Welcome to the 2022 Interim Results Presentation for Health and Happiness International Holdings Limited. Joining us today is Mr. Luo Fei, Chairman. Mrs. Laetitia Albertini, Chief Executive Officer. Mr. Jason Wang, Chief Financial Officer, and Ms. Michelle Fan, Investor Relations Manager. Kindly note that the webcast is audio only and there is no video. During today's presentation, Mr. Luo will first give some opening remarks. Afterwards, Mrs. Albertini will present the group's financial review and outlook. Following this, Mr. Wang will present the group's financial review for the first half of 2022. We will then take questions following the conclusion of the presentation. At any time, you may submit a question by text by clicking the question mark symbol on the left-hand side of the webcast panel. Kindly submit all questions in English.
Once again, you may submit a question at any time in English only by clicking the question mark symbol on the left-hand side of the webcast panel. I will now pass it over to Mr. Luo Fei for his opening remarks. Mr. Luo, please.
Good morning, shareholders, investors, and friends. Thank you for joining H&H Group's 2022 Interim Results Conference Calls. The first half of the year saw a confluence of events that brought great uncertainty to the global economy. Despite this environment, we still achieved healthy and profitable sales growth in the first half. Thanks to our effective strategy and tenacity of each of our three business segments. At the same time, we completed our three-year term loan refinancing thanks to the long-term support of our financing partners. As we further diversify our three business segments, the contribution of IMF sales to our overall top line was reduced to around 40% in the first half of the year. Despite declining birth rates and fierce competitions, the sales decline in our IMF business in Mainland China was also narrowed to 3.1%, in line with our expectations.
Even better, I'm delighted to share that our probiotics business has returned to growth without sacrificing our profit. In our ANC segment, we continue to maintain a double-digit growth momentum in our core markets of Mainland China and ANZ. This validates our decision over the past few years to focus on developing innovative nutrition and health products, something that would not have been achieved without good strategy implementation and the hard work of our management team. Our PNC segment, just two years old, now accounts for 12.2% of our total business and grew by 35.4% in the first half of the year. We expect it will remain a major driver of our sales growth and a significant contributor to our future bottom line.
Just as important to us, though, is the need to reduce our debt ratio to a reasonable level as soon as possible. As always, we continue to maintain a high cash conversion rate, which reached to 90.6% in the first half of the year. This allow us to reduce our gearing while maintaining a dividend payout of 30% to thank our shareholders for their continuous supports. We have never ceased to aspire to be a company that is mission-driven and sustainable development, and high growth. Our ESG committee, newly established at the board level, will play a positive role in the future health development of our group. Now, I would like to invite our CEO, Laetitia, to begin the presentation. Thank you.
Thank you, Fei, and good morning to all of you, dear investor friends. Thank you for joining today's presentation through the phone or online through the webcast. Thank you for your ongoing support to the group. As Fei just mentioned, we have navigated through a lot of challenges in the past years, including in the first half of this year, but we are happy to be with you today, to share on what we believe is results that are in line with the expectations that we had set at the beginning of the year, and to share with you more progress about our overall strategic focus, and also the delivery of this strategy.
If we go to the presentation on page four, just to again summarize on our mission and our vision, we can say that again in the first half of 2022, we have continued to carry forward our mission, which is to make people around the world healthier and happier.
We continue to deliver on this vision to become a global leader in premium nutrition and wellness, while we also want to contribute positively to the society and the environment through our sustainability strategy and progress. On the next slide, page five, this goes alongside the brand portfolio and the product portfolio that we have created through the years with of course Biostime as our native brand founded by Fei, but also the brands that we have acquired through the years from Swisse in 2015 onto the last acquisition of Zesty Paws last year.
We have built a very strong portfolio of premium brands and premium products, and we are relatively lucky to now have a portfolio in three different pillars, baby nutrition and care, adult nutrition and care, and pet nutrition and care that helps the resilience of a business and including with this new PNC pillar to foster further growth in the business despite the challenging times that the overall environment is going through. I think the first half of the year has really shown the resilience of our brand and product portfolio and our ability through diversification of this portfolio to achieve higher growth. In page six, this is not a new slide, but we like to always remind everyone of our focus during, you know, this diversification, of course, winning in core markets and in core brands is very important for us.
