| STATUTORY RESERVES AND RESTRICTED NET ASSETS |
28. STATUTORY RESERVES AND RESTRICTED NET ASSETS Pursuant to laws applicable to entities incorporated in the PRC, the Group’s subsidiaries in the PRC must make appropriations from after tax profit to statutory surplus reserve, which requires an annual appropriation of 10% of after tax profit (as determined under accounting principles generally accepted in the PRC at each year end) until the accumulative amount of statutory surplus reserve reaches 50% of a company’s registered capital. Subject to approval from the relevant authorities, the statutory surplus reserve may be used to offset losses or increase paid-in capital. During the years ended December 31, 2023, 2024 and 2025, appropriations to the statutory reserve have been made by the Group, which was RMB150.3 million, RMB115.9 million and RMB127.9 million, respectively. In addition, due to restrictions on the distribution of share capital from the Group’s PRC subsidiaries and also as a result of these entities’ unreserved accumulated losses, total restrictions placed on the distribution of the Group’s PRC subsidiaries’ net assets was RMB26.0 billion as of December 31, 2025. Cash transfers from the Company’s PRC subsidiaries to their parent companies outside of China are subject to PRC government control of currency conversion. Shortages in the availability of foreign currency may temporarily restrict the ability of the PRC subsidiaries and consolidated affiliated entities to remit sufficient foreign currency to pay dividends or other payments to the Company, or otherwise satisfy their foreign currency denominated obligations. The Company performed a test on the restricted net assets of consolidated subsidiaries in accordance with Securities and Exchange Commission Regulation S-X Rule 4-08 (e) (3), “General Notes to Financial Statements” and concluded that it was applicable for the Company to disclose the financial statements for the parent company. For the purpose of presenting parent only financial information, the Company records its investments in its subsidiaries under the equity method of accounting. Such investments are presented on the separate condensed balance sheets of the Company as “Investment in subsidiaries” and “Net assets of VIEs” and the income of the subsidiaries is presented as “Share of income of subsidiaries” and “Income of the VIEs”. Certain information and footnote disclosures generally included in financial statements prepared in accordance with U.S. GAAP have been condensed and omitted. The Company became parent company of the Group upon the completion of the Reorganization on December 28, 2018. The following disclosures present the financial positions of the parent company as of December 31, 2024 and 2025, the operation results for the years ended December 31, 2023, 2024 and 2025, and the statements of cash flows for the years ended December 31, 2023, 2024 and 2025. The Company did not have significant capital and other commitments, long-term obligations, or guarantees as of December 31, 2024 and 2025. 28. STATUTORY RESERVES AND RESTRICTED NET ASSETS (Continued) Condensed balance sheets of the parent company | | | | | | | As of December 31, | | | 2024 | | 2025 | | | RMB | | RMB | | | | (in thousands, except for | | | share and per share data) | ASSETS | | | | | Current assets: | | | | | Cash and cash equivalents | | 40,415 | | 646,909 | Short-term investments | | 1,946,964 | | 2,771,550 | Amounts due from subsidiaries and VIEs | | 1,476,789 | | 1,434,821 | Prepayments, receivables and other assets | | 7,641 | | 3,495 | Non‑current assets: | | | | | Investment in subsidiaries | | 66,782,487 | | 61,861,571 | Net assets of the VIEs | | 2,744,068 | | 2,931,280 | Long-term investments, net | | 362,992 | | — | TOTAL ASSETS | | 73,361,356 | | 69,649,626 | | | | | | LIABILITIES | | | | | Current liabilities | | | | | Accrued expenses and other current liabilities | | 168,079 | | 45,209 | Amounts due to subsidiaries and VIEs | | 1,869,461 | | 3,163,129 | TOTAL LIABILITIES | | 2,037,540 | | 3,208,338 | | | | | | SHAREHOLDERS’ EQUITY | | | | | Ordinary shares (US$0.00002 par value; 25,000,000,000 ordinary shares authorized, comprising of 24,114,698,720 Class A ordinary shares and 885,301,280 Class B ordinary shares as of both December 31, 2024 and 2025. 