Jefferies Financial Group Inc.

Total Non-interest Expenses

Non-interest expenses were$6.47 billion, an increase of 7.4%,

compared to$6.03 billion for the prior year.

Compensation and Benefits

Compensation and benefits expense consists of salaries,

benefits, commissions, annual cash compensation and share-

based awards and the amortization of share-based and cash

compensation awards to employees.

Cash and share-based awards granted to employees may contain

provisions such that employees who terminate their employment

or are terminated without cause may continue to vest in their

awards, so long as those awards are not forfeited as a result of

other forfeiture provisions (primarily non-compete clauses) of

those awards. Accordingly, the compensation expense for a

portion of awards granted at year end as part of annual

compensation is recorded during the year of the award.

Compensation and benefits expense includes amortization

expense associated with these awards to the extent vesting is

contingent on future service. In addition, certain awards to our

Chief Executive Officer and our President contain performance

conditions and the awards are amortized over their service

periods.

Compensation and benefits expense for 2025 was$3.86 billion

compared to$3.66 billion for 2024. A significant portion of our

compensation expense is highly variable with net revenues.

Compensation and benefits expense as a percentage of Net

revenues was 52.6% for 2025 compared with 52.0% for 2024.

Compensation expense related to the amortization of share- and

cash-based awards amounted to$621.5 million for 2025

compared to$513.7 million for 2024.

At November 30, 2025, we had 7,787 employees globally across

all of our consolidated subsidiaries within our Investment

Banking and Capital Markets and Asset Management reportable

segments, compared to 7,822 at November 30,2024. Included

within our global headcount are 1,797 employees at

November 30, 2025 and 2,063 employees at November 30,2024

of our Stratos, Tessellis, HomeFed, and M Science subsidiaries.

Non-interest Expenses (Excluding Compensation and Benefits)

Non-compensation expenses as a percentage of Net revenues

was 35.6% compared to 33.7% for the current year and the prior

year period, respectively, and was impacted by the following:

•Brokerage and clearing fees were higher by$56.5 million

primarily due to increased global equities trading volumes, as

we continue to gain market share globally.

•Technology and communication were higher by$51.5 million

related to the continued development of various trading and

management systems as well as higher data related costs in

investment banking.

•Business development was higher by$52.2 million due to

increased deal related costs and increased expenses related to

business travel, conferences and other events.

•Other expenses were higher by$53.2 million compared to the

prior year period, as charitable donations increased

$17.0 million compared to the prior year period. Other

expenses for the current year also include a write-down on

certain assets held for sale. Other expenses for the prior year

period include bad debt expenses of$26.2 million largely

related to the shutdown of Weiss. In addition, the prior year

period includes activity from Foursight, which was sold in April

The provision for income taxes on continuing operations was

$184.6 million and$293.2 million for theyear ended November

30, 2025 and 2024, respectively, representing an effective tax rate

of 21.2%, and 29.2%, respectively. The lower rate was primarily

driven by the resolution of certain state and local tax matters.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was

signed into law. The OBBBA permanently extends and modifies

certain domestic and international provisions from the 2017 Tax

Cuts and Jobs Act and phases out certain provisions from the

2022 Inflation Reduction Act. Certain domestic provisions have

retroactive effects beginning in 2025, while the international

provisions are generally effective for years beginning after

December 31, 2025. The OBBBA did not materially impact our

fiscal 2025 results.

Business Developments

On September 19, 2025, we and the SMBC Group announced a

significant expansion of our strategic alliance originally

established in 2021. Key provisions include:

•The planned formation of a joint venture in Japan to integrate

our global equities platform with SMBC Group’s domestic

equity research, sales, trading, and equity capital markets

businesses, expected to launch in January 2027;

•Expansion of joint sponsor coverage in EMEA, targeting larger

sponsors with our combined investment banking and

corporate banking capabilities;

•SMBC Group’s intent to increase its economic ownership from

14.5% to up to 20% (on an as-converted and fully diluted basis),

while maintaining less than 5% voting interest; and

•SMBC Group’s commitment to provide approximately $2.5

billion in new credit facilities to us and Jefferies Finance.

These initiatives are designed to deepen the partnership, leverage

complementary strengths, and deliver enhanced services to

clients.

On December 9, 2025, we entered into an agreement to acquire a

50% interest in Hildene Holding Company, LLC, parent of Hildene

Capital Management, LLC, a credit-focused asset manager with

approximately $18.0 billion of assets under management. We will

contribute our existing revenue share, a portion of our interest in

an existing Hildene-managed fund, and $340.0 million in cash for

our interest. Hildene’s principals will contribute their ownership

interests and approximately $250.0 million of fund and related

equity interests. Additionally, subsequent to the transaction,

Hildene’s insurance underwriting and annuity reinsurance will

expand. Closing is expected in the third quarter of 2026, subject

to customary approvals.