end of 2023.
A similar performance could be seen in our ANZ/ANC business as well, where the revenue increased by 30.3%. We observed growth across our key channels, domestic, corporate Daigou, and exports as well. In the domestic market for ANZ, we regained our number one market position on a unit basis as well. Last, the most important one, North America pet nutrition business grew by 17.2 percentage points for 2023, primarily led by the accelerated growth in Zesty Paws, where the revenue increased by almost 21 percentage points compared to the category growth rate of only 15 percentage points. So what we comfortably say is that across our key brands, we were able to drive higher industry-level growth rate across our key markets. Globalization, we have spoken about it, remains very central to us. China will remain our largest and the most profitable market for the foreseeable future as well.
We want to capture new profit pools and growth areas. Asia remains a key central point for us. We were able to drive our revenue growth rate by 26.4 percentage points in the period of 2023. As you would have seen in the video that I shared a few years ago, these are the quick highlights. In the ANC business, Swisse reached the landmark of AUD 1 billion, almost 3.3x increased since acquisition. This has been a growth across our core markets of China and ANZ. In China, we continue to retain our number one position in e-commerce, and our business in normal trade continues to grow from strength to strength, which was number 20 three years ago to now number 3 by the end of 2023 as well.
In the BNC, we retained and maintained our number one position in the China kids probiotics segment and also our global number one position in the pediatric supplements business. In China, super premium IMF remains core to us, while for the year ending, we were number four player with 12.4% market share. But in Q4, we were able to take it to number three. We will thrive and accelerate our efforts to maintain and retain that position in 2024. BNC, our newly created business vertical, and Zesty Paws continues to follow its omnichannel strategy. We have maintained our number one position in its key digital channel of Amazon and are able to drive growth in that one.
The most exciting thing is Walmart, which is the world's largest retailer, where Zesty Paws entered 2 years ago, and we managed to maintain the number one position, which is a great landmark to achieve, thanks to the superior execution, management, and the brand strength of Zesty Paws. In the Solid Gold in China, we retained the number two position and were able to grow our business by almost 20 percentage points and maintained a market share of 13.3%. Just slightly more qualitative across our business vertical, 2023, while it looks long, but we had a very fruitful year of driving uninterrupted top-line growth rate across our business verticals. Primarily in ANC, we have fortified our market position and continue to drive industry-leading growth rate. As you will see, in China, the overall VHMS market increased by 20 percentage points, but our overall growth rate was close to 36 percentage points.
This shows the strength and our effort in driving deeper penetration into China. Similar to ANZ, we regained our number one position through innovative distribution and products as well. In the gummies, we retained the number two market position for 2023. Outside of ANZ and China, Asia is still very young, but we are driving growth. We are now seeing that not only are we driving growth, but we're also getting profitability from markets like Singapore and Hong Kong, a trend we expect to continue in 2024. BNC had all the headwinds that we can anticipate, but despite all the challenges, we confined our decline of sales to mid-teens level, which was partially for the overall segment, was compensated by the single-digit growth rate for the pediatric segment. This came through innovation and deeper distribution of our Biostime probiotics.
In terms of BNC, we saw a strong double-digit growth rate on an overall basis for both Zesty Paws and Solid Gold in the respective markets. However, Zesty Paws is driving more growth. In the Solid Gold, there's a lot more work to be done in driving share growth in these core markets of North America and China in 2024. Innovation remains the core forefront for us, and we are very proud of how much we have achieved in 2023. We will further accelerate our efforts. In the ANC, we continue to follow our mega-brand strategy in launching different localized products and imported products. One of the key highlights is the extension of Swisse Me gummies into the China market. Under Swisse and under BNC, we successfully completed our GB transition and got seven SKUs registered out of the eight series in 2023.
For the PNC, our focus remains very clear for Solid Gold to further premiumize our portfolio through Nutrient Boost. In Zesty Paws, we are at the forefront to look at disruptive formats and categories to drive penetration. Moving into the numbers, as I mentioned, nutritional supplements remain our core segment for us for driving growth and profitability. In 2023, this segment drove almost 16.4% revenue mix, and we increased our top line by 30 percentage points for that respective segment, which contributed positively to the overall group revenue performance. In terms of revenue mix by geography, as I had mentioned, China will remain our largest market, but we were able to successfully diversify our mix. For each of the markets outside of China, we achieved a strong double-digit growth rate from ANZ and North America.
