Japan Securities Finance : INTEGRATED REPORT - 2.Value Creation Story (ir2025 02 e)

Value Creation Process

Inputs Business Model Outcomes Vision

Financial Capital

JSF's Unique Features

Business Activities

Generation of social activity

Stability:

• Financial foundation

• External credit ratings: R&I AA−

  JCR AA− S&P A

• Capital adequacy ratio (based on FIEA):

  367.5% (March 31, 2025)

  A leading securities finance company that addresses change and market needs by

  leveraging its core strengths in securities transactions and cross-border loans for margin transactions

  Securities markets

  In Japan

  Services that can link the needs of

  Outside Japan

  Providing liquidity in the form of funds

• Fulfilment of role as infrastructure that functions to link securities and financial markets

• Linkage of Japan with the world through supply of market liquidity

• Customer asset preservation in the trust banking business

• International cooperation with the Asian securities industry

• Collaborative empirical research with the University of Tokyo and other institutions

Deploy the Group's collective strengths to become the leader in securities finance

Human Capital

• Human resources with expertise and initiative

• Hiring of talent with diverse backgrounds

• Promotion of personnel across the Group

  Intellectual Capital

  securities markets and financial markets

  In Japan

  JSF

  Financial markets

  and securities to clients in and outside Japan

  Outside Japan

  Creation of economic value

• Achievement of Eighth Medium-Term Management Plan's goals: ROE of 8% or higher, consolidated ordinary profit of

  ¥15.0 billion or more (FY2024 results: ROE of 7.4%; Consolidated ordinary profit of

  ¥12.5 billion)

• Aim for a total payout ratio of 100% on a cumulative basis until ROE reaches 8%. Proactive payment of dividends with a

  Enhancement of corporate value

• Enhance presence in global

  Many years of accumulated experience:

  • Capabilities in managing systems for loans for margin transactions

  • Transaction proposal capabilities in securities financing operations

  • Risk management expertise

    Social and Relationship Capital

• Network with domestic and overseas financial institutions and institutional investors such as securities companies, banks and insurance companies

  Leveraging our unique capabilities by strengthening our earnings base and internal control system

  Strengthen the

Expand target markets and position in Asian and Western

margin transactions: Maintain margin transaction system in

of securities lending: Expand strengthen capabilities for

• Expand securities financing centered on further strengthening transactions focused on the securities themselves, and structuring transaction schemes

• Enhance presence and recognition in overseas markets: product offerings for cross-border transactions and strengthen markets

• Ensure stable operations and improved usability of loans for and update the operational framework of the loans for response to changes in the market environment

External Environment

target payout ratio of 70%

Contributions to shareholders and investors

• High resilience and stable performance

• Sustainable growth and enhancement of corporate value

• Stable and proactive shareholder returns

  markets as a securities finance company

• Innovate business and improve operational efficiency by leveraging digital technology

• Strengthen consolidated management of the Group with an emphasis on risk and return

• Strengthen the human resource base

• Promote diversity and inclusion

  • Vitalization of stock markets in Japan due to increased profitability

  • Shift toward rising interest rates in Japan

  • Demand for Japanese government bonds as high-quality liquid assets

  • Growing demand for funds

    • Progress of digitalization

    • Corporate governance reforms

Message from the Chairperson of the Board

of 8% by FY2028. The Company has developed a business portfolio centered on expanding securities financing, primarily loans for margin transactions, and has continued to strengthen corporate governance. Going forward, these efforts are slated for further acceleration. The Board of Directors has held a series of discussions on business strategies as well as on human capital and system investments to support the Company's long-term growth, and the outcomes of these discussions are reflected in the plan.

Starting in FY2026, initiatives under the new medium-term management plan will begin. We outside directors will continue monitoring progress toward management objectives and providing the necessary advice and oversight to support their achievement. I intend to support the Company in remaining a unique organization that combines agility and flexibility as it carries out the infrastructure functions of the securities and financial markets and pursues sustainable growth while maintaining strong financial soundness.

With a long-term perspective, I will work to support JSF's efforts to take on new challenges that enhance its corporate value on a sustainable basis and enable it to meet stakeholder expectations.

Succession Plans (Initiatives of the Nominating Committee)

We outside directors serve as a bridge between stakeholders and executive officers. We provide objective opinions from an independent, external perspective, bearing in mind JSF's corporate philosophy of contributing to the development of the securities and financial markets while maintaining a keen awareness of its public role.

