Jefferies Financial Group Inc

We present our results as two reportable business segments:

Investment Banking and Capital Markets and Asset Management.

Additionally, corporate activities are fully allocated to each of

these reportable business segments. Beginning in fiscal 2024, we

now refer to “Merchant banking” as “Other investments” in our

Asset Management reportable segment.

Net revenues presented for our Investment Banking and Capital

Markets reportable segment include allocations of interest

income and interest expense as we assess the profitability of

these businesses inclusive of the net interest revenue or expense

associated with the respective activities, including the net

interest cost of allocated short- and long-term debt, which is a

function of the mix of each business’s associated assets and

liabilities and the related funding costs.

The remainder of our “Consolidated Results of Operations” is

presented on a detailed product and expense basis. Our

“Revenues by Source” is reported along the following business

lines: Investment Banking, Equities, Fixed Income and Asset

Management.

Foreign currency transaction gains or losses, debt valuation

adjustments on derivative contracts, gains and losses on

investments held in deferred compensation plans or certain other

corporate income items are not considered by management in

assessing the financial performance of our operating businesses

and are, therefore, not reported as part of our business segment

results.

N/M — Not Meaningful

(1)Allocated net interest is not separately disaggregated for Investment Banking

and Capital Markets. This presentation is aligned to our Investment Banking

and Capital Markets internal performance measurement.

(2)Allocated net interest represents an allocation to Asset Management of our

long-term debt interest expense, net of interest income on our Cash and cash

equivalents and other sources of liquidity. Allocated net interest has been

disaggregated to increase transparency and to make clearer actual

Investment return. We believe that aggregating Investment return and

Allocated net interest would obscure the Investment return by including an

amount that is unique to our credit spreads, debt maturity profile, capital

structure, liquidity risks and allocation methods.

Beginning in the fourth quarter of 2024, revenues from corporate

equity derivative transactions historically included within Other

investment banking net revenues were reclassified to Equities net

revenues as the underlying business has matured and has

started to generate meaningful revenues. Prior year amounts

have been revised to conform to this reclassification change to

the current year reporting.

Investment Banking Revenues

Investment banking is composed of revenues from:

•advisory services with respect to mergers and acquisitions,

debt financing, restructurings and private capital transactions;

•underwriting services, which include debt underwriting and

placement services related to investment grade debt, high yield

bonds, leveraged loans, emerging market debt, global

structured notes, municipal debt, mortgage-backed and asset-

backed securities; equity underwriting and placement services

related to equity offerings, preferred stock, and equity-linked

securities; and loan syndication;

•our 50% share of net earnings from our corporate lending joint

venture, Jefferies Finance;

•our 45% share of net earnings from our commercial real estate

joint venture, Berkadia (which includes commercial mortgage

origination and servicing);

•Foursight, our wholly-owned subsidiary engaged in the lending

and servicing of automobile loans (until the sale in April 2024);

•securities and loans received or acquired in connection with

our investment banking activities; and

•certain revenue-sharing agreements with SMBC primarily

associated with investment banking business opportunities.

Investment banking net revenues were$3.44 billion for 2024, up

51.6% compared to$2.27 billion for 2023. We have made

extensive investments in our investment banking business,

including a significant number of professional hires, particularly

at the managing director level, and have expanded our

capabilities across sectors and regions, which has led to market

share gains.

Advisory net revenues were$1.81 billion for 2024, up 51.1%

compared to$1.20 billion for 2023, driven by market share gains

attributable to an increase in transaction levels across most

sectors in the global mergers and acquisitions markets.

Total underwriting net revenues were$1.49 billion for 2024, up

53.4% compared to$970.5 million for 2023, due to increased

equity and debt underwriting activity as a result of a more robust

equity and general capital markets environment.

Other investment banking net revenues were$144.1 million for

2024, compared to$102.9 million for 2023. Results from our

share of the net earnings of our Jefferies Finance joint venture

increased, as net revenues were slightly improved and certain

investment and loan losses incurred in 2023 were not repeated.

Revenues from our share of the net earnings of our Berkadia joint

venture increased from the prior year period primarily driven by

higher interest income and servicing fees attributable to a larger

and growing loan servicing portfolio, as well as an increase in

sales volumes. In addition, during the current year, we recognized

a$24.2 million gain from the sale of Foursight. Other investment

banking revenue also includes net gains on investments and

revenue from our strategic alliance with SMBC.

Our investment banking backlog remains robust and we see

signs that underwriting and mergers and acquisitions activity in

the upcoming year will remain strong, although execution is

always uncertain and dependent on market conditions. Backlog

snapshots are subject to limitations as the time frame for the

realization of revenues from these expected transactions varies

and is influenced by factors we do not control. Transactions not

included in the estimate may occur, and expected transactions

may also be modified or cancelled.

Equities Net Revenues

Equities is composed of net revenues from:

•services provided to our clients from which we earn

commissions or spread revenue by executing, settling and

clearing transactions for clients;

•advisory services offered to clients;

•financing, securities lending and other prime brokerage

services offered to clients, including capital introductions and

outsourced trading;

•corporate equity derivative transactions; and

•wealth management services.

Equities net revenues were$1.59 billion for 2024, an increase of

39.8% compared to$1.14 billion in 2023, attributable to market

share gains, increased volumes and more favorable trading

opportunities driving stronger results across most of our equities

business lines. Results in our cash and electronic trading

businesses significantly increased over the prior year period.

Results in our prime services business were also strong and

revenue from equity derivative transactions has continued to

grow as the business continues to mature.