This is the first time that North America reached double-digit revenue contribution, a trend we expect to further increase from a contribution perspective to the overall H&H. In terms of the business mix, we are happy to say that thanks to the accelerated growth of the nutritional supplements, ANC is our largest business segment of 2023, whereas overall revenue increased by 34.1 percentage points in the period of 2023. As you can see, where the growth is coming for us, while we reported a 9% revenue growth rate, the majority of the growth rate came from our core markets, which are China, ANZ, and North America. We expect our other markets, primarily Asia and Europe, to start contributing in the next 12-24 months more meaningfully in both dollar basis and percentage basis as they gain more operational leverage.
In terms of quick split by respective business segments, for ANC, China, and ANZ remains the key important market. We drive 95% of the sales. But what is exciting to us, while we are still gaining share in China and ANZ, Asia will become much bigger and relevant for us. We do want to get close to double-digit contribution from this region in the next 3-5 years to further globalize the Swisse brand. In terms of BNC, China is the largest market and will always remain our single largest market, which should not be any surprise because, by definition and market size, IMF is still, even though facing pressure in China, China is the largest market. In terms of PNC, North America represents 78% thanks to the increasing contribution of Zesty Paws.
We remain laser-focused to further diversify our PNC revenue geographic mix to drive presence in China, Europe, and Asia in the coming years. Just a further deep dive, where in the nutritional supplements the growth came, while the overall revenue increased for nutritional supplements by 30 percentage points. But the majority of it came from the VHMS segment, primarily through Swisse, where the revenue increased by 35.4%. And in the pet supplements, which are Zesty Paws and Solid Gold, overall, we saw a 29.3 percentage point, while the pediatric segment only increased into low single digits. But we are happy to say that this growth far exceeded the industry-level growth that we saw in China in 2023. Just in terms of profitability, it should not be a surprise that nutritional supplements, thanks to their higher gross margin, continue to positively drive EBITDA margins for the overall group.
In 2023, we drove our EBITDA margins from 15.4% to 15.9% thanks to improving product mix and spending efficiency that we were able to drive both for our ANC and BNC business. While the PNC business profitability is still low and far below our expectations, this is a strategic choice as a group that we have made. We still want to drive higher accelerated growth, but we want to be profitable as well. So we're going to find the right balance between the growth and profitability. This is what we're going to look at in the next page just to show you overall how we replicated the success of ANC. As you will recall, back in 2015, when we bought the Swisse business, 100% of the active sales used to come from ANZ, and most of it used to come from ANZ into China through export.
We invested a significant sum in terms of building our team, brand, and product portfolio domestically into China. This came over a period of 3-5 years of active investment to build for both cross-border and the normal trade market. Now you can see, after 7 years, the overall Mainland China profitability is 21.5%. It is accreting positively to the overall ANC EBITDA margins. We remain confident that the investments that we're doing for the PNC business outside of North America are going to yield a similar level of results for us. For us, what we wanted to show you is that, yes, in our core markets, we will continue to improve our profitability by focusing on the higher-margin premium brands like pet supplements, treats, and toppers in North America. But outside of that, these brands have very limited brand awareness.
But we see a significant opportunity. If you look at the penetration, the overall pet food market is only $6 billion in China compared to $40 billion in the US. So there is a lot of underpenetration, and we want to capture that trend. So this is where we look to further invest. Moving on, performance by geography, I think I've spoken about in the earliest section of it, right? The ANC business continues to drive growth for us. The overall growth rate for the industry in 2023 was only mere 20%, but our business in China increased by almost 37.4%. What is more pleasing to see is that our strategy of further driving domestic growth through normal trade continues to remain on track. Our normal trade revenue increased by 62 percentage points and reached almost 23.8% in terms of revenue contribution.
We reached an overall ranking of third market rank in the normal trade compared to number 20 three years ago, which is a great stride to reach in 2023. In terms of BNC, the IMF business did decline by -15%. But if you look at the overall industry growth rate, the super premium segment in 2023 declined by 23%, and the IMF as a whole declined by 13%. So we remain pleased that we are putting all the efforts to make sure that the growth rate is not in line with the industry, but we are able to drive and maintain our market share for that. But where we are putting our efforts in driving growth is through the probiotics segment that increased by 8.8 percentage points in 2023. We want to be strategic.