As Chairperson of the Board, I always strive to enhance the effectiveness of deliberations and ensure that the Board of Directors fulfills its role as a "monitoring board." In 2019, JSF transitioned to a company with a Nominating

In 2023, the Company formulated and announced its approach to in-house human resource development with a view to selecting the management team and refined its

approach to the composition of the Board of Directors and the appointment of executive officers. For the key position of Representative Executive Officer & President, in addition to the qualities required of executive officers, candidates must demonstrate the ability to oversee execution, enhance corporate value, and have high ethical standards as a representative of a company fulfilling a public role.

Historically, JSF's management has been led by individuals with a public-sector background, reflecting its business portfolio centered on loans for margin transactions, which are an integral part of the securities

market infrastructure. However, for the successor to the current Representative Executive Officer & President, in light of the orientation toward business development with securities financing and other businesses positioned as growth areas and the overall composition of the executive team, the Company has adopted a policy of placing greater emphasis on knowledge and experience in securities and finance operations, including technological innovation. Discussions will focus primarily on internal candidates, including experienced hires, and will exclude individuals from the public sector. Based on this policy, the Board of Directors continues to discuss the preliminary list of successor candidates and the requisite qualifications.

Committee, etc. structure. The current Board of Directors comprises five outside directors and two inside directors. Through the use of a skills matrix tailored to the Company, the board composition reflects a multifaceted skill set

and diversity in age, gender, and areas of expertise.

Officer Compensation System and Determination of Individual Compensation (Initiatives of the Compensation Committee)

The primary role of the Board of Directors is to formulate basic management policies and strategies and to supervise overall management based on them. Drawing on the insights of directors with diverse backgrounds, discussions and exchanges of opinions at Board of Directors meetings are free, open, and substantive. In addition, a framework is in place for executive management to thoroughly consider the issues and opinions raised during these discussions and provide appropriate feedback.

I will continue to do my utmost as Chairperson to lead discussions and ensure that the Board of Directors meets stakeholder expectations.

Eighth Medium-Term Management Plan

The Compensation Committee decides on the

compensation of directors, executive officers, and corporate officers, as well as policies related to officer compensation and other matters.

The Company has established performance-linked compensation for executive officers to ensure that incentives are aligned with management policies.

Bonuses are positioned as a short-term incentive, with consolidated profit used as the reference indicator

to clarify management responsibility each fiscal year.

performance of the Company as a whole and individual

contributions to that performance are reflected.

Under this framework, for share-based compensation, the Company uses a Board Benefit Trust (BBT) scheme under which points determined in line with achievement of management goals in the medium-term management plan are granted. Until now, the Company deployed a system whereby shares corresponding to the number of accumulated points were delivered upon retirement. In August 2025, however, the system was partially revised.

Based on the Seventh Medium-Term Management Plan (FY2023-FY2025), formulated in February 2023, and the Long-Term Management Vision, formulated and announced in November of the same year, the

Company has been working to achieve its management goals of maintaining consolidated ordinary profit at a stable level of over ¥10.0 billion and ROE at a stable level above 5%, while aiming for further improvement

profit and ROE have steadily improved during the Seventh Medium-Term Management Plan period, reaching levels that exceeded the management goals.

Given the steady progress in enhancing profitability in preparation for new challenges, the Company first revised its Long-Term Management Vision when

formulating the Eighth Medium-Term Management Plan. The revised Long-Term Management Vision clearly states

Share-based compensation is positioned as a longterm incentive, using ROE and consolidated ordinary profit-the management goals of the medium-term management plan-as reference indicators. In addition, bonuses are divided into two components: one

linked to the Company's performance and the other reflecting individual evaluations, to ensure that both the

Board of Directors Initiatives

Specifically, the Company transitioned to a Board Benefit Trust-Restricted Stock (BBT-RS) system in which restricted stock corresponding to the number of points is delivered to executive officers and corporate officers at a fixed time each year. This change enhances the linkage of share-based compensation to performance and allows for clearer disclosure.

in both. The Company has focused on strengthening that the Company will work toward achieving ROE of 8%

corporate governance, reinforcing its earnings base, and diversifying its earnings structure, while also pursuing management with an awareness of the cost of capital and working to improve capital efficiency. It has also advanced efforts to further enhance human capital and strengthen internal controls.

