PROCTER & GAMBLE HOLDING FRANCE SAS
GROUP PROFIT SHARING, INCENTIVE AND EMPLOYER CONTRIBUTION PLAN (FRANCE)
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STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS JUNE 30, 2016 AND 2015
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(
All numbers in Euros
)
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2016
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2015
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ASSETS:
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Participant-directed investments
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57 025 078
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57 719 904
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Non participant-directed investments
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94 513 447
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87 400 223
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Total investments
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151 538 525
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145 120 126
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Receivables:
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Participant contribution
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2 865 682
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4 450 371
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Employer contribution
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3 449 263
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3 564 595
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Total receivables
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6 314 945
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8 014 966
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NET ASSETS AVAILABLE FOR PLAN BENEFITS
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€ 157 853 470
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€ 153 135 092
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See notes to financial statements.
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PROCTER & GAMBLE HOLDING FRANCE SAS
GROUP PROFIT SHARING, INCENTIVE AND EMPLOYER CONTRIBUTION PLAN (FRANCE)
STATEMENTS OF CHANGES IN ASSETS AVAILABLE FOR PLAN BENEFITS FOR THE YEARS ENDED
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JUNE 30, 2016, 2015, AND 2014
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(
All numbers in Euros)
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2016
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2015
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2014
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ADDITIONS:
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Contributions:
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Participant contributions
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7 343 544
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7 262 249
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6 597 071
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Employer contributions
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4 821 933
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6 946 202
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4 631 145
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Total contributions
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12 165 476
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14 208 451
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11 228 216
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Investment (loss) income:
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Increase (decrease) in unrealized appreciation in "The Procter & Gamble Company" common stock
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5 303 253
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13 746 656
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(5 086 276)
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Increase (decrease) in unrealized appreciation in other investments
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(4 616 703)
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3 911 080
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1 892 721
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Realized gain (loss) on sales of The Procter & Gamble Company common stock
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2 381 879
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2 463 284
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2 765 589
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Realized gain (loss) on sale of other investments
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2 604 069
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2 187 903
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3 030 039
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Dividends from The Procter & Gamble Company common stock
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2 102 872
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1 872 567
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1 595 935
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Other income (expense)
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(1 798)
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(9 672)
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(14 648)
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Net investment (loss) income
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7 773 572
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24 171 818
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4 183 359
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Total additions
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19 939 049
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38 380 270
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15 411 577
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DEDUCTION—Benefits paid to participants
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15 220 670
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15 445 316
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17 141 808
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NET INCREASE (DECREASE)
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4 718 378
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22 934 954
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(1 730 232)
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NET ASSETS AVAILABLE FOR PLAN BENEFITS:
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Beginning of year
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153 135 092
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130 200 139
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131 930 372
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End of year
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€ 157 853 470
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€ 153 135 092
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€ 130 200 139
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See notes to financial statements.
PROCTER & GAMBLE HOLDING FRANCE SAS
GROUP PROFIT SHARING, INCENTIVE AND EMPLOYER CONTRIBUTION PLAN (FRANCE)
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE 30, 2016 AND 2015 AND FOR THE YEARS ENDED JUNE 30, 2016, 2015 AND 2014
1.
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DESCRIPTION OF THE PLAN
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The following brief description of Procter & Gamble Holding France S.A.S. Group Profit Sharing, Incentive and Employer Contribution Plan (the "Plan") is provided for general information only. Participants should refer to the Plan Document and their country's Plan supplement for more complete information.
General
— The Plan is an employee savings plan established on December 17, 1990 by agreement between Procter & Gamble S.A. (Procter & Gamble S.A. changed its name to Procter & Gamble Services France and then to Procter & Gamble Services Neuilly before its current name Procter & Gamble Holding France S.A.S.) together with its directly or indirectly wholly-owned subsidiaries, and those subsidiaries' respective
Comités d'Entreprise
("Employee Committees"), in order to provide a means for eligible employees to save and invest their income, group profit sharing, and incentive remuneration. The most recent Plan agreement took effect on July 1, 2014 and was signed by Procter & Gamble Holding France S.A.S., Procter & Gamble France S.A.S., Procter & Gamble Pharmaceuticals France S.A.S., Procter & Gamble Amiens S.A.S., Procter & Gamble Blois S.A.S., Procter & Gamble Seine S.A.S., Wella France S.A.S. and Ondal France S.A.R.L. (together, "P&G France"), and their related Employee Committees.