While we know the overall category in the IMF remains under pressure, we want to be profitable. This segment delivered a 15.1% EBITDA margin in 2023. In terms of PNC, we were able to grow our revenue by almost 20 percentage points in 2023. But this came on the back of strong supply chain disruptions that still impacted our H1 performance for the material part of China. We have seen those trends now completely being dissipated. Now we are readjusting our portfolio to further premiumize and not only look for just growth, but also to drive profitability as well in the China market for Solid Gold. As you can see, we have now launched and further diversified our portfolio, reducing reliance on the dry, which is a low-gross margin business, to more supplements, businesses like fish oil, into the domestic market as well.
In terms of ANZ, a strong performer, 28.7% revenue growth. We achieved growth across our key channels. But most importantly, we drove our market share from 11.5% to 12.5%, almost one percentage increase in the domestic ANZ market. This was led to thanks to two or a couple of things: one, driving more deeper distribution, and also innovation. If you look at Swisse, it regained number two market position in the gummies, reaching a market share of 14%, from less than a low single-digit market to almost double-digit market share in less than two years. In terms of PNC, the overall revenue growth rate is 17.2%, but the key standard performer is Zesty Paws, where revenue increased by 21.7 percentage points.
We are happy to see Solid Gold now rebounding to a positive growth rate after the successful transition of the Amazon business operating model from vendor-based to a market-based, consistent with what we have been operating for Zesty Paws. We continue to maintain our leading market position across the key online and offline channels. In terms of statistics, Zesty Paws today is the number 4 overall retail pet supplement brand. Just as a context, in 2020, we were number 31. We have gained significant distribution and penetration in the last 3 years to reach this milestone. Outside of our core markets, Asia and Europe continue, while they are small, but they are meaningfully contributing to the growth. Our revenue in Asia increased by 26.4%.
But not only are they contributing to growth, markets like Singapore and Hong Kong are also driving profitability in line at par with our overall ANC EBITDA margins. In terms of Europe, we have seen a significant rebound, primarily led by Swisse in Italy, with growth rates and revenue increasing by 5.9 percentage points. That's all in terms of the business performance by geography. As you know, our vision is to make people healthier and happier, and we want to be a purpose-led. We made significant strides not only in our business in 2023 but also in our sustainability efforts. I'm very happy to say that in 2023, we got five entities B Corp-certified, which represents almost close to 80% of our revenue, a milestone which we reached one year ahead of our commitment.
We remain focused to get our remaining entities also B Corp-certified in the next 12-24 months in line with our public guidance that we have made. We are also committed to SBTi, and we remain focused towards driving our agenda on that one. While this year we celebrate 25 years of H&H, we are also celebrating 10 years of the H&H Foundation. We want to make sure that we are not only doing good for our employees but also doing good for the planet and the society as well. We have made a significant contribution to the foundation but in line with our brand, our company DNA, focusing on nutrition, movement, and mind. Last, in terms of our full-year outlook, we want to be growth-oriented, but we want to be profitable.
Our focus remains that we want to drive this growth and profitability in line with our strategy in growing our nutrition supplements business. In the year of 2024, we will also focus on further deleveraging our balance sheet. This year, we ended at 3.42. We remain focused in the next 2-2.5 years. We want to drive our leverage to closer to 2x in line with our historical average of it. How are we going to do this? We have started planting the seeds in our business across the three business verticals. In ANC, for our China market, we want to maintain our number one position but drive growth through increased market share, through superior innovation, and acceleration of distribution for the normal trade segment.
In terms of ANZ, while we achieved the number one market position by unit, we want to be undisputed number one by value as well. We remain confident that in the next 12 months, we can achieve that milestone. In terms of Asia and Europe, this is the most untapped market, the emerging middle class. We want to further drive our penetration in markets like Thailand, India, Indonesia, and Vietnam in the coming years. We will be putting our spending plans to further drive share in these respective markets. In terms of BNC, we do expect the overall IMF market to remain challenging. But we have seen, thanks to the successful transition of our GB, we will ensure that we are retaining stable market share in line with the overall category.
But we're going to double down on our growth rate into the Biostime pediatrics segment and continue to strengthen our number one position. In terms of PNC, for Zesty Paws, we want to retain our leadership and further lead the category growth rate in the North American market. We will continue to drive our share both into online and offline. And we will also explore the entry of Zesty Paws, subject to regulatory approvals, in other markets like Europe, Asia, and China as it permits. In terms of Solid Gold, we are seeing some softness in the overall category, especially for China post-COVID and the inflationary pressures being going on. While we achieved strong growth in 2022, we want to set the business for success.