As a result of these initiatives, consolidated ordinary

to further improve profitability and capital efficiency, and that it will maintain a total payout ratio of 100% as its shareholder return policy until ROE reaches 8%.

In the Eighth Medium-Term Management Plan (FY2026-FY2028), announced in November 2025, the Company set management goals of achieving consolidated ordinary profit of ¥15.0 billion and ROE

As part of formulating the Eighth Medium-Term Management Plan, the Board of Directors held extensive discussions in FY2025 on management policies and growth strategies for FY2026 and beyond, with a view to realizing the Company's corporate philosophy and the Vision of the Future Targeted by JSF. As Chairperson

of the Board, I am committed to ensuring that the

Board of Directors responds flexibly to changes in the securities and financial markets and engages in free and open discussion so that it can ensure the effective implementation of management policies,

supervise business execution, and strengthen corporate governance, thereby fulfilling its role as a monitoring board.

Overview of the Eighth Medium-Term Management Plan

Revision of the Long-Term Management Vision Management Goals of the Eighth Medium-Term Management Plan

The Company has updated its Long-Term Management Vision, taking into account changes in its business environment and the steady progress being made in strengthening its earnings base. The revised vision clearly states that the Company will work toward achieving ROE of 8% as it seeks to enhance profitability and capital efficiency, and that it will maintain a total payout ratio of 100% as its shareholder return policy until the ROE target is reached.

Long-Term Management Vision Targeted by JSF

Profitability Ordinary profit: ¥15.0 billion

• We aim to achieve our profitability targets by focusing on two key pillars: the stable operation and enhancement of usability in loans for margin

transactions, and the expansion of securities financing with a focus on further strengthening securities lending.

Capital Efficiency ROE: 8%

• We recognize that our cost of equity is in the low-6% range. We will strive to achieve returns that enable us to exceed this level while simultaneously enhancing profitability and maintaining financial soundness, as we work to improve ROE.

(Billions of yen)

15.0

Sixth Medium-Term Management Plan Seventh Medium-Term Management Plan

¥15.0 billion

(％)

8.0

Sixth Medium-Term Management Plan

1. Vision of the Future Targeted by JSF

   As Japan's only securities finance company supporting the infrastructure functions of securities and financial markets, JSF aims to be a distinct and unique company that operates with a high degree of agility and flexibility.

   It will achieve sustainable growth and enhance its corporate value, while maintaining strong financial soundness and contributing to the development of securities and financial markets.

   10.0

   5.0

   5.5

   Forecast

   7.1

   7.6

   11.0

   12.5

   13.2

   7.0

   6.0

   5.0

   4.0

   3.0

   gains)

   Seventh Medium-Term Management Plan

   7.4

   8%

   7.0

   5.7

   6.5% (excl. extraordinary

   4.4

   3.8

   3.0

   
   
   

   0 2.0

   2020 2021 2022 2023 2024 2025

   (Forecast)

   Eighth Medium-Term

   (FY)

   2020 2021 2022 2023 2024 2025 Eighth

   (Forecast) Medium-Term

   (FY)

2. Corporate Message

   Be unique. Be a pioneer.

   Strategy

   Management Plan

   Management Plan

3. Long-Term Direction

As Japan's only securities finance company, JSF will continue to agilely and flexibly address the trading needs of securities and financial market participants. Through its contributions to market development, JSF will seek to concentrate the collective efforts of its Group companies to sustain growth and enhance its corporate value, while maintaining strong financial soundness.

Under this management direction, JSF will continue striving to strengthen its earnings base and pursue

returns, JSF will maintain a total payout ratio of 100% until it achieves ROE of 8%, and will strive to enhance shareholder returns thereafter as well.

Through these management efforts, JSF aims to maintain a market valuation with a price-to-book ratio (PBR) in excess of 1x.

In addition, under its organizational design as a company with a Nominating Committee, etc., JSF will strive to strengthen its corporate governance by

Six Strategies for Achieving Management Goals

(5) Group management enhancement

identification of market needs

(2) Expansion of Securities Financing Centered on Further Strengthening of Securities Lending

• Expansion of transactions focused on securities

• Strengthening transaction scheme development capabilities

1. Stable Operations and Enhanced Usability of Loans for Margin Transactions as Part of the Securities Market Infrastructure

   • Adapting systems to changes in market conditions

   • Proactive communication on loans for margin transactions and accurate

(6) Talent enhancement

stable and steady improvement of its capital efficiency, while remaining mindful of the cost of capital. JSF aims to achieve ROE of 8% during the period of the Eighth Medium-Term Management Plan, and will continue to work toward steady improvement thereafter as well.

