Chief Executive Adrian Ringrose said he believed the division, which provides services such as caring for the elderly, had potential to develop further after it securing 6.5 billion pounds ($10 billion) of contracts in 2014.

"The strategic theme for us is the development of our front-line public services business ... that is something that we have built up over the last two or three years and I think that has got a lot of potential ahead of it," Ringrose told Reuters.

Britain's Ministry of Justice last year named Interserve as preferred bidder for five probation contracts as part of a partnership with social enterprise firm 3SC and charities Addaction, P3 and Shelter, which is expected to be worth around 600 million pounds over seven years.

The company, which provides employment assistance schemes for the government, cleaning services for London Underground and facilities management for the BBC, posted a 31 percent rise in headline pretax profit to 106.2 million pounds for 2014 and said it had a record future workload of 8.1 billion pounds.

It also said it had delivered organic revenue growth of 10 percent and that total revenue rose by a third to 2.9 billion pounds, helped by the acquisitions of Initial Facilities and the Employment & Skills Group.

Shares in the company were up 2.5 percent to 574 pence by 0839 GMT, making it one of the biggest gainers on the FTSE 250 <.FTMC> index of mid-sized companies.

Interserve said in a separate statement its chairman Norman Blackwell plans to step down before its 2016 annual shareholders' meeting and it would start a search for his replacement in coming months.

($1 = 0.6437 pounds)

(Additional reporting by Paul Sandle; Editing by Sarah Young and David Holmes)

By Li-mei Hoang