We're going to reset our portfolio in line with the domestic requirements of premiumizing through toppers and treats to ensure we can achieve not only growth but profitability in the coming 2-3 years. That's a wrap from me. I've passed the floor to Jason for financials.
Thanks, Akash. So now I would like to share with you some insights regarding our financial performance. So as Akash just mentioned, we have achieved very healthy growth of both the revenue and EBITDA in 2023. And if you look at the profitability level, thanks to the continued efforts to drive for the business operation efficiency, we are very happy to see the Adjusted EBITDA margin got further improved by half a percentage point. At the same time, despite the pressure from the high finance costs, we also managed to maintain a stable net profit margin throughout the year. Now I would like to give you also a certain kind of breakdown regarding the adjusted results. As you may recall, we have been taking the consistent approach to adjust for only the non-recurring, non-cash items in line with the adjustment scope as defined in our loan and the bond agreements.
So that then, on this page, we can show to you on the like-for-like basis the actual performance of the business year- over- year. Then if we deep dive into the P&L, on the gross margin side, we have maintained also a healthy level of the total group gross margin, even though there is a slight kind of decline, mainly due to the higher sourcing cost of the infant formula and also the higher slow-moving stock provision impact through this GB transition. However, this pressure was mitigated by the improvement of gross margin from both ANC and the PNC segments, thanks to the higher contribution of revenue from the high-margin supplement products and also the lower stock provision, thanks to the higher supply chain management efficiency for our ANC and PNC business. So net-net-wise, we can still maintain a quite healthy gross margin level.
Then looking to the selling distribution expense side, also, you can see a clear improvement of the overall spending efficiency. We can see the tangible improvement from the ANC side, thanks to also the economy of scale we are building up and also the very successful efforts implemented in all key markets of ANC, especially in ANZ and the China markets. For the BNC side, despite the pressure from the declining revenue, we have quickly implemented the optimization measures to adjust the spending accordingly so that you can see the S&D ratio of the BNC has remained relatively stable. The only major increase from this spending category is mainly in the PNC area, where we do see the investment is very necessary for us to drive the further channel expansion, both online and offline, in the North American markets and also in the China market.
This is a very critical and necessary investment to enable us to win in the future. Overall, thanks to the contribution from all these three segments so that we can still achieve this total spending efficiency improvement for the group in terms of S&D ratio. For the admin expense ratio, we have remained also at a stable level with just a very slight increase of 0.3 percentage points. This is adjusted due to the increased employee incentives and also a bit higher traveling expenses post the COVID-related travel restrictions. Overall, it still has remained at a healthy level. Now let's look into the working capital side. Overall, the working capital has been stabilized, especially with the tangible improvement from the inventory turnover.
As you may recall, during our interim result announcement last year, the high inventory turnover was a key focus from the investor at that time. We explained at that time this is a necessary buildup of the safety stock for IMF before the new GB transition. Now, along this GB transition, it's progressing well. We are very happy to see the BNC turnover has come down very significantly from 177 to 155 days, which also helped the overall group inventory turnover to come down quite significantly during the year of 2023. Going forward, we will continue this inventory management exercise to further improve to reach the target level of around 150 days for the total group. Look at our liquidity position. For the end of 2023, we have achieved the liquidity balance of above CNY 1.3 billion.
To remind that, according to the loan amortization schedule, we repaid $84 million in term loans at the end of December last year. So if we add back this amortization on the pro forma basis, our year-end cash balance is close to CNY 2 billion, which is a very healthy level. Plus, since the end of December, we further raised the additional liquidity sources. So here, you can see we successfully launched our H&H bond offering for the very first time just last week, and we settled just yesterday. So this gives us this additional CNY 500 million liquidity source. And secondly, also, to further expand our funding coverage, then year to date, we raised over CNY 1.4 billion in RMB-denominated loan facilities for the group.
So this gives us the additional liquidity buffer in order to meet all the operational needs and also the deleveraging needs. Now let's look at the leverage side. We are happy to see that, so I'll show you, at the end of 2023, our total gross debt level has further come down to $1.3 billion level, which means that there is an $84 million gross debt reduction achieved in 2023. Also, as you may notice that for our debt portfolio, we have further optimized to diversify the sources of funding to also help to reduce the cost of the funding and plus also to minimize the currency exposure, especially with the inclusion of the new RMB-denominated loan facilities, which can help us to better match with our operational currency. Then in the middle, it is the finance cost we incurred for year 2023.
