The Group operates several share based payment plans as follows:

Deferred Annual Bonus Plan

This scheme is applicable to Executive Directors and Divisional Executive Directors. Under this scheme awards aremade annually consisting of Deferred Shares, which are linked to the payout under the Annual Bonus Scheme (details of which are contained in the Directors’ remuneration report) and Matching Shares. The value of Deferred Shares is determined by the payout under the Annual Bonus Scheme: half of the annual bonus is paid in cash and the remainder is compulsorily deferred on a gross basis into Deferred Shares. The Deferred Shares are held for a period of 3 years from the date of award during which they are not forfeitable, except in the case of dismissal for gross misconduct.

A conditional award of Matching Shares is made at the same time as the award of Deferred Shares. Participants will be eligible to receive up to 1.5 Matching Shares for every Deferred Share. Matching Shares will vest after the 3 year holding period to the extent to which performance conditions have been met. 33.3% of the Matching Shares will vest if growth in the company’s earnings per share (EPS) is equal to growth in the UK Retail Price Index (RPI) plus 6%per annum, rising on a straight-line basis to 100%vesting if growth in the company’s EPS is equal to or greater than growth in the RPI plus 16% per annum. The performance condition attached to the awards may be amended by the Group Remuneration Committee, a sub-committee of the Group Board, from time to time, subject to the new condition being no less demanding than the original condition.

Long Term Indexed Share Appreciation Scheme (LTISAS)

This scheme was only open to the Executive Directors and the Divisional Executive Directors. The final grant under this scheme wasmade in November 2004. Under this scheme, participants were granted 2 equal tranches of 600,000 share options. The performance criteria are the same for both tranches with performance periods that end on 31 December 2006. The exercise price of the options increases in line with the FTSE All Share Index fromthe date of grant to 25 November 2007. The final option price at which the awards can be exercised cannot be below the market value of the share at the date of grant. These options are only exercisable subject to the growth in the company’s EPS over the performance period.

Options will become exercisable, if over the performance period, the growth in the company’s EPS exceeds certain targets as follows: 25% of the options shall vest if growth in the company’s EPS exceeds RPI growth by 8% per annum, rising on a straight-line basis to 100% vesting if growth in the company’s EPS exceeds growth in the RPI by 12% per annum. The contractual life of options granted is 10 years for the first tranche and 8 years for the second tranche as the options under both schemes are exercisable between 25 November 2007 and 25 November 2012.

1997 Executive Share Option scheme

This scheme is open to senior employees other than Executive Directors and Divisional Executive Directors. The exercise price of the options is equal to the market price of the shares on the date of grant. Options granted under this scheme become exercisable if the growth in the company’s EPS exceeds the growth in RPI by 8%over the 3 year vesting period fromthe date of grant. The contractual life of each option granted is 7 years. There are no cash settlement alternatives.

Capita Sharesave Scheme

This is an employee Save As You Earn scheme open to all Capita employees. Under this scheme, employees are granted share options at a discount to the market price at the date of grant. The discount is currently nil (2005: 10% and 20% prior to 2005). The options become exercisable for a 6 month period following completion of a 3 or 5 year savings period. There are no performance conditions attached to these options.

The expense recognised for share based payments in respect of employee services received during the year to 31 December 2006 was £8.5m (2005: £7.6m), all of which arises from equity-settled share based payment transactions.

The following table illustrates the number and weighted average exercise prices (WAEP) of, andmovements in, share options during the year (excluding Deferred Annual Bonus Plan and LTISAS).

¹ Included within this balance are options over 11,012,567 (2005: 21,950,907) shares that have not been recognised in accordance with IFRS 2 as the options were granted on or before 7 November 2002. These options have not been subsequently modified and therefore do not need to be accounted for in accordance with IFRS 2.

The options have been exercised on a regular basis throughout the year and the weighted average share price during the year was £4.97 (2005: £3.78).

As noted above under the LTISAS scheme 2 tranches of 600,000 share options have been issued to each participant in the scheme. Both were deemed to have been granted in November 2002. The first tranche, totalling 5,400,000 share options, was awarded and issued in November 2002 when the share price was £2.16. The second tranche, also totalling 5,400,000 share options, was awarded in November 2002 and issued in November 2004 when the share price was £3.51. During the year, 106,667 share options under this scheme were forfeited thus the total number of options outstanding under this scheme was 10,693,333 at 31 December 2006 (2005: 10,800,000). As the exercise price of the options increases in line with the FTSE All Share Index from the beginning to the end of the performance period, it is not possible to determine the weighted average exercise price until the end of the performance period. None of the LTISAS options are exercisable until 25 November 2007.

The total cash value of the Deferred Shares awarded during the year under the Deferred Annual Bonus plan, discussed above, was £1.5m (2005: £1.7m) The matching shares allocation in respect of the 2005 awards under this plan charged in 2006 was £0.5m.

The weighted average fair value of options granted during the year was £1.00 (2005: £1.16). The range of exercise prices for options outstanding at the end of the year was £0.71 to £5.35 (2005: £0.34 to £5.35).

The fair value of equity-settled share options granted is estimated as at the date of grant using a multiple simulation option pricing valuation model, taking into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model used for the years ended 31 December 2006 and 31 December 2005.

The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns thatmay occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other features of options grant were incorporated into the measurement of fair value.