Biostime, Swisse, and Zesty Paws, now our three largest brands, and focusing on our core markets, of course, is still extremely important, and we are happy to show that through, you know, focusing on this core and giving it enough time and resources has helped us to deliver growth into each of our core markets and our core pillars. While we continue to globalize our business and diversify through the years, we are still carrying this strategy by expanding into PNC, expanding into new markets, and we continue to expand that footprint while we also give that focus to the core. Of course, we continue to invest for the future. We are a product organization driven by innovation, so we continue to explore new business models, accelerate our digitization.
Today, 45% of our sales at the group level are already done through online. We're getting more and more connected to the consumer, and we are exploring new ways to try and make sure that our brands are still relevant and digitally connected to our end users. On page seven, a quick summary and snapshot of our results. We achieved a 9.8% reported top-line growth, revenue growth, which definitely is an acceleration of our growth versus the last two years. While our EBITDA has dropped 1% with a stable, relatively stable EBITDA margin at 17.7%.
Our adjusted net profit is down 26.9% on an adjusted basis, while -5.2% on a reported basis, mostly driven by our increased cost of debt because of the Zesty Paws acquisition of last year. At the same time, our operating cash flow is still very strong, so our ability to convert our EBITDA and profit into cash is still above 90%, which is very important in the backdrop of course the leverage that we have created because of our acquisitions and so our ability through this cash flow generation to pay down our debts going forward, and of course in the past, but also going forward and at the same time to service and reward our shareholders through dividends.
We have also, as Fei mentioned, decided yesterday at the board meeting to pay a 30% dividend for the first half of this year based on this strong cash flow and the strong cash position of the group and those relatively good results. On the next page eight, a summary of the key results of our first half. First, from a geographical perspective, mainland China accounted for 73.8% of the total group revenue and achieved a 3.4% growth on a like-for-like basis.
This is important and this is a positive result because if you remember last year, China was down a negative growth and now we're bringing back the China business back on a growth trend, driven by a stabilization of our IMS sales, infant formula sales, but also our probiotic revenue back to growth, as Fei mentioned, 6.5%. Probiotic is the historical segments of the group and is also a very profitable category. Being able to turn around our probiotic business, in the background of depressed birth rates, but through a lot of strategic initiatives, is a performance we are happy about that obviously contributes to bringing back the total China business, on a growth trend. Our other pediatric product revenue has gone down. We'll come back to that.
ANC China has performed really well, double-digit growth, which also contributed to our overall China revenue being up. At the same time, our second-largest market, Australia and New Zealand, has shown a very strong performance of +24% on a like-for-like basis, which is a very good performance. Also for those of you who've been following our business for longer, you definitely know we had challenge in the ANZ region since the implementation of the new e-commerce law. The part that was related to China exported through Australia was really challenged, and the domestic sales were no longer delivering a lot of growth. We have turned around those through different strategies that we have implemented. It's very, very good to see our Australian business back on track with a very strong growth.
We'll come back to that. At the same time, our U.S. market, our third-largest market since the acquisition of Zesty Paws and Solid Gold, has also shown strong growth, 21.9% on a like-for-like base. We'll come back to the U.S. Other territories have been more challenged, -10.7% overall, driven by Europe with changes in strategic choices we'll explain, and while Asia has been performing quite well. On the next page nine. If we look per category, obviously BNC, our channel extension strategy has been the driver of stabilizing our BNC business branding initiative, making sure we also deliver the right consumer education.
We can say at this stage that our BNC business, which is mostly still in China, is showing healthy channel inventory, which is important in the context of a very competitive market now in China, in IMF particularly. In ANC overall, ANC, PNC will see the numbers down the slides. You can see that we are delivering strong growth in both those segments, which also is supporting our strategy of diversifying into those pillars and also in line with global consumer trends. At the same time, as Faye mentioned, we have successfully refinanced our three years term loan that we have completed at the end of this first half. Very important for the business to be able to have a long-term capital structure certainty and also locked up with favorable terms.
Again, we thank our banking partners in this process, and I think this shows also the confidence of the banking market into H&H, and its ability, of course, to pay down this debt down the road. Page ten. Very quick snapshot on products. Of course, our performance has to link with the appeal, and the relevance of our products. We have continued to innovate in the past few years, investing in product innovation, ingredients innovation, format innovation, personalization. Just to quote two examples, in the ANC segment, we have launched a product called NR Beauty Activator with nicotinamide riboside, with an exclusive partnership with a company called ChromaDex in California. A very strong product to boost cell energy from within.