At the same time, with regard to shareholder

tackling sustainability issues while focusing on further improvement of the effectiveness of deliberations by its Board of Directors and respective committees, the further enhancement of information disclosure, and the development of a robust human capital base.

(4) Business Innovation and

Operational Efficiency through Digital Technology Utilization

• Strategic IT investment

• Continuing medium- to long-term initiatives such as the practical application of distributed ledger technology (DLT)

(3) Enhancing Presence and

Recognition in Overseas Markets

• Expanding target markets and products for cross-border transactions

• Enhancing position as a key player in Asia

  Main Measures and Initiatives Shareholder Return Policy
  
  
  

  Promoting Sustainability Management

We aim to achieve sustainable growth through initiatives in each business area aligned with our management strategies, supported by investments in human capital and systems.

• To enhance shareholder returns, JSF will aim for a total payout ratio of 100% until it achieves ROE of 8%, by paying dividends and flexibly repurchasing shares.

  Dividend payout ratio of around 70%

  Dividends

Purchase on the market

100%

Driving IT strategies to

support management and operations

Promoting Diversity

& Inclusion (D&I)

• Dividends will be paid proactively, with a dividend payout ratio of around 70% as a guideline.

Talent Portfolio

• Promoting experienced hires and increasing specialized talent ratio

Offensive IT Investment

Strategic investments aligned with changes in the business portfolio

Loans for Margin Transactions

• Maintaining the presence of loans for margin transactions in the stock market by enhancing usability for market participants

  Securities Financing

• Enhancing quality and driving revenue growth by further developing overseas clients and expanding the range of handled foreign securities

• Strengthening position as a key player in Asia

  Securities Investment

• Strengthening the framework to secure revenue by building a strong risk-return portfolio as a core pillar of the business portfolio

  New Business Fields (Medium- to Long-Term Initiatives)

• Steady growth in fund administration services

• Ongoing efforts toward business expansion in emerging markets (Indonesia) and the practical application of DLT

  Trust Banking (JSF Trust & Banking)

• Further growth in trust operations through expansion in adjacent niche areas

• Strengthening Group collaboration in securities financing

(Yen)

• Adding and improving

  functions to strengthen competitiveness

• Introducing new technologies to deliver new value

• Implementing IT tools to promote DX

100

Ordinary dividend per share Special dividend per share

(Billions of yen)

12.0

Profit attributable to owners of parent Share buybacks

Training & Career Path

• Strengthening talent with a focus on expertise and proactivity

80 60

40

20 0

Dividend payout ratio

60.1%

53.0% 47.2% 50.0%

67.4%

80

68

10.0

69.7%

8.0

6.0

4.0

2.0 0

3.9

Dividends

5.1

5.9

8.0

3.0

10.3

9.4

2020 2021 2022 2023 2024 2025

Forecast

(FY)

2020 2021 2022 2023 2024 2025

2.8

3.0

Forecast

(FY)

Evaluation & Rewards

• Actively evaluating employees' contributions to task execution

Defensive IT Investment

Investments supporting smooth operations and business continuity

Workplace Improvement

• Balancing work with childcare and caregiving, utilizing telework

• Promoting a comfortable work environment

• Maintaining and ensuring

  stable operation of existing systems including IT upgrades

• Strengthening measures against cyberattacks and data breaches

• Expanding BCP frameworks

Aiming to be a company that earns the trust of all stakeholders

Message from the Officer Responsible for Corporate Strategy

Management Strategy

In the Seventh Medium-Term Management Plan, in addition to accelerating and deepening our initiatives to date, we have been strengthening the human resource base, and making management efforts toward the management goal we set for ROE: maintain at a stable level above 5% and aim for further improvement. Based on these ongoing management efforts, we formulated

our Eighth Medium-Term Management Plan in November 2025. Here I will explain our business portfolio, our efforts to implement management with an awareness of the cost of equity and stock price, as well as our growth strategy, shareholder returns, and our initiatives for corporate governance and sustainability.

FY2024 Consolidated Financial Results

Business Portfolio

The JSF Group is keenly aware of its public role as part of the infrastructure of Japan's securities and financial

markets, and provides a variety of related services to meet the diverse needs of the securities and financial sectors.