Even though on the reported base, as you can see, the total finance cost is CNY 773 million, which shows a quite high increase from 2022. But I want to highlight here is that within that, we have CNY 24 million actually is the amortization of the transaction cost and upfront fee. So the actual interest cost on the reported base is CNY 749 million. And the company has taken very proactive measures to place the various cross-currency swaps and interest rate swaps to mitigate our currency exposure and the risk interest rate exposure. So if we include the benefit of those currency hedges and interest rate hedges, the actual interest expenses the company incurred in 2023 were only CNY 625 million, which means that, say, the annualized interest expense margin was only 7%. And this is very well in line with the guidance we gave to the market last year.
On the right-hand side, you can see our net leverage development trend for last year and also the overall trend in the longer time frame. We further improved our net leverage down to 3.4x in 2023. If we exclude certain kind of special effects, for example, the strategic choice we made at the end of last year to hold certain IMF stock in order to keep a healthy channel stock level ahead of the GB transition, then on the pro forma base, our net leverage was even further down to the 3.2x level. If we look at the last two years, this shows a very consistent deleveraging trend for two years in a row since Zesty Paws acquisition at the end of 2021.
Also, if we look further back since the end of 2015, then you can see we have successfully extended this proven track record of deleveraging after the major acquisition. We achieved that from 2016 to 2018 after the Swisse acquisition. Now we are achieving again this track record of deleveraging since Zesty Paws acquisition. On the back of this very healthy financial performance we achieved in 2023, we feel very confident that we can continue this deleveraging path down into 2024 and beyond as well. Thank you.
Thank you, Jason. We are now ready to take some questions from the audience. If you have any question, please raise your hand, and we will pass the microphone to you. Please also introduce yourself and your company.
Hi, management. This is Susan from CLSA. Thanks very much for taking my question. So basically, I have two questions. One is regarding our profitability as well as our resource allocation. So basically, we understand, on the one hand, our major competitors in the nutritional supplement field in mainland China have raised its cost in selling expenses to support their top-line growth. On the other hand, we understand that our IMF business is under a transition period with our latest GB standard product released late last year. So my assumption is that we need more support during this transition period. And as you guys just mentioned, our PNC business is still in an expansion period, which I assume that we need additional support to support its top-line growth.
My question would be, how do you think about the appropriate cost allocation between the three major business pillars, and how do we see in a more quantitative way about the profitability as well as the A&P ratios for these three businesses? My second question is regarding our finance cost. First, congratulations on our successful issuance of our RMB bond as well as the full redemption of our previous senior note. I understand that we previously mentioned that we are going to refinance our—I mean, to finish our refinance process one year ahead of our deadline, which means we have to finish our refinance process in the first half this year. Are we still targeting at this timeline and then any expectations for the finance cost in 2024 and 2025 maybe? Thank you.
Maybe I take the Susan, can you hear me? Okay. So thank you for your question. I think if you look at overall our profitability, as we guide it, nutritional supplements is not only our growth driver, but it's also our profitability driver. If you look at the investor presentation that we show, for the first time, ANZ, China, and Asia and Europe. So if you look at across these three, ANZ market is operating at a 25% EBITDA margin and China at 21%. This growth has also come, if you look at it in 2023, on the back of hyperinflation that was coming in 2022, where the COGS pressure was significantly higher. But why we have been able to drive superior is driven by a couple of factors. One, channel mix, that we are able to focus on the right channels as well.
If you look at our CBEC channel in China, it increased by almost 31 percentage points in 2023 as well. We are finding really a very good balance into basically how much of the growth acceleration we want to do between the two channels. As you know, normal trade is still at very early stages of development. We are still able to grow that at 62%. But what has driven that underlying profitability is our product mix. If you can see, for our China business in particular, Swisse Plus for 2023 represented close to 10 percentage points of revenue contribution. And that business is operating at a gross margin of 80%+ , at almost 14-15 points accretion to the overall ANC gross margin that Jason has outlined in 2023.
So we do believe, thanks to the successful innovation, product mix, and the channel, we can find a good towards that. So I think that we're going to continue to drive towards it. We do believe we are still at very early stages of Swisse Plus growth rate. We are actively looking to expand our portfolio. Today, we have almost 4-5 SKUs, and we'll continue to deepen our portfolio penetration towards that. So I think that will help us to even finance and expand our expansion into normal trade category as well. In terms of the BNC profitability in particular, yes, we did see a decline in the profitability to 15.1 percentage points overall. But I think if you look at, there is a lot of noise into that as well.
