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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 January 1, 2015 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 (together, “P&G France”) and their related Employee Committees. An amendment to the Plan to increase the Employer’s matching contribution was implemented as of FY 18/19, signed by the same parties.
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. The PERCO is in place since January 1st 2013 for the aforementioned entities. The PERCO was established in June 2016 for
Procter & Gamble Amiens S.A.S.
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. The plan’s financial statements are a combination of the 5 FCPE.
Administration — Administration of the Plan and of the PERCO are jointly executed by Procter & Gamble Holding France S.A.S.
and Natixis Investments Managers International (previously 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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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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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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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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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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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:
- 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.
- 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:
- 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 € 157.50. These matching contributions are automatically invested in Option D.
- 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.
- 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 10
per fiscal year).
Withdrawals — All contributions to the Plan are “blocked” for a period of five years beginning on October 1st 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 1st, 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.
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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 participant’s 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, 2019.
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2019
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2018
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Asset Group (All
numbers in Euro)
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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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103 363 105
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80 943 591
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Other investments
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63 687 813
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60 545 396
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TOTAL
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167 050 919
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141 488 987
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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 Fund manager as of June 30, 2019 and 2018 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, 2019 and 2018.
Investments held by the Plan at June 30, 2019 and 2018 were as follows:
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2019
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2018
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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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220 517
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24 513 731
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225 668
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23 989 280
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• Groupe Procter & Gamble Obligations (Option B)*
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613 102
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17 133 493
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589 935
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16 530 768
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• Groupe Procter & Gamble 5000 (Option C)*
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672 192
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18 191 648
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656 859
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16 969 674
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• Groupe Procter & Gamble (Option D)*
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395 816
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103 363 105
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455 970
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80 943 591
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• Groupe Procter & Gamble (Option F)*
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2 269 128
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3 848 941
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1 900 696
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3 055 674
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Total investments
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167 050 919
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141 488 987
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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, 2019, 2018 and 2017:
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(All numbers in Euros)
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2019
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2018
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2017
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The Procter & Gamble Company Common stock (FCPE Option D)
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Cost
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44 584 589
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49 217 008
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47 414 745
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Market value
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103 363 105
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80 943 591
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91 568 080
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Unrealized appreciation (depreciation)
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58 778 516
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31 726 583
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44 153 335
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(Decrease) increase in unrealized appreciation
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27 051 934
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(12 426 752)
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(3 764 225)
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Other investments (FCPE Option A, B, C, F)
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Cost
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58 344 670
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53 781 063
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53 616 606
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Market value
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63 687 813
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60 545 396
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60 172 951
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Unrealized appreciation (depreciation)
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5 343 144
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6 764 333
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6 556 345
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Increase (decrease) in unrealized appreciation
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(1 421 189)
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207 987
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2 581 620
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The realized gain (loss) on the sales of the Plan’s investments for the years ended June 30, 2019, 2018, and 2017 was determined as follows:
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(All numbers in Euros)
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2019
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2018
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2017
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The Procter & Gamble Company Common stock
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Proceeds on sales of shares
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15 464 409
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4 338 834
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10 233 617
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Cost
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8 753 906
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3 184 811
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6 013 616
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Realized (loss) gain
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6 710 503
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1 154 023
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4 220 000
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Other investments
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Proceeds on sales of shares
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41 470 044
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24 496 803
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45 516 680
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Cost
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37 914 291
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22 278 094
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42 829 927
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Realized (loss) gain
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3 555 753
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2 218 709
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2 686 753
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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, 2019, 2018 and 2017 is as
follows:
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(All numbers in Euros)
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2019
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2018
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2017
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Net assets:
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P&G Company Stock (FCPE Option D) – beginning of year
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80 943 591
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91 568 080
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94 513 447
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Changes in net assets:
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Net appreciation (depreciation) in fair value of investments
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35 821 429
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(9 333 914)
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2 557 589
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Participant contributions
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3 584 753
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3 120 526
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4 806 321
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Employer contributions
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3 085 651
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3 340 972
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2 841 577
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Benefits paid to participants
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(20 072 319)
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(7 752 073)
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(13 150 855)
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Net change
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22 419 515
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(10 624 490)
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(2 945 367)
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P&G Company Stock (FCPE Option D)—end of year
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103 363 105
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80 943 591
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91 568 080
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As of June 30, 2019, the Plan had 2,000 participants investing in the Plan (vs 2,051 as of June 2018) whereas 768 employees (730 as of June 30, 2018) 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.
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7.
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RELATED PARTY TRANSACTIONS
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At June 30, 2019 and 2018, the plan held 1,073,210 and 1,209,090 shares respectively, of common stock of the Procter & Gamble Company, the sponsoring employer with a cost basis of €
44 584 589 and € 49 217 008 respectively and a fair value of € 103 363 105 and € 80 943 591 respectively.
During the years ended June 30, 2019, 2018 and 2017, the Plan recorded dividend income from common stock of the Procter & Gamble Company of € 2 062 327, € 1 941 935 and € 2 103 947
respectively.
During the years ended June 30, 2019, 2018 and 2017, 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 € 21 335 685, by € - 11 272 729 and € 455 775 respectively.
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report
to be signed on its behalf by the undersigned hereunto duly authorized on September 26, 2019.
PROCTER & GAMBLE HOLDING FRANCE S.A.S.GROUP PROFIT SHARING, INCENTIVE AND EMPLOYER CONTRIBUTION PLAN (FRANCE)
By: /s/ Benjamin
Binot
Benjamin Binot
President
Procter & Gamble Holding France S.A.S. Group Profit Sharing,
Incentive and Employer Contribution Plan (France)
EXHIBIT INDEX
Exhibit No.
23 Consent of Deloitte & Associés