These services mainly involve securities financing centered on loans for margin transactions, a licensed business. JSF is the only securities finance company in Japan authorized to offer loans for margin transactions. In our securities financing operations, we play a unique role by focusing

on the provision of liquidity in the form of securities,

a physical asset, and by acting as a bridge between domestic and overseas markets. Going forward, we will continue to leverage these distinctive features in our loans for margin transactions business.Our business portfolio also encompasses securities investment, trust banking and real estate leasing. We have been using these businesses to diversify our revenue sources and cultivate multiple earnings drivers to stabilize revenue as we continue to pursue more sustainable growth and work to achieve the Vision of the Future Targeted by JSF.

The economic environment in FY2024 was characterized by a continued, moderate recovery supported by factors

and trust banking operations.

As a result, consolidated results for FY2024 saw increases

Efforts to Implement Management That is Conscious of Cost of Capital and Stock Price

including stronger corporate earnings and increased inbound demand. Furthermore, signs of increased demand for funding emerged in Japan's financial markets, and market interest rates began to rise as the Bank of Japan ended its negative interest rate policy.

Japan's stock markets turned bullish following favorable corporate earnings reports. However, after the Bank of Japan announced an additional interest rate hike, expectations of a narrowing interest rate gap between Japan and the United States led to a correction. The market then rebounded, but concerns about U.S. tariff policies and other issues kept prices subdued toward the end of the fiscal year. Japan Securities Finance is working to enhance its corporate value over the medium to long term under a business portfolio that includes securities

in all profit categories to record highs. Operating profit rose 11.3% year on year to ¥11,329 million, ordinary profit

increased 13.4% to ¥12,507 million, and profit attributable to owners of parent increased 29.2% to ¥10,375 million.

During FY2024, results were solid for securities financing such as loans for margin transactions and equity repo transactions, backed by factors including increased demand for funds in a strong stock market and the shift to an environment of fluctuating market interest rates. In

addition, management trust services continued to perform well in the trust banking business. We are counting on the continued understanding and support of our stakeholders as we strive to enhance JSF's corporate value over the medium to long term with our public role in mind, and

to strengthen corporate governance and advance our

Based on the Seventh Medium-Term Management Plan (FY2023-FY2025) formulated in February 2023 and the Long-Term Management Vision formulated and

announced in November 2023, JSF is working to achieve its management goals of maintaining a stable ROE of 5% and ordinary profit exceeding ¥10 billion, with a continued focus on further enhancing these metrics. As a Prime Market-listed company that supports the infrastructure of the securities and financial markets, we have strengthened corporate governance and pursued improvements in profitability and capital efficiency to achieve sustainable growth and enhance corporate value over the medium

to long term. ROE for FY2024 was 7.44%, or 6.50% on a core basis before adjustment for extraordinary income,

significantly exceeding the management goal in the Seventh Medium-Term Management Plan. In addition, market valuation of the Company has steadily improved, with PBR generally above 1.0 times and total shareholder return (TSR) significantly outperforming TOPIX.

Given these achievements, in November 2025 we formulated and announced the Eighth Medium-Term Management Plan, which targets even higher levels of profitability and capital efficiency. After estimating the cost of equity in the low 6% range, we set management goals of

¥15 billion for consolidated ordinary profit and 8% for ROE.

We will continue to steadily strengthen our earnings base and improve capital efficiency.

financing, which centers on loans for margin transactions,

sustainability initiatives.

ROE and PBR Total Shareholder Return (Index*)

FY2024 Consolidated Results (Millions of yen)

(%)

7

ROE (Left axis) PBR (Right axis)

7.44

(Times)

1.4

(%)

500

JSF TOPIX (incl. dividends)

6

5

4

3 3.03

3.79

4.36

5.73

0.97

7.00

(Forecast)

1.09 1.12

1.2

1.0

0.8

0.6

400

300

200

198.1

224.1

367.1

406.6

213.4

430.4

254.8

2 0.54

1 0

0.59 0.64

0.4

0.2 0

167.1

216.7

Year ended Mar. 2021

Year ended Mar. 2022

Year ended Mar. 2023

Year ended Mar. 2024

Year ended Mar. 2025

Nine months ended Sep. 2025

Note: Premium charges (lending fees) included in operating revenue are received from borrowers when lending securities as part of loans for margin transactions, and the same amount is paid to the lender as premium charges (borrowing fees) and recorded as an operating expense. Therefore, although changes in premium charges increase or decrease operating revenue, lending fees and borrowing fees offset each other and thus do not affect profit. To facilitate understanding of the Company's business performance, we have presented operating revenue and operating expenses excluding premium charges on lending and borrowing securities.

