On January 2, Ge Longhui Holdings (02166.HK) issued an announcement. According to the Group's strategic plan, in order to concentrate the company's resources on authorized distribution business, a representative of the Group will no longer serve as a director of Mingguan Hong Kong and a member of the board of directors of Mingguan Hong Kong, effective from December 31, 2023. Since the Group will no longer have most control over the board of directors of Mingguan Hong Kong after its resignation, Mingguan Group will terminate the merger in the Group's consolidated financial statements. The directors believe that the Group will benefit from the termination of the merger and avoid unnecessary costs, including (among others) legal and professional expenses, employee costs, related benefits expenses, and other administrative expenses. Smart IC Cloud has entered into new shareholder agreements with four shareholders to replace the existing shareholder agreements, and Mingguan Hong Kong's articles of association have also been amended to reflect the termination of the merger and changes brought about by this action.
The termination of the merger did not involve any costs or changes in Mingguan Hong Kong's equity. Since the income of Mingguan Group is excluded, it is expected that the Group's earnings will decrease after the merger is terminated. However, it is anticipated that the termination of the merger will not result in any significant changes in the group's equity and profits due to the company's shareholders.