REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Trustees and Participants of the Procter & Gamble 1-4-1 Plan:

We have audited the accompanying Statements of Net Assets Available for Plan Benefits of the Procter & Gamble 1-4-1 Plan ("Plan") as of June 30, 2014 and 2013, and the related Statements of Changes in Net Assets Available for Plan Benefits for each of the three years ended June 30, 2014, 2013 and 2012.  These financial statements are the responsibility of the Plan's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan's internal control over financial reporting. Accordingly we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material respects, the net assets available for plan benefits of the Plan as of June 30, 2014 and 2013 and the changes in net assets available for plan benefits for the years ended June 30, 2014, 2013 and 2012, in conformity with accounting principles generally accepted in the United States of America.

/s/Deloitte LLP

Deloitte LLP

Newcastle upon Tyne, United Kingdom

September 19, 2014

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PROCTER & GAMBLE

 1-4-1 PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
JUNE, 30 2014 AND 2013
	2014	2013
	£	£
ASSETS:
Investment in The Procter & Gamble Company common stock, at fair value	53,945,304	59,209,588
(1,168,895 shares at June 30, 2014, 1,169,349 shares at June 30, 2013)
Cash at bank and in hand	515,647	515,838
Due from participating Procter and Gamble companies (Note 7)	558	-
Total assets	54,461,509	59,725,426
LIABILITIES:
Contributions received in advance	(58,518)	(77,998)
Total liabilities	(58,518)	(77,998)
NET ASSETS AVAILABLE FOR PLAN BENEFITS	54,402,991	59,647,428

 

 

The accompanying notes are an integral part of the financial statements.

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PROCTER & GAMBLE

 1-4-1 PLAN

STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEARS ENDED JUNE 30, 2014, 2013 AND 2012
ADDITIONS/ (LOSSES):	2014	2013	2012
	£	£	£
Contributions:
Employee contributions	3,371,028	3,380,272	3,653,523
Employer contributions (Note 7)	3,371,028	3,380,272	3,653,523
Total contributions	6,742,056	6,760,544	7,307,046
Investment income:
Net (depreciation) / appreciation in fair value of    The Procter & Gamble Company common stock
(Note 4)	(5,260,853)	13,634,703	(325,287)
Dividends from The Procter & Gamble Company    common stock (Note 7)	1,437,937	1,455,037	1,304,242
Total investment income	(3,822,916)	15,089,740	978,955
Income from participating Procter & Gamble   companies (Note 7)	35,928	45,683	16,375
Total additions	2,955,068	21,895,967	8,302,376
DEDUCTIONS:
Distributions and withdrawals to participants	(8,163,577)	(11,313,880)	(6,705,240)
Administrative expenses	(35,928)	(45,683)	(16,375)
Total deductions	(8,199,505)	(11,359,563)	(6,721,615)
(DECREASE)/ INCREASE IN NET ASSETS	(5,244,437)	10,536,404	1,580,761
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year	59,647,428	49,111,024	47,530,263
End of year	54,402,991	59,647,428	49,111,024

 

 

The accompanying notes are an integral part of the financial statements.

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PROCTER & GAMBLE

 1-4-1 PLAN

NOTES TO FINANCIAL STATEMENTS AS OF

1.	DESCRIPTION OF THE PLAN

The Procter & Gamble 1-4-1 Plan (the "Plan") is a stock ownership plan sponsored by The Procter & Gamble Company ("Company"). The following brief description of the Procter & Gamble 1-4-1 Plan 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 United Kingdom ("UK") employees to tax efficiently purchase shares of the Company. The Plan is administered by Capita IRG Trustees Limited who were appointed by the Trustees of the Plan and hold the Plan assets on behalf of the Trustees of the Plan.

Eligibility — Employees eligible to participate in the Plan included all regular employees of participating subsidiaries of the Company (Note 6) with the exception of employees considered to be an executive, officer, director, or a 10 percent stockholder of the Company and employees eligible for another savings plan sponsored by the Company and maintained in the United States, Canada, or Puerto Rico.  Eligible employees can enrol in the Plan on the first day of each month and on the initial participation date for each participating subsidiary.

Distributions and Withdrawals – Participants may withdraw contributory shares from the Plan at any time. Participants cannot withdraw matching shares from the Plan within five years of purchase, unless the participant ceases to be an employee of one of the participating companies.

