Strategic options – SoTP cornerstone of our investment case The cornerstone of our investment case is the SoTP argument – that the shares materially undervalue Cyber Security, assuming >£300m for Escode which, at the current share price, implies Cyber is only c7x FY26E EBITDA, or c10x FY25E EBITDA, off below-trend margins. Yesterday, Sky News reported that a number of private equity firms, including Montague and BridgePoint, were looking at potential bids for NCC’s Escode business, with mooted valuations of £300m-£400m. It is not the first time that reports of a possible bid have appeared in the press. NCC responded before market close confirming that it is investigating a number of options for its Escode business, including a potential sale, the process is at a very early stage, no proposals have been received, and no decision has been made on whether to proceed with any transaction. Valuing the Escode business - >£350m feasible Over the last couple of years, the company has succeeded in sustainably growing Escode revenues by a low to mid-single digit amount while delivering EBITDA margins in the mid-forties, supported by high cash flow generation. It has been aided by a revised operational management team moving Escode ‘up the value chain’ into high value, more strategic enterprise deals as regulatory pressures on certain industries (e.g. financial services) are increasingly mandating Escode being part of a business resilience strategy. With NCC the clear global leader in this industry, this outlook should readily support a low double-digit EBITDA multiple, in our view, with our £300m ‘low end’ base case SoTP implying an 11x FY25E EBITDA multiple. Sustained financial and operational delivery would support a low-teens multiple for FY26E, implying >£350m is feasible in our view. As confidence continues to build in the business, we suspect that valuation levels will move up. SoTP valuation: 190p base case, with >250p mid-term potential Our base case 190p TP assumes 11x FY26E EBITDA for Escode (c£300m) and 13x FY26E EBITDA for Cyber, both conservative multiples in our view. Assuming more ‘normalised’ medium-term Cyber margins of c13% vs our c8% for FY26E, together with £350m for Escode, this would give a potential valuation of 250p. We expect the company is aiming for higher than 13% Cyber margins mid-term; if achieved this could suggest >250p is realistic, especially as this margin level would likely command a higher rating. It’s too early to focus on this now, but it does highlight the material value potential in NCC, assuming steady mid-term financial improvement in Cyber, executing on its business transformation strategy, along with a valuation for Escode reflecting sustained future financial delivery. We retain our Buy.