We have launched our first product into the beauty segment, and we're gonna launch another product in the second half of the year. In the PNC segment, we have launched a new line called NutriBoost, with plasma that enhances immunity and the nutrient absorption of nutrition, in the pet's food and also enhances the palatability of our products. Those are just examples of, you know, how we continue to innovate and bring new products to the market to continue to disrupt and keep a leading edge in premium nutrition. On page 11, you have a snapshot of our performance per geography, per key markets, I would say, and perhaps a lot to see on this slide. If I have to say one thing, we can see clearly the growing importance of the U.S. market.
Of course, China remains our largest market, and second largest market is ANZ. If you compare 2021 with 2022, the U.S. now accounts for 9.6% of our total revenue, very close to 10%. Obviously, this percentage is going to continue to grow as the U.S. is growing very fast. Very soon, U.S. should become actually our second largest market. Obviously, an important focus for us, as we have diversified into this market through acquisitions. On page 12, you have now a snapshot per product pillar, so ANC, BNC, and PNC. We can see here that the breakdown is obviously moving towards more contribution of PNC, as Fei mentioned, already 12.2% of our revenue.
BNC is and will continue to be our largest pillar because of the size of that infant formula and probiotic business we have in China. At the same time, we see that, you know, our diversification through the year has operated as planned, and we now have almost half of our business outside of BNC. With the growing importance of PNC with U.S. and China mainly, that is going to continue to grow as a total contribution. On the next slide, 13, that gives you a visual view of where the growth has been coming from.
It looks really obvious from this slide that most of the growth in absolute value has come from our three core markets, including China, which is back into growth, including ANZ, actually higher contribution, total contribution than China for this first half because of the strong growth. Most striking part is the U.S., which has contributed 7.7% out of these 9.8% of growth for the first half of the year. Again, reiterating the importance of this market in terms of growth contribution as we continue to expand into PNC. On page 14, we also have a snapshot of our contribution of revenue per per pillar. Of course, BNC today is mostly still present in mainland China. ANC, China, and ANZ are two core markets while we expand into other territories.
For PNC today, the focus is China and the U.S., two large, two world largest markets. U.S. market is still growing as a market which has a lot of our focus. Of course expanding into China, which has been part of our core strategy, in the last 24 months. I will move quickly to the next slide. I might not comment on each slide, but slide 16 gives you a snapshot of our EBITDA. Not only just revenue performance, but from an EBITDA standpoint, you can see also where our EBITDA and profit is coming from in terms of business. Obviously BNC with infant formula and probiotics is still our number one profit contributor.
Our ANC and PNC pillars, which have grown faster, have also delivered. If you can see on the right side, we have given a double comparison from our EBITDA margin standpoint, comparison in yellow with full year last year and in light blue with first half of last year. We think that the best benchmark is actually full year of last year because there have been some not like-for-like comparisons with first half of last year because of the pandemic, because of the performance or the investment in certain categories.
If we benchmark with full year 2021, we can see that both for BNC and ANC actually our EBITDA margin has been up, while for PNC our EBITDA margin has been going down, mostly due to increased costs of raw material, particularly in the food segment for Solid Gold. This has obviously shrunk our margins in the PNC segment. We are working through these challenges, but important to say that in our two core pillars we have improved EBITDA margin and obviously we are monitoring spending and all the inflation pressure points very carefully across the business while we do not want to diminish our investment in our brands and into the channel. If we move into per territory performance on page 18 for China BNC, I'm sure we'll come back to that during the Q&A session.
As mentioned earlier, it was important for us to stabilize this business in a complex context of declining birth rates, registration, re-registration of the new GB standards that are asking a lot of brands to reformulate. There is a lot of news and lots of things happening in the market. That being said, we have further narrowed our drop in the IMS net sales to -3.4%, with a +10.3% growth in the goat milk segment. Sorry, with a +7.5% growth in the goat milk segment, accounting for now more than 10% of our IMS sales. We are seeing growth in our super premium segment.
This has been driven by our channel expansion strategy, which has been executed well by our team as we move further into lower tier cities with a higher penetration and a higher coverage of lower tier cities. Probiotic revenue we mentioned earlier is up. What's important, and you can see it from the pictures, is we have since the end of last year decided to combine both infant formula and probiotic under one total Biostime brand image, enhancing immunity from within. All of our communication now is combining products together, which creates, of course, synergies and efficiencies. We also carry that into when we go into lower tier cities, bringing along our probiotic super premium product alongside our infant formula to create those synergies and increase our brand awareness.