In addition to the Plan, a collective Pension Savings plan ("PERCO") was established for Procter & Gamble Holding France S.A.S and the following subsidiaries: Procter & Gamble France S.A.S., Procter & Gamble Pharmaceuticals France S.A.S, Procter & Gamble Blois S.A.S, and Procter & Gamble Seine S.A.S. In place since January 1
st
2013 for the aforementioned entities, the PERCO was established one year later (January 2014) for Wella France S.A.S and two years later for Ondal France S.A.R.L (February 2015).
Procter & Gamble Holding France S.A.S. is directly or indirectly a wholly-owned subsidiary of The Procter & Gamble Company (the "Parent"). The Plan and the PERCO are subject to the laws and regulations of France. The assets of the Plan and of the PERCO are invested in five "
Fonds Commun de
Placement d'Entreprise"
("FCPE"
)
which are registered investment funds reserved to employees of P&G France subject to the laws and regulations of France.
Administration
—
Administration of the Plan and of the PERCO are jointly executed by Procter & Gamble Holding France S.A.S. and Natixis Asset Management, the fund manager. The five FCPE are under the supervision of the
Conseils de Surveillance
("Monitoring Committees") which are composed of both employee and employer representatives of P&G France.
Participants Accounts and Investments Options
— An account is maintained for each employee, and reflects employee and employer contributions as well as employee withdrawals. There is no provision for the allocation of income since the FCPE's do not pay dividends. Participants are permitted to invest certain contributions into any of the five FCPE's; however, certain other contributions from employees and from P&G France are mandatorily invested in FCPE Groupe Procter & Gamble (Option D). Amounts may be transferred from one FCPE to another FCPE except that "blocked" amounts may not be transferred out of FCPE Groupe Procter & Gamble (Option D).
Participants may allocate their account balances to one or all of the following investment options offered by the Plan:
•
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FCPE Groupe Procter & Gamble Actions (Option A)
– The prospectus indicates that this fund is primarily invested in securities or in mutual funds which invest with a minimum of 60% in Eurozone securities and with a maximum of 10% in interest rate products.
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•
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FCPE Groupe Procter & Gamble Obligations (Option B)
– The prospectus indicates that this fund is primarily invested in Eurozone monetary products or in mutual funds which invest primarily in Eurozone monetary products.
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•
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FCPE Groupe Procter & Gamble 5000 (Option C) –
The prospectus indicates that this fund is primarily invested in securities or in mutual funds invested at least at 60% in securities (Europe, United States, Asia and emerging countries) and with a maximum of 10% invested in Eurozone monetary products.
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•
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FCPE Groupe Procter & Gamble (Option D) –
The prospectus indicates that this fund is invested at least at 90% in The Procter & Gamble Company common stock and with a maximum of 10% invested in US/Euro zone monetary products.
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•
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FCPE Groupe Procter & Gamble (Option F)
– The prospectus indicates that this fund is invested at 80% in International bonds or in mutual funds which invest in International bonds, at 20% in "socially responsible investment" Euro bonds or in mutual funds which invest in "socially responsible" Euro bonds.
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To note, the formerly existing
FCPE Groupe Procter & Gamble (Option E)
was merged in April 2014 into FCPE Groupe Procter & Gamble (Option F). All assets held in that fund were transferred to the newly created FCPE Option F.
For the PERCO, investments in Option D are not possible. The other Options are accessible at the discretion of the employee.
Contribution and Vesting
—
Employees are eligible for Plan participation three months after their start date with P&G France. Contributions are made by Plan participants as well as by P&G France as follows:
Employees' Contributions:
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Voluntary, periodic contributions
– These are usually contributed on a monthly basis. They are eligible for matching contributions from P&G France. These contributions are automatically invested in Option D.
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Voluntary, complementary contributions
– Employees may make complementary contributions whenever they wish although these amounts receive no matching contributions. These contributions are invested at the discretion of the employee in one of the five FCPE's.
Employers' Contributions:
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Employer matching contributions
– P&G France makes a matching contribution between 50 and 100 percent, based on employees' voluntary periodic contributions, with a maximum threshold of € 121.72. These matching contributions are automatically invested in Option D.
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Profit Sharing
– P&G France calculates and distributes profit sharing contributions according to French law as well as a supplementary profit-sharing agreement. These amounts are invested at the discretion of the employee in one of the five FCPE's. If no investment direction has been given by an employee, amounts are automatically invested as per the last investment choice or, by default, in Option B.
