# Finance (No. 2) Act 1997, 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×PDWhere—
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.

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Source: https://www.legislation.gov.uk/ukpga/1997/58/schedule/1/paragraph/2 (the official version)
Page: https://openlegislation.uk/finance-no-2-act-1997/schedule-1/paragraph-2
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.