Contributions- Contributions represent amounts received from members, and amounts matched by the participating Procter & Gamble companies (Note 6), 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 deferred on the statement of net assets available for plan benefits.

Participant Accounts – Individual accounts are maintained for each Plan participant. Each participant's account is credited with the participant's contribution, the participating companies' 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 vested account.

Participant accounts remaining in the Plan continue to have individual accounts maintained with Plan earnings or losses allocated based on earnings and account balances as defined.

Vesting – Participants are vested immediately in all shares and contributions allocated to their respective Plan accounts. The participating Procter and Gamble companies match contributions.

Investments - All employee and employer contributions were invested in shares of the Company's common stock generally on the 5th working day of each month. Sales of the Company's common stock for distributions generally also occur on the 5th working day of each month. Any dividends on shares of the Company's common stock are invested in additional shares of the Company's common stock.

Participant Loans – Under the terms of the Plan agreement, participants are not permitted to borrow funds from their account balance.

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2.	SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting - The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").

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 Company common stock is stated at fair value, which is based on quoted market prices and is translated into sterling 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 identified cost method.

Net Appreciation / (Depreciation)  in Fair Value of Investments - Realised and unrealised 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 realised appreciation / (depreciation), or on the last day of the year for unrealised 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 Company 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 6).

Fair Value Measurements and Disclosures - In May 2011, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") no. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs, which amends Accounting Standards Codification ("ASC") 820.  ASU 2011-04 also required the categorization by level for items that are only required to be disclosed at fair value and information about transfers between Level 1 and Level 2. In addition, the ASU provides guidance on measuring the fair value of financial instruments managed within a portfolio and the application of premiums and discounts on fair value measurements.  The Plan adopted this guidance on July 1, 2012.  The effect of the adoption of ASU 2011-04 had no impact on the Plan's statement of net assets available for plan benefits and the statement of changes in net assets available for plan benefits.

 

 

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ASC Topic 820 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:

Level 1		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.
Level 2		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 following a Level 1 valuation technique, as of June 30, 2014 and 2013.

4.	INVESTMENTS

The Plan's investment in Company common stock experienced net appreciation/ (depreciation) in value as follows for the years ended June 30, 2014, 2013, and 2012:

      

	2014		2013		2012
	£		£		£
The Procter & Gamble Company common stock:
Net (depreciation)/ appreciation	(5,260,853)		13,634,703		(325,287)

 

5.	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, 2014 and 2013, 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 administrators believe it is no longer subject to income tax examinations for years prior to 2011.

HM Revenue & Customs (HMRC) has determined and informed the Company that it is an approved Employee Share Scheme under UK tax legislation.  Therefore, the Plan Administrator believes that the Plan was qualified and tax-exempt as of June 30, 2014 and no provision for income taxes has been reflected in the accompanying financial statements.

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6.	PARTICIPATING PROCTER & GAMBLE COMPANIES

The participating Procter & Gamble companies are as follows:

Procter & Gamble Prestige Products Limited

Procter & Gamble Product Supply (UK) Limited

Procter & Gamble Technical Centres Limited

Procter & Gamble (L&CP) Limited

Procter & Gamble (Health & Beauty Care) Limited

Gillette UK Limited

Gillette Management LLC

Wella (U.K.) Limited

Wella (UK) Holdings Limited

7.	RELATED PARTY TRANSACTIONS

At June 30, 2014 and 2013, 1,168,895 and 1,169,349 shares of Company common stock were held by the Plan respectively. The cost of this stock at June 30, 2014 and 2013 was £42,078,724 and £39,524,934 respectively.

During the years ended June 30, 2014, 2013 and 2012, the Plan recorded dividend income from Company common stock of £1,437,937, £1,455,037 and £1,304,242 respectively.

Contributions from participating Procter & Gamble companies of £3,371,028, £3,380,272 and £3,653,523 were recorded for the years ended June 30, 2014, 2013 and 2012, respectively. Amounts due from participating Procter & Gamble companies of £558 and £nil were recorded at June 30, 2014 and 2013 respectively.

Also, the Plan received reimbursements for administrative expenses from the participating Procter & Gamble companies for the years ended June 30, 2014, 2013 and 2012 of £35,928, £45,683 and £16,375 respectively.

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8.	PLAN TERMINATION

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.

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