Notes: PBR is the value at the end of each fiscal year.

ROE for the nine months ended September 2025 has been calculated using the estimated consolidated results announced on May 15, 2025, and PBR for September 2025 has been calculated using the stock price on September 30, 2025.

Growth Strategy Corporate Governance Initiatives

Our central sales strategy in the Seventh Medium-Term Management Plan is to further strengthen the loans for margin transactions business and securities financing.

secure stable earnings by accumulating carry income through fund procurement on favorable terms backed by our high creditworthiness. We will conduct risk management within

Composition of the Board of Directors

JSF transitioned to a company with a Nominating Committee, etc. in FY2019, and the Board of Directors currently comprises five outside directors, two of whom are women, and two inside directors. Accounting

for about 70% of board members, outside directors play a central role in formulating management policies and in making personnel and compensation decisions involving executive management.

Securities financing is influenced not only by equity

our risk appetite framework (RAF) to appropriately control

Initiatives of the Board of Directors and the Nominating Committee

prices but also by fluctuations in interest rates. In Japan, the end of the negative interest rate policy has created an environment in which interest rate mechanisms are functioning again. As a result, our lending interest rates have increased, and we are seeing signs of increased funding demand from our clients.

To respond appropriately to this change in the environment, we will work to improve the quality of our internal control through focusing on the balance between risk and return, and to enhance the stability of the middle and back-office operations in tandem with front-office sales activities. We will also secure stable revenues in

the other businesses that make up our portfolio. In the securities investment business, as part of the asset-liability management (ALM) necessary for securities financing, including loans for margin transactions, our basic policy is to

Shareholder Returns

We remain committed to enhancing shareholder returns. Our goal through FY2025 is to achieve a total payout ratio of 100% on a cumulative basis through the payment of dividends and flexible implementation of share buybacks.

market risk and expand stable funding methods, including foreign currencies, as well as focusing efforts on liquidity management.

Regarding subsidiaries, the trust banking business will continue to flexibly meet transaction needs for preservation trusts-including client money segregation trusts-and management trusts across a range of fields, while maintaining a strong presence in niche sectors and conducting distinctive operations. The real estate

leasing business will continue to steadily promote leasing of buildings owned by the JSF Group (for details of subsidiary businesses, see pages 36-37).

During the Eighth Medium-Term Management Plan, we will further accelerate and develop existing initiatives, centered on expanding securities financing, primarily loans for margin transactions.

share buybacks, resulting in a total payout ratio of 96.8%.

For FY2025, we continue to aim for a total payout ratio of 100% through dividends and flexible implementation

of share buybacks based on our shareholder return

In FY2024, having steadily achieved the management goals set out in the Seventh Medium-Term Management Plan and recognizing that management efforts to date have produced solid results, the Board of Directors engaged in discussions and took other steps toward

formulating the next medium-term management plan, while also working to set appropriate agenda items aimed at enhancing corporate value over the medium to long term.

Regarding nominations for director, executive officer and other positions, the Board of Directors and the Nominating Committee finalized the list of director candidates to be submitted to the General Meeting of Shareholders, and the candidates for executive officers and corporate officers for FY2025. Specifically, the appointment process

Officer Compensation

JSF has structured officer compensation to align incentives with its management policies. Performance-linked compensation is divided into short-term and long-term incentives, with bonuses positioned as a short-term incentive and share compensation as a long-term incentive. Bonuses are based on reference indicators for performance, and

Status of Dialogue with Shareholders

As a Prime Market-listed company, JSF follows Japan's Corporate Governance Code in proactively engaging in dialogue with shareholders to support sustainable growth and the enhancement of corporate value over the medium to long term. The three main themes and matters of interest that came up in dialogue with shareholders in FY2024 were management strategy, business model and changes in the external environment. For management strategy, we mainly discussed our medium-term management plan and shareholder return policy. For business model, we discussed initiatives to strengthen our business foundation by diversifying revenue sources and establishing multiple

involves discussion by the Nominating Committee of a preliminary list of candidates, which is narrowed down to a short list from which final decisions are made following interviews with the individual candidates.