This strategy is paying off and is also part of the reasons why our probiotics are back into growth trend. On the next slide, you have a snapshot of our market share performance. We have seen a stable market share during the first half of the year overall. What's most important is the fact that we are growing share in the super premium segment on the right side. We've gone from 11.6%- 12.3%, which is not an easy thing to do in the context of very strong competition in that super premium segment from domestic peers as well as international brands.
Our ability to grow in the super premium segment with our Biostime, Paixing series, as well as our goat infant formula and organic infant formula, is a reflection of the fact that we've always kept focus on this part of the premium and super premium market and still the appeal of our brands. On the next slide, you can see also the performance per channel. While we are still seeing some challenges in the supermarket channel, where we have also purposely repurposed some investments into parts of the channels that are growing faster, including lower tier baby stores and e-commerce, we're seeing therefore an increase of our share in lower tier baby stores and in e-commerce channel.
Although this slide only gives you a snapshot of our total share in the baby store channel, we can say that our share in the lower tier stores has grown and also in e-commerce. On the next slide for Swisse in China, very quickly, strong performance still delivered double-digit growth, and this being mostly driven by our push into the normal trade channel, both online and offline. This performance is very consistent with the previous years, and we keep a number-one position in the overall e-commerce market in China. For PNC, Pet Nutrition & Care in China on slide 22, we've delivered very strong sales of RMB 167 million, with doubling our sales plus 108.6%, which is a strong performance. Obviously the second half will be a bit more challenging.
We're having some out of stock issues that we are solving for, but the demand for our products overall is very strong. We are now the number two brand in premium cat food, already number two after only two years of presence in the market. During the June 18 festival, Solid Gold was ranking already number one in imported cat food category on Tmall. Quite a strong performance. At the same time we are moving fast into also the normal trade channel and offline. We are already now present in about 5,000 pet stores, and we have received seven new licenses in the first half of the year. To the next slide, 23, about Australia and New Zealand. As mentioned earlier, very strong performance, +24% top line growth.
Our overall market share in the domestic market is growing, but also, we are seeing a rise of immune demand product also in the back of the pandemic in the first half, and our channel expansion in the domestic channel. Strong performance in domestic markets despite retail daigou pressure. Strong performance also in our corporate daigou business, which has been struggling for the past two years and which is now back on track to growth, which is very encouraging. Next slide, 24, on the U.S., which is mostly a pet nutrition and care business for H&H. We should look at Solid Gold and Zesty Paws like for like growth, which is a better representation of our performance. Solid Gold has grown 13.6%.
The U.S. pet food market is a growing but quite competitive market with a lot of brands. Solid Gold in this context has still been able to deliver double-digit growth, which is, we think, a very good performance. Obviously, we're starting to see the synergies of Zesty Paws and Solid Gold being operated under one team with e-commerce expertise from Zesty Paws. This has already helped Solid Gold to move faster in the online channel. Zesty Paws has grown 26.3%, which is a very strong performance, keeping this leading position on both Amazon and Chewy, and growing market share respectively on both these platforms in the first half of the year.
Also besides this very strong online presence, the Zesty Paws and Solid Gold brand have also moved faster offline, especially for Zesty Paws, with a listing in Walmart and very strong performance in Petco and PetSmart, which is very promising in giving us further growth outlook in the future with this omni-channel strategy. In the interest of time, I'll comment very quickly on slide 25 and 26. Other territories, total revenue down because of some strategic choices we've made in Europe to deprioritize some of our investments in some markets for Swisse to refocus on core markets and Asia. While our largest initiative in Europe today being Biostime IMS in France, this part is performing really well.
We've continued to see double-digit growth of 22%, and Biostime in France still being the number one organic infant formula brand in the French pharmacies with growing market share. On slide 26, in Asia, one highlight of the first half was our entry into Vietnam, active sales into the Vietnam market, with a commercial partner, and Swisse now being available in seven Asian markets outside of China, where we can actually see a very strong growth of the brands, we've seen it from the growth contribution slide. If we now move to ESG and our sustainability initiatives, I think on slide 28, you can see that we've been very consistent with our sustainability strategy, which is supported by our four pillars.
