Explanation of £3bn Royal Mail Valuation?

Hi,

For those of you with valuation experience, could you briefly explain the £3bn valuation of the Royal Mail IPO? The FT seems to be quoting a metric of 8x EV/EBIT.

Reported EBIT (52-week adjusted) is £403m, normalised EBIT is £675m (adding back "transformation costs" and "net exceptional items"), there is a £600m term loan and £800m revolving credit facility.

So 8x normalised EBIT would be £5,400m, and even assuming a fully-drawn RCF this would only bring the valuation down to £4,000m.

Alternatively, using 8x reported EBIT would give £3,224m and then assuming the RCF was nil drawn would only bring it up to £2,624m, which is closer but using reported EBIT seems amateurish.

The other option would be using EV/forward EBIT, and assuming debt of £1,400m that would imply forward EBIT of £550m (£4.4bn/8) which I'm not sure sounds plausible due to the high transformation costs this year, unless more will be spent next year, or the work done this year has been a failure.

Any help appreciated!