One of the key things that we had to take a negative impact in 2023 was the write-off of the old GB stock that we had to do as a part of the transition, due to which our gross margin declined to sub 60 percentage points, which is not the normalest level that we want to operate. We are very confident that we will be able to drive our gross margins north of 60 percentage points in the period of 2024 as well. There is also an impact in the first half of 2023 because of the COGS that came from Europe. As you know, over 90% of our sourcing of IMF business comes from Europe as well. We were cycling through the heavy cost-based impact in 2023.
We have now seen the impact of those hyperinflations, especially. I'm not going to say all the businesses, but the BNC now being mitigated. We are seeing much more stable cost structure, and we are on the worst behind in terms of write-off of the stocks. We believe that while the growth will remain challenged, we will be able to maintain healthy profitability through improved SKU mix. I think Jason and I have spoken to you separately as well, that in China, what we are not trying to go is into the price discounting, which our competition has resorted to back end of 2023 to deplete the stock. We are still maintaining our price positioning to ensure that we have the right level of margins to invest behind the consumer education towards looking at it.
So we do expect that overall, for the BNC and ANC EBITDA margins, we will not see any material deterioration. In fact, we remain confident it should remain stable, and we'll try to aspire through improving product mix and spending efficiency to drive efficiency wherever. On the PNC side, I think, as we have explained to you, it's a story of two brands and two markets. If you look at Zesty Paws, when we bought that business back in 2021, the overall, similar to any nutrition supplements business, the business makes gross margin closer to 60 points, and the profitability of the business was 20% EBITDA margin. That is one of the key factors. If you look at it in 2023, our EBITDA margins improved from low to mid-single digit 7% to 11 percentage points.
And that was driven, A, by improving product mix coming out of Zesty Paws, and also some of the benefit that we're seeing out of Solid Gold product portfolio mix and the channel strategy that we started implementing. It. I think what we are going to have to invest, where is more into China because the brand is relatively very young. It's almost only in its three years of investment. But within the three years, it has seen a lot of disruption coming out of supply chain. As you know, we have not been having stock uncertainty coming out of North America. And whenever that disruption happens, it kind of detaches the consumer, whatever the efforts that we do. So we are going to have two-pronged strategy while we continue to have our dry positioning coming out of North America.
But locally in China, we're going to minimize the portfolio and focus on higher margin categories like supplements, toppers, as we showed to you through fish oil, to further gain operational leverage and drive the awareness of the Solid Gold. We still have to invest, and we'll also do this at the expense of losing some of the sales because what we want to do is make sure we reorient our portfolio in line with the consumer needs. So we do remain confident that through the mix of Zesty Paws contribution increasing in 2024, the overall PNC EBITDA margin should be closer to mid-single digit, not opposed to 2.4% that we saw in 2023.
Then, Susan, regarding your second question about the finance cost for 2024, so basically, we will continue our proactive liability management exercise in 2024 to further diversify our resources funding, to well control our finance cost, and also to minimize the currency exposure. So along then with this plan, we expect for year 2024, if we include also the benefit from the cross-currency swaps and the interest rate swaps, then the total finance cost, sorry, the interest cost we are going to incur will be in the range of CNY 630 million-CNY 650 million. And then the annualized interest expense margin will be in the range of 7-7.5 percentage points. So basically, this will not be far, let's say, above the level we achieved in 2023.
So around this kind of exercise, we will also make sure we take care of the maturing debt instruments for the proper refinancing well ahead of the maturity. Like you just mentioned, yes, usually we target to complete that at least one year ahead of the final maturity. So actually, this is why, as you are already seeing our recent announcement, we have successfully fully redeemed our maturing 2024 bond. And then for our outstanding term loan, which will mature in June 2025. So currently, we are also in discussion with various banking partners to explore the various refinancing options going forward. And we believe with this very healthy, consistent deleveraging trend we have achieved, and also with this sufficient time ahead of well ahead of the maturity, we should have a very high confidence level to complete this refinancing at the terms favorable to the company down the road.
For any kind of progress we are going to make, we will keep the market informed as soon as we can.