Fixed Income Net Revenues

Fixed income is composed of net revenues from:

•executing transactions for clients and making markets in

securitized products, investment grade, high-yield, distressed,

emerging markets, municipal, sovereign and emerging markets

securities and loans;

•customized products and corporate hedging and foreign

currency solutions through derivative products; and

•financing and other structuring services.

Fixed income net revenues were$1.17 billion for 2024, up 6.8%

compared to$1.09 billion in 2023, driven by stronger results from

our distressed trading and securitized markets businesses,

partially offset by reduced activity in our global structured

solutions business and lower results across our emerging

markets, credit e-trading, corporates, and municipal securities

businesses, which were particularly strong in the prior fiscal year.

Asset Management

We operate a diversified alternative asset management platform

offering institutional clients a range of investment strategies

directly and through our affiliated asset managers. We provide

certain of our affiliated asset managers access to our global

marketing and distribution platform, as well as operational

infrastructure and support. We often invest our own capital in the

strategies offered by us and associated third-party asset

managers in which we have an interest.

Asset management revenues include the following:

•management and performance fees from funds and accounts

managed by us;

•revenue from affiliated asset managers where we are entitled

to portions of their revenues and/or profits, as well as earnings

on our ownership interests in our affiliated asset managers;

•investment income from our capital invested in and managed

by us and our affiliated asset managers; and

•revenues from investments held in our other investments

portfolio, including consolidated operations from real estate

development activities, foreign exchange trading(Stratos

consolidated from the beginning of the fourth quarter of 2023)

and telecommunications activities related to Tessellis

(consolidated at the end of the fourth quarter of 2023) as well

as OpNet (from the at the end of the fourth quarter of 2023

through its sale in August 2024) and investments in certain

public equity securities and private companies. Prior fiscal

years include revenues from oil and gas activities until the spin-

off of our interest in Vitesse Energy in January 2023.

Asset management fees and revenues are impacted by the level

of assets under management and the performance return of

those assets, for the most part on an absolute basis, and, in

certain cases, relative to a benchmark or hurdle. These

components can be affected by financial markets, profits and

losses in the applicable investment portfolios and client capital

activity. Further, asset management fees vary with the nature of

investment management services. The terms under which clients

may terminate our investment management agreements, and the

requisite notice period for such termination, varies depending on

the nature of the investment vehicle and the liquidity of the

portfolio assets. In some instances, performance fees and

similar revenues are recognized once a year, when they become

fixed and determinable and are not probable of being

significantly reversed, typically in December. As a result, a

significant portion of our performance fees and similar revenues

generated from investment returns in a calendar year are

recognized in our following fiscal year.

(1)These amounts include our share of fees received by affiliated asset

management companies with which we have revenue and profit share

arrangements, as well as earnings on our ownership interest in affiliated asset

managers.

Asset management fees and revenues were$103.5 million for

2024, compared to$93.7 million for 2023, reflecting higher

management and performance fees on funds managed by us,

partially offset by a decrease in revenues from our strategic

affiliates.

Investment return was$212.2 million for 2024, compared to

$154.5 million for 2023, with the increase driven by improved

returns generated across a number of our fund strategies,

partially offset by losses of$36.2 million associated with our

investment in Weiss.

Other investments net revenues were$550.1 million for 2024,

compared to negative net revenues of$(10.3) million for 2023,

with the increase primarily driven by the consolidation of Stratos

and Tessellis in the fourth quarter of 2023, partially offset by the

spin-off of Vitesse Energy in January 2023. Additionally, during

the current year, Other investments net revenues includenet

gains on investment positions compared tolosses recognized in

the prior fiscal year on certain positions.

Assets Under Management

Aggregate net asset values or net asset value equivalent assets

under management:

(1)Revenues related to the investments made by us are presented in Investment

return within the results of our asset management businesses.

(2)Revenues from our share of fees received by affiliated asset managers are

presented in Revenue from strategic affiliates within the results of our asset

management businesses.

(3)We earn asset management fees as a result of the third-party investments,

which are presented in Asset management fees and revenues within the

results of our asset management businesses.

The tables below include third-party and other assets under

management by us, excluding those of our affiliated asset

managers.

Assets under management by predominant asset class:

Change in assets under management:

Assets under management are based on the net asset value or

net asset value equivalent of a fund plus unfunded capital

commitments to the fund, the net asset value equivalents of

separately managed accounts and the fair value of any invested

capital in our consolidated funds and separately managed

accounts. Assets under management is generally based on how

fee and revenues are calculated and the measure also includes

funds and separately managed accounts for which we do not

charge fees.

Our definition of assets under management is not based on any

definition contained in any of our investment management

agreements and differs from the manner in which “Regulatory

Assets Under Management” is reported to the SEC on Form ADV.

Asset Management Investments

Our asset management business makes seed and additional

strategic investments directly in alternative asset management

separately managed accounts and co-mingled funds where we

act as the asset manager or in affiliated asset managers where

we have strategic relationships and participate in the revenues or

profits of the affiliated manager.

Investments by type of asset manager:

(1)Due to the level or nature of an investment in a fund, we may consolidate that

fund; and accordingly, the assets and liabilities of the fund are included in the

representative line items in our consolidated financial statements. At

November 30, 2024 and 2023,$11.3 million and$11.9 million, respectively,

represent net investments in funds that have been consolidated in our

financial statements.

(2)Where we have investments in a separately managed account, the assets and

liabilities of such account are presented in our consolidated financial

statements within each respective line item.

Other

Other revenues include foreign currency transaction gains or

losses, debt valuation adjustments on derivative contracts, gains

and losses on investments held in deferred compensation plans

or certain other corporate income items that are not attributed to

business segments as management does not consider such

amounts in assessing the financial performance of our operating