NOTES TO FINANCIAL STATEMENTS
AS OF JUNE, 30 2022 AND 2021, AND FOR THE YEARS ENDED JUNE 30, 2022, 2021 AND 2020
| 1. |
DESCRIPTION OF THE PLAN
|
The Procter & Gamble Ireland Employees Share Ownership Plan (1998) (the “Plan”) is a stock ownership plan sponsored by The
Procter & Gamble Company (the “Company” or “Procter & Gamble”). The following brief description is provided for general information purposes only. Participants should refer to the Plan agreement for more complete information.
General - The Plan is a share purchase plan established by Procter & Gamble to provide a means for eligible Irish employees to tax efficiently purchase shares of the Company. The Plan is administered by Mercer Limited who were appointed by
the Trustees of the Plan and who hold the Plan assets on behalf of the Trustees of the Plan.
Eligibility – Employees are eligible to participate in the Plan if they are employed by a participating company (Note 8) and pay Irish income tax under the PAYE system on their earnings from that employment, or individuals who were
at some time previously an eligible employee but on behalf of whom the Trustees, pursuant to the rules, continue to hold stock in the Plan.
Contributions – Contributions represent amounts received from participants, and amounts matched by the participating Procter & Gamble companies (Note 8), that have been invested in stock of the Company. Employees can contribute
up to 2.5% of their base salary. Where cash amounts are received from members and matched by the sponsoring companies, but have not yet been invested in stock of the Company, they are presented as Cash at bank and in hand on the statement of
net assets available for plan benefits.
Distributions and Withdrawals – Participants are unable to withdraw shares from the Plan within two years of purchase, unless the participant ceases to be an employee of one of the participating companies. Shares held by the Plan for three years
from the date of purchase must be sold or transferred into the participant’s own name.
Participant Accounts - Individual accounts are maintained for each Plan participant. Each participant’s account is credited with the participant’s contribution, the participating Procter & Gamble companies’ (Note 8) matching
contribution and allocations of Plan earnings, and charged with withdrawals and an allocation of Plan losses. Allocations are based on participant earnings or account balances as defined. The benefit to which a participant is entitled is
limited to the shares that can be provided from the participant’s account.
Vesting - Participants are immediately vested in their contributions, the participating Procter & Gamble companies matching contributions and earnings.
Investments - Participants are only permitted to invest in the Company common stock. Any dividends on shares of the Company common stock are separately payable to participants in accordance with the Plan agreement.
PROCTER & GAMBLE IRELAND
EMPLOYEES SHARE OWNERSHIP PLAN (1998)
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE, 30 2022 AND 2021, AND FOR THE YEARS ENDED JUNE 30, 2022, 2021 AND 2020 (CONTINUED)
| 2. |
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 (“GAAP”).
Functional Currency – The functional currency of the Plan is considered to be Euros because that is the currency of the primary economic environment in which the Plan operates.
Use of Estimates - The preparation of financial statements in conformity with GAAP 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.
Risks and Uncertainties - The Plan invests in Company common stock which represents a concentration in investments. 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 such changes could materially affect the value of the
participants’ account balances and the amounts reported in the financial statements.
Investment Valuation and Income
Recognition - The Plan’s investment in the Company’s common stock is stated at fair value, which is based on quoted market prices and is translated into Euros at the rate of exchange at the period end date.
Purchases and sales of securities are recorded on a trade date basis. Dividends are recorded on the ex-dividend date, net of any U.S. withholding taxes. Realized gains and losses are based upon the average cost method.
Net Appreciation /
(Depreciation) in Fair Value of Investments - Realized and unrealized appreciation / (depreciation) in fair value of investments is based on the difference between the fair value of the assets at the beginning of the year,
or at the time of purchase for assets purchased during the year, and the related fair value on the day investments are sold with respect to realized appreciation / (depreciation), or on the last day of the year for unrealized appreciation /
(depreciation).
Cash at Bank and In Hand - Amounts shown as cash at bank and in hand are uninvested funds held that are to be invested in the Company’s common stock in the following month.
Expenses of the Plan - Investment management expenses and all other fees and expenses are reimbursed by the participating Procter & Gamble companies (Note 8).
| 3. |
FAIR VALUE MEASUREMENT
|
ASC 820, Fair Value Measures and Disclosures, establishes a framework for measuring fair value. That framework provides a fair
value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and
the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described as follows:
PROCTER & GAMBLE IRELAND
EMPLOYEES SHARE OWNERSHIP PLAN (1998)
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE, 30 2022 AND 2021, AND FOR THE YEARS ENDED JUNE 30, 2022, 2021 AND 2020 (CONTINUED)
| 3. |
FAIR VALUE MEASUREMENT (continued)
|
| |
Level 1
|
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Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the plan has the ability to access.
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Level 2
|
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Inputs to the valuation methodology include
• quoted prices for similar assets or liabilities in active markets;
• quoted prices for identical or similar assets or liabilities in inactive markets;
• inputs other than quoted prices that are observable for the asset or liability;
• inputs that are derived principally from or corroborated by observable market data by correlation or other means.
If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.
|
| |
Level 3
|
|
Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
|
The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest
level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.
All investments are measured at quoted prices in the active market and are classified as
Level 1 assets as of June 30, 2022 and 2021.