I think, Susan, I just want to add one point. Our key focus that remains from H&H is to extend the life of the loan, but also be able to take the benefit of the market. If you look at, we were probably one of the few high-yield credits last year able to tap the USD bond, whereas the market has been shut. Because today, overall banking, we need to diversify our source of capital rather than relying on one instrument. So you will see that in the next 20 in this 2024, maybe some volatility in our finance cost going up and down. But we remain focused. First is to extend our period of maturity while equally finding the balance in terms of the cost. What we are having is a market pricing towards it.
We work extremely hard to make sure that we work with our banking partners to optimize wherever possible. But it's also a function of liquidity and various instruments that we are able to tap. So we will continue to keep you posted on that.
Thank you, Akash. Thank you, Jason and Susan. Are there any other questions?
Thank you for taking my question. I'm Vivi from Morgan Stanley. So I have two questions from my side. Firstly is on the recent trend. So it would be much appreciated that if management could share with us the recent trend you have been observing in the first quarter. And is it hitting the target run rate as management has previously budgeted? It would be also much appreciated if it could break down by categories and regions if possible. Secondly is on the GB transition. Like previously mentioned in the presentation, it has been progressing smoothly. Could you share more color on this part? And also, do you assume further impact from this transition into 2024? Thank you.
So thank you, Vivi, for your question. I think this is out of 2023, what we anticipated. The Q1 results will come. So even though it's 26th of March, we're still trying to get more clear visibility as to it. As you recall from 2023, our first half overall performance, ANC business revenue increased by almost 40 percentage points, and Probiotics business was close to 49 percentage points in the first half. And Q1 was extremely high, where China sales increased by 93 percentage points, and Probiotics was 77 percentage points. Obviously, we have a very significant comp base that we have to go through. So overall, what we are expecting between the sell-through and the sell-in, we will have a softer Q1 for our ANC and BNC business because of the high base that we are cycling through.
But what we can confirm is that the overall underlying trend from a consumer POS or the sell-through or the velocity remains on positive track. We are continuing to drive our market share for our Swisse business in China. In fact, our last statistics, we have further gained share both into the CBEC and the normal trade market on a month-to-month basis. We can give you more precise guidance as we come and announce our results towards the end of April or early May. But I think overall, we say our business, from how we track it compared to the budget and the industry, remains on track. We will be able to deliver the guidance that we are given to this high single-digit growth rate for 2024 at the end of 2024.
Yeah, just regarding your second question about the GB transition, we guided the market actually on the full-year basis. Yes, we targeted this stable IMF business. But as Akash just mentioned about this phasing point of view from the sell-in point of view, then definitely we will see still on the soft side for the beginning of the year down into Q2 while we see the pickup for the sell-in more in the second half of this year. And also regarding the P&L impact point of view, what I'd like to give you the color is that, as you are already seeing from our announcements, for the IMF gross margin last year was impacted by both the higher sourcing cost, but also this stock provision for the GB transition.
For 2024, we can clearly see that for this stock provision impact associated with the GB transition will be very minimal, which means that, say, the company has taken a very prudent approach to capture this provision impact already in 2023 so that then we can have a fresh start for the P&L-wise in 2024.
Thank you. Any other question? This gentleman, please.
Apologize. I was late. So if you addressed this issue earlier, I apologize. I would love to know your outlook for the pet business in your business. What's your growth outlook and whether you plan to expand the business to Asia/China? Thank you.
Pet remains our very strategic focus. So if you look at this year, we got almost 13% of revenue contribution for 2023, which was almost, if I'm not wrong, 2 percentage points higher compared to 2022. I think the way we look at our Pet business is a mix of U.S., China, and the rest of the world. As you know, U.S. accounts for 78% of the revenue for our PNC business, and within which Zesty Paws is between 60%-70% of the revenue contribution. The remaining comes from Solid Gold. As you can see from our 2023 results, Zesty Paws revenue overall increased by 21.7 percentage points compared to our overall industry growth rate of 15%. And this was thanks to the accelerated expansion that we have been continuing for Zesty Paws outside of online into retail channels.
This year, we reached Walmart, became our number one key channel as well. We have been able to add almost 15,000 distribution points for Zesty Paws in North America. So what lies ahead for us? As you know, the category of pet nutrition is very young. The overall household penetration is high single digits, between 8 and 10 percentage points. Whereas if you compare with the human supplements, penetration in the U.S. is closer to 80%. Not that we are expecting that the overall household penetration will reach to that level, but we are seeing a continuous adoption rate of pet supplements by the pet parents in North America. And Zesty Paws, being the number one brand, we believe will be the biggest beneficiary. So for us, what we are focusing on is to ensure that we are present in driving our growth through both online and offline channels as well.
