Capita, which manages London's congestion charge scheme, found itself pitched into a row last night after reporting a 22% increase in annual profits.

The financial results were described as "shocking" by Lynne Featherstone, the chairwoman of the London Assembly transport committee, which said Capita should be ensuring that the road toll mechanism worked better.

"Surely the company's profits can be ploughed into making the system fairer for motorists and improving London's ailing transport services, instead of just fattening managers' pockets," she said.

Capita's chairman, Rod Aldridge, dismissed the criticism as "unfair" and defended the performance of his firm.

"I think it's a bit unfortunate to make comments like that," said Mr Aldridge. "If you look at the overall statistics on our performance, they have been very good."

Capita said only 6% of its business came from the congestion charge - which was introduced by Ken Livingstone, the London mayor, three years ago but had a shaky start.

Critics say motorists continue to be charged incorrectly and that it should be made easier to pay.

The company will gain further if the mayor proceeds with a plan to raise the charge from £5 to £8. The current contract does not come up for renewal until 2009.

Capita said pre-tax profits before goodwill and exceptionals had grown to £148.2m - a level that was slightly ahead of analysts' forecasts - on the back of a 19% surge in turnover to £1.3bn.

The company said it had a record bid pipeline of £3.8bn worth of contracts, which is up more than 40% on last year.

Capita's operating margins inched upwards and it rewarded shareholders with a 34% increase in the dividend.

Mr Aldridge is used to dismissing accusations that the company is profiteering from the public sector and yesterday he was happy to justify his company's performance in this field as a whole.

"The real story here is not our level of margins, which are around 12%, but the 48% savings that we have been able to provide to customers such as the government," he argued.

"Over teachers' pensions, for instance - a small contract involving 450-odd people - we have been able to unlock value not by cutting jobs but by reducing absenteeism among the staff from 25.3% to 7%."

Mr Aldridge caused surprise recently by selling a large amount of his personal holding in Capita, indicating to some that he might be losing faith in its potential for growth.

But he said yesterday that the order-book spoke for itself and that he was very confident about future prospects.

The shares rose nearly 50% during 2004 and were up 8p yesterday to end the day's trading at 369p.