To improve the transparency of this process, the Company has disclosed the status of the nomination process, particularly the active involvement of outside directors and the approach to internal talent development with a view to the selection of management executives (details on page 60). In addition, the duties of executive officers were redefined to make them easier for stakeholders to understand, and with a view to making

the nomination process more transparent the Nominating Committee discussed matters such as a preliminary list of candidates for the succession plan for the current Representative Executive Officer & President.

individual evaluations have also been incorporated. Furthermore, JSF partially revised its executive compensation system in August 2025 to enhance the linkage of share-based compensation to performance and allow for clearer disclosure (details on pages 61-62).

revenue drivers. For changes in the external environment, we mainly discussed the impact of rising interest rates on profitability. Many shareholders expressed their appreciation for the Company's initiatives to date. The insights gained through dialogue were discussed by the Board of Directors, after which the board took action on insights that it determined the Company should incorporate (details on page 62).

The status of dialogue with shareholders is promptly reported to the Board of Directors after each such opportunity so that the board and various committees can also take into account the feedback of shareholders in their discussions.

Our policy is to actively pay dividends, with a target

policy during the period of the Seventh Medium-Term

Enhancement of Information Disclosure and Support for Outside Directors

payout ratio of 70%. Under this policy, we increased dividends for FY2024 by ¥37 from the previous fiscal year to ¥84 per share, including a special dividend of ¥16 per share. In addition, we conducted ¥3.0 billion in on-market

Management Plan. Accordingly, dividends for FY2025 will total ¥80 per share, including a special dividend of ¥12 per share.

In FY2024, as part of our initiatives to improve our information tools, we

renewed the Company website and adopted a new logo. We also refine the content of our integrated report each year to enable stakeholders to gain a more comprehensive understanding of our initiatives. We will continue to focus on providing information to all stakeholders, including shareholders, investors, and business partners.

Furthermore, with the addition of new directors in FY2025, we will

continue with initiatives to enhance support for outside directors by the secretariat of the Board of Directors and thereby improve the board's effectiveness.

We will continue to develop a corporate governance system suited to our operating environment and business portfolio, and remain committed to the sustainable enhancement of corporate value.

Shareholder Returns

80

3.8

3.5

16

60

3.0

40

2.3

JSF will actively pay dividends

during the period from FY2024 through FY2025, aiming for a target payout ratio of 70%

20

0

3.0

2.5

2.0

1.5

1.0

0.5

0

68

3.0

2.8

80

Ordinary dividend per share

Special dividend per share

Share buyback amount

Initiatives for Sustainability

(Yen) 100

(Left axis)

2021

2022

2023

(Left axis)

2024

(Right axis)

2025 (Forecast) (FY)

(Billions of yen)

4.0

We also take a proactive approach to key issues related to sustainability.

Developing and maintaining the infrastructure that forms the foundation of socioeconomic activity is a key element in realizing a sustainable society. It is also one of the Sustainable Development Goals (SDGs) set by the United Nations, and is an area in which JSF believes it is particularly well positioned to contribute as a company that has long supported infrastructure functions of Japan's securities and financial markets. Based on that

market infrastructure overseas. Moreover, as part of our promotion of academic research activities through industry-academia collaboration, we conducted joint demonstration tests with the University of Tokyo on the

potential application of distributed ledger technology to securities financing transactions. We published a paper summarizing the research findings, presented the results at an academic conference overseas, and engaged in ongoing discussions of other topics. We also recognize that addressing climate change is a critical issue.

Note: Dividends per share for FY2025 are an estimate, and the share buyback amount represents the upper limit.

Regarding shareholder returns during the Eighth Medium-Term Management Plan, we are targeting a total return ratio of 100% through dividends and the flexible implementation of share buybacks until we achieve ROE of 8%. Additionally, JSF plans to actively pay dividends with a target payout ratio of 70%.

belief, in addition to the governance initiatives described above, we are carrying out environmental and social initiatives. Specifically, we continue to provide technical and other assistance to an Indonesian securities finance company as a contribution to securities and financial

To Our Stakeholders

We respectfully request the continued understanding and support of our stakeholders as we work to enhance corporate value over the medium to long term with our

Although our CO2 emissions have never been large due to the nature of our businesses, in line with the TCFD recommendations, we disclose information on climate change on our corporate website and elsewhere (details on page 47).

public role in mind, strengthen corporate governance, and advance our sustainability initiatives.