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Incentive compensation
– P&G France contributes incentive amounts to employees according to an incentive compensation agreement. Employees have the option to receive these amounts immediately, or to contribute these amounts to the Plan. Amounts contributed to the Plan are invested at the discretion of the employee in one of the five FCPE's, or automatically invested as per the last investment choice.
All contributions are immediately 100 percent vested.
Contributions to the PERCO can be made by the employees through i) voluntary periodic contributions, ii) investment of the profit sharing contribution and iii) valorisation of remaining vacation days (up to 5 per fiscal year).
Withdrawals
— All contributions to the Plan are "blocked" for a period of five years beginning on October 1
st
of the calendar year in which the contribution was made. After this period, amounts are available for withdrawal without restriction. Under certain circumstances, as defined by law, a participant may withdraw "blocked" contributions. All amounts become immediately available for withdrawal upon the termination of employment.
Plan Termination
– The Plan agreement was renewed by written agreement between P&G France and their related Employee Committees in December 2014 with effective date January 1
st
, 2015 for an indefinite period. However, any party has the right to terminate the agreement at any time.
In the event of Plan termination, the FCPE's will either remain active or will be merged with other FCPE's. Thus, Plan participants will have the option to withdraw "unblocked" amounts or to remain invested. Future employee and employer contributions to the Plan would then be suspended.
2.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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Basis of Accounting
— The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.
Use of Estimates
— The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
Employer and participants contributions reflect the estimated total investments in the Plan, based on prior year behavior.
Risks and Uncertainties
— The Plan utilizes various investment instruments as described in Note 1. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the financial statements.
Plan Investments –
The Plan's investments are presented at fair-value based upon the net asset value of the units of each FCPE held by the Plan at year end. The net asset values of the FCPE's are determined by the fund manager, Natixis Asset Management, based upon the fair value of the FCPE's underlying investments, less any liabilities.
Purchases and sales of investments are recorded on a trade date basis. Dividends are recorded on the ex-dividend date. The cost of investments sold is determined using average cost.
Fair value measurements –
ASC 820,
Fair Value Measurements and Disclosures
, established a single authoritative definition of fair value, set as a framework for measuring fair value, and requires additional disclosures about fair value measurements. In accordance with ASC 820, the Plan classifies its investments into Level 1, which refers to securities valued using quoted prices from active markets for identical assets; Level 2 which refers to securities not traded on an active market but for which observable market inputs are readily available; and Level 3, which refers to securities valued based on significant unobservable inputs. Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
The following table sets forth by level within the hierarchy a summary of the Plan's investments measured at fair value on a recurring basis at June 30, 2016.
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2016
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2015
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Asset Group
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Level 1
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Level 2
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Level 3
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Level 1
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Level 2
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Level 3
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The Procter & Gamble Company common stock
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€ 94 513 447
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€ 87 400 223
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Other investments
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€ 57 025 078
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€ 57 719 904
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TOTAL
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€ 151 538 525
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€ 145 120 126
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Expenses of the Plan –
Investment management, record keeping expenses, and other administrative expenses are paid by P&G Holding France S.A.S. Brokerage commissions are paid by the participants, and other costs related to the purchase or sale of shares are reflected in the price of the shares and borne by the participants.
Contributions Receivable –
Contributions that are pending transfer to the Trustee as of June 30, 2016 and 2015 are recorded as contributions receivable to the Plan in the accompanying financial statements.
Payment of Benefits –
Benefit payments to participants are recorded upon distribution. There were no amounts allocated to accounts of persons who have elected to withdraw from the Plan but have not been yet paid at June 30, 2016 and 2015.