3,479,616,986 Class A ordinary shares issued and 3,337,567,403 Class A ordinary shares outstanding(1) as of December 31, 2024; 3,366,778,024 Class A ordinary shares issued and 3,233,808,859 Class A ordinary shares outstanding(1) as of December 31, 2025; and 145,413,446 and 139,447,770 Class B ordinary shares issued and outstanding as of December 31, 2024 and 2025, respectively) | | 461 | | 450 | Treasury shares | | (949,410) | | (848,433) | Additional paid‑in capital | | 72,460,562 | | 64,802,176 | Accumulated other comprehensive income | | 609,112 | | 290,029 | (Accumulated deficit) / Retained earnings | | (796,909) | | 2,197,066 | Total shareholders’ equity | | 71,323,816 | | 66,441,288 | TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | 73,361,356 | | 69,649,626 |
| (1) | Excluding the Class A ordinary shares registered in the name of the depositary bank for future issuance of ADSs upon the exercise or vesting of awards granted under our share incentive plans and the Class A ordinary shares repurchased but not cancelled in the form of ADSs. |
28. STATUTORY RESERVES AND RESTRICTED NET ASSETS (Continued) Condensed statements of comprehensive income of the parent company | | | | | | | | | For the Year Ended December 31, | | | 2023 | | 2024 | | 2025 | | | RMB | | RMB | | RMB | | | | (in thousands) | General and administrative expenses | | (45,781) | | (33,862) | | (92,616) | Interest income, net | | 52,460 | | (117) | | 6,647 | Share of income of subsidiaries | | 5,618,262 | | 3,734,104 | | 2,581,208 | Income of the VIEs | | 194,884 | | 252,952 | | 187,213 | Fair value changes through earnings on investments, net | | 45,235 | | 40,780 | | 95,325 | Foreign currency exchange loss | | (30,089) | | (40,093) | | (21,420) | Other income, net | | 48,253 | | 111,136 | | 237,618 | Income before income tax expense | | 5,883,224 | | 4,064,900 | | 2,993,975 | Income tax expense | | — | | — | | — | Net income | | 5,883,224 | | 4,064,900 | | 2,993,975 | Net income attributable to KE Holdings Inc.’s ordinary shareholders | | 5,883,224 | | 4,064,900 | | 2,993,975 | | | | | | | | Net income | | 5,883,224 | | 4,064,900 | | 2,993,975 | Other comprehensive income (loss) | | | | | | | Currency translation adjustments | | 574,223 | | 217,142 | | (429,040) | Unrealized gains on available-for-sale investments, net of reclassification | | 82,800 | | 147,668 | | 109,957 | Total comprehensive income | | 6,540,247 | | 4,429,710 | | 2,674,892 | Total comprehensive income attributable to KE Holdings Inc.’s ordinary shareholders | | 6,540,247 | | 4,429,710 | | 2,674,892 |
Condensed statements of cash flows of the parent company | | | | | | | | | For the Year Ended December 31, | | | 2023 | | 2024 | | 2025 | | | RMB | | RMB | | RMB | | | | (in thousands) | Net cash provided by operating activities | | 62,063 | | 194,920 | | 131,872 | Net cash provided by investing activities | | 6,933,723 | | 7,749,040 | | 9,950,599 | Net cash used in financing activities | | (6,576,333) | | (7,931,793) | | (9,462,344) | Effect of exchange rate changes on cash and cash equivalents | | (422,857) | | 18,834 | | (13,633) | Net increase (decrease) in cash and cash equivalents | | (3,404) | | 31,001 | | 606,494 | Cash and cash equivalents at the beginning of the year | | 12,818 | | 9,414 | | 40,415 | Cash and cash equivalents at the end of the year | | 9,414 | | 40,415 | | 646,909 |
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