Our next growth, have we reached the peak into retail? We are now looking at accelerated expansion into club, which is Costco and Sam's Club, into North America, which should further underpin the growth rate for Zesty Paws. In terms of outside expansion for Zesty, it's been very complex, as you know, especially for China. The regulatory environment and approval is pretty complex, as opposed to human supplements where you have to go through just product registration. In pet supplements, you have to go through contract manufacturer registration and the product registration, which is a very long process. We do expect, and we are working very hard and diligently to ensure that we can launch in an accelerated time frame in China.
But we don't expect before the end of 2025 that normal trade penetration of Zesty Paws, though we have started launching Zesty Paws into the cross-border channel, but that is still a very small segment overall of the pie. But what remains exciting for this brand is the growth into Europe and Asia. Outside of the U.S., the U.K., and Europe is the second-largest pet supplement market in the world. So we are putting our efforts to further leverage our existing presence in those markets to drive growth for Zesty Paws. In terms of solid sorry.
Thank you for this. But I look at Chinese pet, a retail company?
Sure. pet food retail companies also. They source the pet foods locally, and they distribute it locally online in China. So if you source locally.
So I'll come to Solid Gold now. That was on the pet supplements. In terms of your question on pet foods, as you know, today, Solid Gold is just in two markets: China and North America. Overall, what we saw for Solid Gold revenue did increase by 20 percentage points, but this was also driven by the base impact and also improvement of the supply chain. But what we have seen in the last six months is some softness in the overall industry. In 2023, industry growth rate was only 5 percentage points for the pet food market in China, as opposed to 13 percentage points a year before in 2022.
We are seeing this as a consequence of the inflation, that the pricing that was there in the market has slowed down, and also the supply being available more readily because historically, distributors were willing to stock up more products because they were seeing a lot of challenges coming from importation, et cetera. We are also readjusting the Solid Gold portfolio to align with the local consumer needs. As I had mentioned, now we have a two-pronged approach: it is to focus domestically on our supplements and toppers business, which will be manufactured locally in China to premiumize the portfolio and be more faster in driving the needs of the consumer, but while keeping the international image of the brand of the dry food coming from North America. So in 2024, we will see indeed a softness in our overall sales for Solid Gold.
But this will be compensated by the growth that we'll bring into Zesty Paws outside of China and North America into Europe and Asia. So this will be a bit of a structure change that we are implementing for our business in the next 12 months.
Thank you. We have time for one more question. Are there any from the audience?
Feel free. This gentleman.
I have a question for Mr. Luo. In the coming 10 years, what is your expectation for H&H?
I'm from the Aokai Fund.
Well, we will continue to focus on household supplements and health products. In this process, we're still working towards this target. Nutritional supplements account for 60% of our revenue and are growing at a very high speed. In terms of geographical locations, the Chinese market will continue to remain one of our core markets, especially for PNC, just like our colleagues have shared with you. When we purchased Zesty Paws, it focused on online business. But for the past 2 years, we have continued to move that business offline. And for the Asian market and Europe markets, also of great potential, 10 years is a long period of time. But I would say that we will continue to stay loyal to our strategy, and we focus on household nutrition. ANC, BNC, PNC all focus on household nutrition.
For CoQ10, for adults, they are also used in pet nutrition or pediatric nutrition. We focus on premium health solutions. This is the rationale of our business. We will also continue to operate in different geographical locations and with different product categories. Sorry. Just one more thing. For the PNC, EBITDA is around 2%. If you take a look at the North American market, the EBITDA margin is 11% for PNC. We continue to expand into the offline business. If you look at North America, it gives us a lot of confidence boosts. We are still at an investment stage for the PNC business, and we also want to expand our offline business. There are other factors that affect the EBITDA margin. For example, the China business. In 2015, we acquired Swisse. At that time, Swisse China was suffering loss.
But as you can see, PNC EBITDA is still under pressure. But this is a pressure that is necessary for us to take. I don't think there is any concern for our PNC business. We need to grasp the opportunity. And eventually, the EBITDA margin will return to a normal level. PNC EBITDA, if it remains at 2%, I don't think this would be a business worth investing. But it won't remain this way. Thank you. And joining us today. This brings today's presentation to an end. Have a great day, everyone. Thank you.