Investments held by the Plan at June 30, 2016 and 2015 were as follows:
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2016
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2015
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(All numbers in Euros)
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Number
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Market
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Number
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Market
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of Shares
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Value in €uros
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of Shares
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Value in €uros
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Investments of each FCPE
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• Groupe Procter & Gamble Actions (Option A)*
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240 586
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21 587 457
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242 570
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22 736 811
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• Groupe Procter & Gamble Obligations (Option B)*
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681 221
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19 169 451
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642 800
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18 079 662
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• Groupe Procter & Gamble 5000 (Option C)*
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655 049
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12 914 006
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654 885
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14 053 180
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• Groupe Procter & Gamble (Option D)*
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488 549
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94 513 447
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501 875
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87 400 223
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• Groupe Procter & Gamble Solidaire (Option E)*
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-
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-
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-
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-
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• Groupe Procter & Gamble Obligations (Option F)*
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2 031 951
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3 354 165
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1 819 901
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2 850 251
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Total investments
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€ 151 538 525
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€ 145 120 126
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*Represents investments which exceed five percent of net assets available for benefits
The Plan's investments experienced unrealized (depreciation) appreciation in value as follows for the years ended June 30, 2016, 2015 and 2014:
(All numbers in Euros)
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2016
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2015
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2014
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The Procter & Gamble Company Common stock (FCPE Option D)
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Cost
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46 595 887
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44 785 916
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43 344 100
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Market value
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94 513 447
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87 400 223
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72 211 751
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Unrealized appreciation (depreciation)
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47 917 560
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42 614 307
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28 867 651
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(Decrease) increase in unrealized appreciation
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5 303 253
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13 746 656
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(5 086 276)
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Other investments (FCPE Option A, B, C, E, F)
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Cost
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53 050 353
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49 128 475
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47 433 040
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Market value
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57 025 078
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57 719 904
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52 113 388
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Unrealized appreciation (depreciation)
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3 974 725
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8 591 428
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4 680 348
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Increase (decrease) in unrealized appreciation
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(4 616 703)
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3 911 080
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1 892 721
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The realized gain (loss) on the sales of the Plan's investments for the years ended June 30, 2016, 2015, and 2014 was determined as follows:
(All numbers in Euros)
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2016
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2015
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2014
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The Procter & Gamble Company Common stock
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Proceeds on sales of shares
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10 905 117
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10 623 607
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13 654 835
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Cost
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8 523 237
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8 160 323
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10 889 245
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Realized (loss) gain
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2 381 879
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2 463 284
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2 765 589
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Other investments
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Proceeds on sales of shares
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27 696 356
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21 033 431
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31 829 907
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Cost
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25 092 287
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18 845 528
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28 799 868
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Realized (loss) gain
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€ 2 604 069
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€ 2 187 903
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€ 3 030 039
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4.
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NON PARTICIPANT - DIRECTED INVESTMENTS
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FCPE Option D is considered to be non participant-directed under the guidance of SOP 99-3 because participants are required to maintain contributed funds in the Parent's stock.
Information about the net assets and the significant components of the changes in net assets relating to the non participant-directed investments as of June 30, 2016, 2015 and 2014 is as follows:
(All numbers in Euros)
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2016
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2015
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2014
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Net assets:
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P&G Company Stock (FCPE Option D)
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87 400 223
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72 211 751
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75 763 144
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Changes in net assets:
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Net appreciation (depreciation) in fair value of investments
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€ 9 784 609
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18 079 057
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(728 015)
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Participant contributions
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4 786 842
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4 958 956
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4 672 369
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Employer contributions
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3 247 595
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2 898 934
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3 243 144
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Benefits paid to participants
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(10 705 822)
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(10 748 475)
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(10 738 891)
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Net change
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7 113 224
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15 188 472
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(3 551 394)
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P&G Company Stock (FCPE Option D)—beginning of year
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87 400 223
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72 211 751
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75 763 144
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P&G Company Stock (FCPE Option D)—end of year
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94 513 447
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87 400 223
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72 211 751
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As of June 30, 2016, the Plan had 3,656 participants invested in the Plan (vs 3,656 as of June 2015) whereas 871 employees (829 as of June 30, 2015) chose to collect their year group profit sharing rather than invest in the plan.
The Plan and the underlying FCPE's are subject to the tax laws of France. The Plan and the underlying FCPE's are tax-exempt according to French tax law. Thus, no provision for income taxes has been reflected in the accompanying financial statements.
7. RELATED PARTY TRANSACTIONS
At June 30, 2016 and 2015, the plan held 1,240,800 and 1,242,940 shares respectively, of common stock of the Procter & Gamble Company, the sponsoring employer with a cost basis of € 46,595,887 and € 44,785,916 respectively and a fair value of € 94,513,447 and € 87,400,223 respectively.
During the years ended June 30, 2016, 2015 and 2014, the Plan recorded dividend income from common stock of the Procter & Gamble Company of € 2,102,872, € 1,872,567 and € 1,595,934 respectively.
During the years ended June 30, 2016, 2015 and 2014, the Plan's investment in common stock of The Procter & Gamble Company, including gains and losses on investments bought and sold as well as held during the year (depreciated) appreciated in value by € 7,685,132, by € 16,209,940 and € (2,320,687) respectively.