Paragraph 2

(1)

Subject to paragraph 4 below, the value in profit-making terms of the disposal made on the occasion of a company’s flotation is the amount produced by multiplying the average annual profit for the company’s initial period by the applicable price-to-earnings ratio.

(2)

For the purposes of this paragraph the average annual profit for a company’s initial period is the amount produced by the following formula—

A = 365 \times \frac{P}{D}

Where—

A is the average annual profit for the company’s initial period;

P is the amount, ascertained in accordance with paragraph 5 below, of the total profits for the company’s initial period; and

D is the number of days in the company’s initial period.

(3)

For the purposes of this paragraph the applicable price-to-earnings ratio is 9.