They are closely linked to the ten principles of the UN Global Compact, and we've particularly identified as priority areas of focus, those four areas. Sustainability governance particularly has never been so important for us, and that's why we are engaging more broadly in our organization. We've set up an ESG committee, as I mentioned at the beginning, and you might have seen our announcements. We have set ESG goals for all of our senior managers and top executives in 2022. We set up a new sustainability-linked loan. The loan that we have refinanced has sustainability KPIs with three KPIs. One is environmental, one is social, one is governance-related. Obviously we have to track against those goals. We are also further engaging our suppliers to embed more sustainability in their management strategy.
For example, Isigny, our largest IMS partner, is also now aiming for the B Corp certification, which shows that we are really working hand-in-hand with our suppliers in this sustainability approach. On the next slide, you can see that we reached great milestones along our sustainability strategy in the first half of 2022 across our four pillars. If we have to name a few, first, we've maintained our MSCI rating of A with an increased score due to the progress of our corporate behavior and sustainability-linked loan that I just spoke about. In the health and community impact, we've provided $1 million community investment across the group, including for the Australian Red Cross, for the Red Cross Society of China, et cetera, a lot of different initiatives.
On planet, we've completed our group carbon footprint for scope 1, 2, and 3, which is quite important. We've gained an award for Swisse Earth, and a lot of different initiatives that will take too long to express, but we are definitely making a lot of progress in each field. On the next slide, regarding B Corps, we are on track for our B Corp 2025 corporate goal. ANZ and Mainland China have both submitted their business impact assessment, and we are now waiting for the audit phase. We are definitely tracking against this progress and still aiming to get group certification by 2025. On the next slide, our path to a low carbon global economy.
Definitely, I mean, on this slide, what is important is our GHG emissions reduction and climate strategy is the number one priority for our group. At the end of August, we have achieved group's carbon footprint for scope 1, 2, and 3, and in Q4 of 2022, going forward before the end of this year, we will set the GHG emission reduction targets in line with the latest climate science, and we'll define the associated action plan. This is work in progress. We will also apply to have those targets approved by SBTi. We are also developing a climate strategy, more detailing, identifying climate risks and opportunity in line with the task force on climate-related financial disclosure. I'll pass quickly on to the next slide.
You can see that at H&H, we are also actively engaging people of all ages, to make healthier life decisions. It starts with our employees, our own team members, because if you want to be a sustainable, you know, excellent company, we have to also make sure that our team members are embedded into this strategy. We've carried our Global Wellness Week, which is one of the biggest internal events at H&H. We've really made sure that wellness is at the core pillars of our employees and that they come to work with a purpose and really believe in what we do, not just in our products, but our philosophy of wellness and well-being.
If we move to the slide 34 on the full year outlook, our goal is definitely to sustain the growth momentum we've created in the first half throughout the rest of the year, although we're seeing, of course, a lot of pressure points around us, again, in the environment, in the competition landscape, but we want to keep this growth momentum, continuing to invest in our brands and products. In BNC, we want to continue to stabilize our market position in the IMS business and continue the growth momentum we've recreated for probiotic, to then aim to gradually return our best business in China back to growth. On ANC, we want to continue to aim on this accelerated growth with our core markets and including with the expansion we've created with other markets.
For PNC, we think the U.S. is going to continue to deliver a strong growth momentum, and also China will definitely contribute to the growth of this PNC pillar. At the same time, we are obviously seeing margin pressure. We've seen this in the first half. We're gonna see this even more in the second half with some of the cost increases and inflation increases being impacting our H2 costs. And of course, our team is working really around the clock to solve these challenges through a mix of, you know, price increase but also cost optimization, making sure we deal with these without compromising the investment we are making in our brands. That's all from me now. I will now pass it on to Jason to present your financial performance in more details. Thank you.
Thanks, Laetitia. Now let's go to page 36 for the P&L summary. In this page, you can see, as also explained by Laetitia just now, we have achieved the accelerated growth for the revenue of close to 10% in the first half of this year. Meanwhile, we have been able to maintain a stable adjusted EBITDA versus the same period of last year. The adjusted net profit has seen a 27% decline from last year, but this is well expected given the higher finance cost based on the $550 million incremental debt we incurred from October last year for Zesty Paws acquisition. Overall, this P&L result is in line with our expectation. Next page, 17. 37.
