Capita’s 2012 results revealed respectable organic growth of 3% boosted by acquisitions which led to 14% overall top line growth to £3.4bn.

But the contribution of one division stands out. Capita Justice & Secure Services (J&SS) announced an impressive 122% rise in sales to £198.3m. Although the volume of revenue for J&SS is small compared to the group as a whole (just 3% of the group total), the rate of growth is highly significant. In fact, J&SS grew by £108.9m, which is just over a quarter of total revenue growth generated across the whole group.

So what does J&SS do? The division provides software, IT and a wide range of business process services including custody processing and secure transport. The software portfolio also covers a large area with products including HR, command and control and mobile systems.

Capita’s J&SS revenue growth is partly down to M&A activity, where two companies (UK command and control solutions provider Fortek and the Secure Task Management division of UK security group Reliance) were acquired at a cost of £24m in 2012. However, even this is an indication of the strong focus that is being placed by Capita on the sector. To put this into perspective, £24m represents 14% of all Capita’s M&A expenditure in 2012.

These two acquisitions are just the latest two pieces of the J&SS puzzle, whose assembly began in December 2010 with the £86m acquisition of Sungard’s public sector division. With more takeovers planned for the future, it is clear that Capita aims to become a truly end-to-end provider that can meet the sector-specific needs of clients in this market.

It is PAC’s opinion that this approach will position Capita to take advantage of the opportunities that will emerge in the ‘post-PCC’ reality. The current political sensitivity around the ‘privatisation’ of police jobs more or less rules out personnel-intensive engagements such as the ill-fated ‘Business Partnering for Police’ initiative. This means that private sector partners seeking to deal with Police Forces are under pressure to provide ‘added value’ for clients, rather than simply offering ‘your mess for less’ solutions. The breadth of Capita’s proposition means that it is armed with the cutting edges to do just that.

A key reference for Capita will the implementation of its Cedar HR software as a platform for a ‘shared back office’ initiative to streamline HR processes across three police forces (Leicestershire, Nottinghamshire and Derbyshire) under one system. Although this is not the largest of initiatives in terms of contract value (£2.3m over five years), it is nonetheless highly significant as it will save the three forces £900,000 per annum.

Despite the scope to enhance Capita’s J&SS division through acquisitions that fill gaps in its portfolio, PAC believes that tooling Capita’s existing strengths to suit the sector-specific needs of J&SS clients will present some of the strongest opportunities. For example, one of J&SS’ major contract wins in 2012 was a £21m deal with the MoJ for application management and hosting of the Criminal Justice Systems Exchange. Clearly this is an IT services engagement, building on the ITO strengths Capita has been building following the acquisition of Carillion IT in 2009, but leveraging the J&SS to provide these services in a secure context.

One area that Capita has already identified is the provision of training services. This is clearly an area where Capita is already strong, as evidenced by the recent extension of its Civil Service Learning engagement. However, through the acquisition of the Fire Service College, it now has an outlet that provides not only opportunities for the Fire and Rescue segment of the emergency services market, but also has significant cross-over potential for areas such as the MoD, Police Forces and the international market.