The Plan’s investment in Company common stock experienced net appreciation in value as follows for the years ended June 30,
2022, 2021, and 2020:
| |
|
2022
|
|
2021
|
|
2020
|
| |
|
€
|
|
€
|
|
€
|
| |
The Procter & Gamble Company
|
|
|
|
|
|
| |
common stock
|
|
|
|
|
|
| |
Net appreciation
|
420,147
|
|
82,139
|
|
183,292
|
The realized gain on sales of Company common stock for the years ended June 30, 2022, 2021 and 2020 was determined using an
average cost method as follows:
| |
|
2022
|
|
2021
|
|
2020
|
| |
|
€
|
|
€
|
|
€
|
| |
Proceeds on sales of shares
|
620,739
|
|
577,587
|
|
540,621
|
| |
Cost
|
(460,448)
|
|
(470,984)
|
|
(415,831)
|
| |
Realised gain on sales of shares
|
160,291
|
|
106,603
|
|
124,790
|
PROCTER & GAMBLE IRELAND
EMPLOYEES SHARE OWNERSHIP PLAN (1998)
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE, 30 2022 AND 2021, AND FOR THE YEARS ENDED JUNE 30, 2022, 2021 AND 2020 (CONTINUED)
Distributions payable represent dividends and proceeds from disposals owed to participants and were €21,350 and €21,020 at June 30, 2022 and 2021,
respectively. Dividends received by the Plan are separately payable to participants in accordance with the Plan agreement.
| 6. |
AMOUNTS PAYABLE TO OTHERS
|
At June 30, 2022 and 2021, amounts payable to others were €nil and €63,033 respectively. This represents amounts not yet settled to participants in
respect of share transactions.
| 7. |
FEDERAL INCOME TAX STATUS
|
The Plan is not qualified under Section 401(a) of the Internal Revenue Code and is exempt from the provisions of Title I of ERISA pursuant to Section
4(b) (4) thereof. The Company believes that the fiduciary should be viewed as a directed custodian and that, for U.S. tax purposes, the participating employees should be treated as the owners of the shares of the Company’s common stock held for
their account under the Plan.
GAAP requires plan administrators to evaluate tax positions taken by the Plan and recognize a tax liability if the Plan has taken an uncertain
position that more likely than not would not be sustained upon examination by the IRS or the Department of Labor. The Plan administrators have analyzed the tax positions taken by the Plan, and have concluded that as of June 30, 2022 and 2021,
there are no uncertain positions taken or expected to be taken that would require recognition of a liability or disclosure in the financial statements. The Plan has recognized no interest or penalties related to uncertain tax positions. The
Plan is no longer subject to income tax examinations for years prior to 2016.
The Irish Tax Authority has determined and informed the Company that it is an approved Employee Share Scheme under Irish tax
legislation. Therefore, the Plan Administrator believes that the Plan was qualified and tax-exempt as of June 30, 2022 and 2021 and no provision for income taxes has been reflected in the accompanying financial statements.
8. PARTICIPATING PROCTER & GAMBLE COMPANIES
The participating Procter & Gamble companies are as follows:
|
•
|
Procter & Gamble (Manufacturing) Ireland Ltd;
|
|
•
|
Procter & Gamble (HABC) Ltd; and
|
|
•
|
Procter & Gamble (L&CP) Ltd;
|
PROCTER & GAMBLE IRELAND
EMPLOYEES SHARE OWNERSHIP PLAN (1998)
NOTES TO FINANCIAL STATEMENTS
AS OF JUNE, 30 2022 AND 2021, AND FOR THE YEARS ENDED JUNE 30, 2022, 2021 AND 2020 (CONTINUED)
| 9. |
RELATED PARTY TRANSACTIONS
|
At June 30, 2022 and 2021, the Plan held 20,866 and 25,350 shares, respectively, of common stock of the Company, the sponsoring employer, with a cost
basis of €2,226,175 and €2,421,784 respectively. Contributions from participating Procter & Gamble companies of €358,294, €352,824 and €372,281 were recorded for the years ended June 30, 2022, 2021 and 2020 respectively.
Amounts due from participating Procter & Gamble companies of €12,607 and €1,554 were recorded at June 30, 2022 and 2021 respectively. During the
years ended June 30, 2022, 2021 and 2020, the Plan recorded dividend income from The Procter & Gamble Company common stock of €70,303, €70,364 and €78,124 respectively.
Administrative expenses of €1,111, €1,447 and €1,904 were recorded for the years ended June 30, 2022, 2021 and 2020 respectively. These expenses were reimbursed by the participating Procter & Gamble companies.
Audit fees of €24,000, €22,470 and €21,400 were incurred for the years ended June 30, 2022, 2021 and 2020 respectively. These fees were paid by the
participating Procter & Gamble companies (Note 8) on behalf of the Plan.
Although they have not expressed any intent to do so, the participating Procter & Gamble companies have the right under the
Plan to discontinue their contributions at any time and to terminate the Plan subject to the provisions set forth in the Plan agreement.
The Plan has evaluated subsequent events and transactions for potential recognition or disclosure in the financial statements
through September 22, 2022, the date the financial statements were issued. No other events have occurred that require adjustment to or disclosure in the financial statements of the Plan.
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employees benefit plan) have duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Dublin, Ireland, on the 22nd day of September 2022.
PROCTER
& GAMBLE IRELAND
EMPLOYEE
SHARE OWNERSHIP PLAN (1998)
/s/
Patrick Foley
Irish
Pensions Trust Limited,
Corporate
Trustee
/s/
Donal O' Flaherty
Donal O' Flaherty, Director
Irish
Pensions Trust Limited,
Corporate
Trustee
EXHIBIT
INDEX
Exhibit No.