Also in order to be transparent to the capital market, we have listed here the bridge from reported EBITDA to adjusted EBITDA, and also from reported net profit to adjusted net profit. We have adopted the same principle of adjustment from the previous years, i.e., we only adjust the non-cash and non-recurring items unrelated to our underlying business performance directly. As you can see from this bridge table, we are quite happy to see that in the first half of this year, the amount of adjustment for both EBITDA and net profit has been significantly less from the last year. This shows a much narrowed gap between the adjusted EBITDA and adjusted EBITDA, as well as the reported net profit and adjusted net profit. We will show, in a consistent way going forward, what and where we adjust for those items.
Next, page 38 for our gross margin performance. Overall, we are quite happy that the gross margin for each major product category has remained at a stable level despite the various external challenges, especially related to the COGS increase and inflation pressure. Especially thanks to the inventory management improvement for our ANC business, we have reduced the slow-moving stock provision so that it resulted in the slight improvement of the gross margin for ANC. For PNC, the gross margin increased by over seven percentage points, thanks to the consolidation of the Zesty Paws business into PNC portfolio. On a total base of our group gross margin of 62%, which is 0.9 percentage point below the level of last year. This is mainly due to the product mix change, i.e., the higher contribution from the lower margin PNC business in the overall portfolio.
Thanks to the continued efforts made by management to improve our overall sourcing base and the supply chain management efficiency. We aim to stabilize our overall gross margin going forward despite this product mix change and the continued inflation pressure. Next page, 39. Regarding the company's selling and distribution expense ratio, as you can see, in the first half of this year, there is a slight increase of 0.5 percentage points versus the first half of last year. The biggest driver behind is the consolidation of Zesty Paws into our PNC portfolio, as well as the further expansion of Solid Gold business in China and also the U.S. markets. The PNC S&D ratio increased by 10 percentage points.
Given there is a timing difference between the investment made in the first half and the second half, in this page, we also showed the S&D ratio for the full year of last year, which we believe is a more representative base for us to compare with. Overall for last year, the total S&D ratio investment level was 41.5%. For this year, for the overall planning and the control of our S&D ratio investment, we target to maintain the similar level from last year. Next page 40. Regarding the admin expenses. Thanks to the continued improvement of the functional expense efficiency, we have managed to reduce this admin ratio by 0.4 percentage point to 5.3%.
It is a very good result of the efforts made by all the function teams together, and we shall continue this good path for the second half of this year. Next page, 41. In addition to this strong effective P&L management, we have also achieved very effective working capital management so as to support a healthy liquidity position. As you can see from this page, we have maintained stable working capital turnover, especially for our inventory turnover days. We have managed to reduce the turnover days for both BNC and ANC and maintained a stable PNC turnover days. On a total basis, the inventory turnovers came down by 20 days- 159 days, also well in line with our plan. To page 42, regarding our liquidity and leverage status.
Under this Volcker Rule, we definitely see the healthy liquidity position is very critical for us to ensure the financial health of the overall group. In the first half of this year, we managed to finish the period with over RMB 2.1 billion liquidity source, resource in the book. This healthy liquidity resource can be very useful and critical to support our continued growth going forward. Meanwhile, also now we have a stable long-term capital structure in place. As you can see from the second table in this slide, half a year ago, we still had acquired, say, more short-term related capital structure with some maturing term loan facilities. After the successful completion of the refinancing exercise in the first half of this year, now we have only two long-term financial instruments outstanding in our balance sheet.
The $1.125 billion, three-year term loan facility and $300 million senior notes facility, which will mature in October 2024. We believe this is really to further strengthen company's financial health despite the various external volatilities and challenges. When we look at the net leverage ratio, i.e., the net debt divided by EBITDA, also we have managed to maintain the level below the 4x, i.e., to give us a sufficient headroom, financial headroom, for our total debt covenant compliance. We aim to gradually deleverage our balance sheet going forward with this net leverage ratio to come down gradually for the rest of the year and also next year. Thanks to the company's high cash flow generative business model, as well as the healthy development of our overall three business segments.
We feel quite confident that we will be able to achieve this, deleveraging target for rest of the year, also the coming years.
That's all for our overall finance health overview. We will be happy to answer any questions you may have. Thanks.
Thank you, Jason. We are now ready to take some questions from the audience. As a reminder, you may submit a question by text by clicking the question mark symbol on the left-hand side of the webcast panel. Again, by clicking the question mark symbol on the left-hand side of the webcast panel. Kindly submit all questions in English. I will now pass it over to Ms. Michelle Fan, Investor Relations Manager, to commence the Q&A.
