UPDATE 1-Capita H1 profit up 16 pct, H2 starts strongly

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LONDON, July 24 (Reuters) - Britain's biggest back-office outsourcing firm, Capita Group Plc (CPI.L: Quote, Profile, Research, Stock Buzz), posted a 16 percent rise in first-half profit on Thursday and said the second half of the year had started strongly.

Capita, which runs London's vehicle congestion charge and collects payments from Britain's television licence holders, recorded pretax profit of 120.2 million pounds in the six months to end-June as turnover grew 20 percent to 1.18 billion pounds.

The group was expected to post pretax profits of 120 million pounds, according to the average of seven analysts polled by the company.

Capita, which last month acquired IBS OpenSystems for 77.7 million pounds, hiked the interim dividend by 20 percent to 4.8 pence and said it would continue its share buyback programme under which the group repurchased 10 million shares during the period.

Capita's shares have outperformned other London-listed support services companies .FTASX2790 by 13 percent since the start of the year. The group renewed major contracts worth 626 million pounds during the period and said the second half had started strongly with a further 187 million pounds of renewed contracts secured this month alone.

"The company has announced major contract wins during the first half of the year which gives us a high degree of certainty that 2008 forecasts are achievable," said UBS analyst Mark Shepperd in a note prior to the results.

A poll of analysts by Reuters Estimates forecast median pretax profit of 285.6 million pounds for the year.

Capita has been benefiting from a growing trend towards outsourcing administrative tasks in Britain as the government looks to cut costs and reduce its borrowings and companies seek to improve their profitability.