Good morning, everyone. We got a combination of questions from investors. There are three questions. The first one is what's the channel inventory level for your INAP products in Mainland China? Do we see any destocking risk? The second question is how will management develop its PNC business both in Mainland China and U.S. markets, and what growth should we expect for 2022? The third one is, how will management manage the time and effort invested into three business segments, and what is your strategy to expand business globally? Thank you.
Thank you, Michelle. Laetitia here. Maybe I will try to answer parts of those questions and also invite Fei and Jason to add to the, as we go through them. Okay. First question is on the channel inventory for IMS, so BNC in China. I understand where the question is coming from because we are seeing quite a lot of destocking in the channel in the first half of the year, again linked to macro pressure points with depressed birth rates and also an increased competition and also quite a lot of price discounting in the channel. This is not new, but particularly in the first half, this has been quite strong.
I think we can say that from a Biostime standpoint, we have, and I think I mentioned that during the presentation, quite a healthy inventory position both at the company level but also at the distributors level, as we are able to monitor that, as well as the retail level. Overall, we have a healthy channel inventory as we speak now, and this has been, you know, the fruit of a lot of work for our team to make sure we manage this inventory well, in order to maintain a good channel management throughout the country. We can say we have a healthy channel inventory at this stage. We do not see any big risk of destocking as we speak.
Of course, we are working towards the, you know, new GB standard with new products coming to the market next year once we get the registration. We are monitoring closely our inventory to make sure we ensure a smooth transition between the products meeting the current GB and the new GB of 2023. Our team is working on this plan. This will be a 2023 challenge that we are solving for now, and we're definitely working towards that. Fei, I don't know if you want to add anything on this first question.
No, that's fine. Our level is quite healthy. We manage inventory more.
Okay. On the second question, how we want to develop our PNC business both in China and U.S. markets. There's a lot to say to that, but in summary, first of all, our focus is on these two markets. Of course, we're seeing a lot of opportunities for PNC globally, including in Europe and Asia, but our focus from an investment standpoint remains within the U.S. and China because we want to focus our investment to make sure we make an impact and accompany the growth in those two markets. Again, despite cost challenges and some supply chain challenges we're facing this year, we're seeing very strong demand for this category in both markets. In the U.S. markets, Solid Gold has been in market for 45 years, but it's still growing double- digit.
We will continue to service the brand in this omni-channel strategy. Online, we want to create synergies with Zesty Paws, and offline we want to continue to make sure the brand grows healthily with our key accounts, Petco and PetSmart. We are also seeing some new opportunities offline with accounts that are selling Zesty Paws and that are now also asking for Solid Gold. Trying to create synergies for the two brands as we now have one sales team to service both brands. For Zesty Paws, we want to continue to strengthen the leading position into the online channel and continue the expansion into the retail channel.
On the back of this, we believe that our PNC US business will be able to continue to deliver strong growth for the full year and also as we move into 2023. For China, Solid Gold is a bit more mature than Zesty Paws because Solid Gold has been in the Chinese daigou markets. It was there already through a distributor when we bought the brand, and we have since then expanded the presence. As mentioned earlier, we want to make sure we continue to increase the awareness of the brand, focus on premium and super premium product, and expand with more SKUs. That's why one of the focus of the team is to make sure we get those registrations from Ministry of Agriculture to make sure we can put more products in the normal trade channel to extend beyond CBEC.
We are also planning to launch Zesty Paws in China. Towards the end of the year, we might be able to launch our first product, which has just been approved for import into China CBEC channel. Of course, we will expand the portfolio in 2023. There has been a lot of preparation work by the team for this launch from a brand standpoint. We are now on track and ready. Last question was on management and how we manage our time and efforts right into these three segments. Obviously, there's a lot of opportunities ahead of us. We have to make sure we focus our investments in order to prioritize and make sure we make the right use of our cash.
That's why we have had this discipline in the past few months to review our portfolio and see where we want to focus our investments. In terms of focus, of course, China is our number one market and will continue to be, I guess forever, for a long, long time. China has a lot of our focus in terms of energy and time we spend, though we have a very strong team on the ground with one China CEO and dedicated teams for each pillar. Obviously, in terms of strategy and how we want to grow the Chinese market, we are obviously still involved.
Also because of the acquisition of our two brands, PNC, for Zesty Paws and Solid Gold, that required in the past two years quite a bit of our time to make sure we integrate those companies properly and that we size and we accompany the growth opportunity of PNC. As you can see, we are starting to deliver on this strategy. Obviously integrating the brands, which is now done into the H&H business and infrastructure, making sure we set the right organization, has been a key focus for us. Obviously, we have now one big H&H Group with regional CEOs, group functions that supports the overall infrastructure of the group and integrated R&D function.
I think we now have the right organization to set ourselves for success into this global expansion, but giving the right focus and investment into our core markets that are delivering growth. Jason and Fei, do you want to add anything to this?
That's fine.
Yeah, very clear. Yeah.
Thank you, Laetitia.
Thank you.
Our next question is from Sophie Lin, Invesco. What's the company's refinancing plan for the term loan amortization and the senior notes due in 2024? Thank you.
For this question, I can answer. As just mentioned now, we have a more long-term kind of focused capital structure because for our senior notes, it will just mature in October 2024. Which means that we have more than two years before the maturity of this debt instrument. As you may know quite well, the company has maintained a very good practice to refinance the debt instrument usually one year ahead of the final maturity. It means that then the company can use the time within the coming year to explore the right and optimal market window to find the right refinancing option to replace this debt instrument.
Also you can see from the recent trading level of our senior notes, it has remained at a quite stable level, even with the certain kind of a recent price rebound. It also shows the confidence from the bond investors and the market in our debt instrument, which shall also provide a quite good prospect for the refinancing exercise later. For our loan facility, it is a three-year loan. With the amortization, just a small amount upfront, i.e., 5% in the first year, and the majority of the principal to be only amortized in the final year of this facility.
Therefore, it gives the company much more headroom and flexibility to manage the cash flow and arrange the refinancing more towards the final maturity of this term loan facility. Again, with the completion of the recent loan refinancing exercise, at this moment, our top priority is to continue to generate cash flow from our operation so as to deleverage the overall balance sheet within the coming years. This should also provide a proven track record and good base for our next round of refinancing exercise for both senior notes and loans later.
Thank you, Jason. Our next question is from Lawrence Gandler, Credit Suisse. What is the likely cause of delay for SAMR, new GB registration, and what is the expectation for industry renewal timeline? Thank you.
Thank you for this question. First of all, I should have said that during the presentation, we have been able to submit. We have successfully submitted all of our existing SKUs re-registration dossiers as we speak now in the course of the last few months. By now we have already completed this step. Now all of our dossiers are with SAMR, and we are already having back and forth exchanges to, you know, add some documents or technical information into our files and dossiers. This is normal progress of the registration. We can say that we are on track to achieve those registrations on time.
The registration is to be completed by next year, first half of next year, and we think there should not be any specific delays or you know blocking points as we speak, at least from now, from a H&H perspective. We are on track to complete this re-registration on time.
Thank you, Laetitia. Our next question is from Eugene Buckley and Terence from Credit Suisse. Their question's both on the deleveraging target. What's company's view on current leverage levels? Could you share some target figures on net debt to EBITDA? Thank you.
Jason?
Yeah, sure. Yeah. I can also answer this question regarding the operating leverage status. As we just showed in our presentation, our current leverage ratio, i.e., in terms of net leverage ratio, it is at the level similar to that at the end of 2015, shortly after the Swisse acquisition. At that time, also, we indicated very clear deleveraging path going forward to deleverage the balance sheet based on the cash flow generation projection to the level of below 2x within the coming three years. Now, we have the same target based on our cash flow projection to reduce our net leverage ratio to the level of lower than 2x within the coming three years as well.
Given that we have achieved successfully this deleveraging path from 2016- 2018, we're quite confident that based on this proven track record, we can achieve this deleveraging again within the coming three years. Thanks to the continued cash flow generation, we can, on one hand, reduce our net leverage ratio. On the other hand, also, based on the cash resource we have in hand, we will also look into the right timing to consider to prepay part of the debt so that to reduce our gross leverage as well during this period. This will really show a clear deleveraging path for our overall balance sheet within the coming two years.
Thank you, Jason and Laetitia. That's all the questions for today. Matt, could you close the meeting with remarks? Thank you.
Thank you, Michelle, and thank you everyone for joining us this morning. Please stay healthy and safe. I now announce the end of today's presentation and webcast. Thank you.
Thank you, everyone.
Thank you. Bye-bye.
Thank you.