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SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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FORM 20-F

|(MARK ONE) |                                                                                                                              
|---------- | -----------------------------------------------------------------------------------------------------------------------------
|o          | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934                               
|           | OR                                                                                                                           
|ý          | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED APRIL 30, 2002
|           | OR                                                                                                                           
|o          | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                                     

COMMISSION FILE NUMBER 0-19696

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Merant plc(Exact name of Registrant as specified in charter)

England and Wales(Jurisdiction of incorporation or organization)

Abbey View,
Everard Close,
St. Albans, Hertfordshire
AL1 2PS, England(Address of principal executive offices)

Securities
registered or to be registered pursuant to Section 12(b) of the Act: None

Securities registered or to be registered pursuant to Section 12(g) of the Act: Ordinary shares of 2p each

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

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Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:



Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



Indicate
by check mark which financial statement item the registrant has elected to follow.



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TABLE OF CONTENTS

|                                                              |  |                                                         |  | Page
|------------------------------------------------------------- |  | ------------------------------------------------------- |  | ----
|GENERAL INTRODUCTION                                          |  | 4                                                      
|FORWARD-LOOKING STATEMENTS                                    |  | 5                                                      
|PART I                                                        |  |                                                        
|ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |  | 6                                                      
|ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE               |  | 6                                                      
|ITEM 3. KEY INFORMATION                                       |  | 6                                                      
|A.                                                            |  | Selected Financial Data                                 |  | 6   
|B.                                                            |  | Capitalization and Indebtedness                         |  | 8   
|C.                                                            |  | Reasons for the Offer and Use of Proceeds               |  | 8   
|D.                                                            |  | Risk Factors                                            |  | 8   
|ITEM 4. INFORMATION ON THE COMPANY                            |  | 15                                                     
|A.                                                            |  | History and Development of the Company                  |  | 15  
|B.                                                            |  | Business Overview                                       |  | 17  
|C.                                                            |  | Organizational Structure                                |  | 19  
|D.                                                            |  | Property, Plants and Equipment                          |  | 19  
|ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS          |  | 20                                                     
|A.                                                            |  | Operating Results                                       |  | 21  
|B.                                                            |  | Liquidity and Capital Resources                         |  | 26  
|C.                                                            |  | Research and Development, Patents and Licenses, etc.    |  | 27  
|D.                                                            |  | Trend Information                                       |  | 27  
|ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES            |  | 27                                                     
|A.                                                            |  | Directors and Senior Management                         |  | 27  
|B.                                                            |  | Compensation                                            |  | 29  
|C.                                                            |  | Board Practices                                         |  | 31  
|D.                                                            |  | Employees                                               |  | 33  
|E.                                                            |  | Share Ownership                                         |  | 34  
|ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS     |  | 35                                                     
|A.                                                            |  | Major Shareholders                                      |  | 35  
|B.                                                            |  | Related Party Transactions                              |  | 35  
|C.                                                            |  | Interests of Experts and Counsel                        |  | 35  
|ITEM 8. FINANCIAL INFORMATION                                 |  | 36                                                     
|A.                                                            |  | Consolidated Statements and Other Financial Information |  | 36  
|B.                                                            |  | Significant Changes                                     |  | 37  
|ITEM 9. THE OFFER AND LISTING                                 |  | 37                                                     
|A.                                                            |  | Offer and Listing Details                               |  | 37  
|B.                                                            |  | Plan of Distribution                                    |  | 38  
|C.                                                            |  | Market                                                  |  | 38  
|D.                                                            |  | Selling Shareholders                                    |  | 38  
|E.                                                            |  | Dilution                                                |  | 38  
|F.                                                            |  | Expenses of the Issue                                   |  | 38  
|ITEM 10. ADDITIONAL INFORMATION                               |  | 38                                                     
|A.                                                            |  | Share Capital                                           |  | 38  
|B.                                                            |  | Memorandum and Articles of Association                  |  | 39  
|C.                                                            |  | Material Contracts                                      |  | 39  
|D.                                                            |  | Exchange Controls                                       |  | 39  
|E.                                                            |  | Taxation                                                |  | 40  
|F.                                                            |  | Dividends and Paying Agents                             |  | 44  

2

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|G.                                                                                    |  | Statement by Experts   |  | 45
|------------------------------------------------------------------------------------- |  | ---------------------- |  | --
|H.                                                                                    |  | Documents on Display   |  | 45
|I.                                                                                    |  | Subsidiary Information |  | 45
|ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   |  | 45                    
|ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       |  | 46                    
|PART II                                                                               |  | 46                    
|ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              |  | 46                    
|ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |  | 46                    
|ITEM 15. CONTROLS AND PROCEDURES                                                      |  | 46                    
|ITEM 16. [RESERVED]                                                                   |  | 46                    
|PART III                                                                              |  |                       
|ITEM 17. FINANCIAL STATEMENTS                                                         |  | 47                    
|ITEM 18. FINANCIAL STATEMENTS                                                         |  | 82                    
|ITEM 19. EXHIBITS                                                                     |  | 82                    

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GENERAL INTRODUCTION

Merant plc publishes annual reports containing annual audited consolidated financial statements and opinions on the financial statements by independent auditors.
We prepare our financial statements in accordance with United Kingdom Generally Accepted Accounting Practices (U.K. GAAP), and expressed in pounds sterling. In addition, the Company recognises revenue
in accordance with United States Generally Accepted Accounting Principles (U.S. GAAP), which is viewed as being more stringent and is accepted by U.K. GAAP. U.K. GAAP differs from U.S. GAAP in,
amongst other areas, the treatment of mergers, of goodwill and other intangibles acquired in connection with business combinations, and in other disclosures and presentation. An analysis of
differences is set forth in note 26 to our financial statements, included elsewhere in this Form 20-F. Effective from the fourth quarter of the fiscal year ended
April 30, 2002, we no longer publish financial statements prepared in accordance with U.S. GAAP.

We
also publish quarterly updates and semi-annual reports containing unaudited financial information prepared on the same basis as the annual audited consolidated financial
statements.

We
deliver each of these reports to The Bank of New York, which acts as depositary under a deposit agreement. The depositary generally will mail these reports to record-holders of
American depositary receipts, or ADRs. We also furnish to the depositary all notices of shareholders' meetings and other reports and communications that are made generally available to our
shareholders. The depositary makes these communications available for inspection by ADR record-holders and mails notices of shareholders' meetings to them.

As
a foreign private issuer in the United States, we are required to file an annual report on Form 20-F and furnish certain other information. The Securities and
Exchange Commission (SEC) maintains a web site located at http://www.sec.gov. that contains a searchable database of filings, reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC. Foreign private issuers are not currently required to file electronically, but we have done so since March 1997 on a voluntary basis. Effective
November 4, 2002, we will be required to do so.

You
may obtain a copy of this Form 20-F without charge, upon written request to "Investor Relations" at our offices:

3445,
NW 211th Terrace,
Hillsboro, Oregon, 97124, U.S.A.,

or

Abbey
View,
Everard Close,
St.Albans, AL1 2PS, U.K.

The
financial statements and other financial information in this Form 20-F do not comprise "statutory accounts" within the meaning of Section 240 of the
Companies Act 1985 of Great Britain. Statutory accounts for the year ended April 30, 2002 will be delivered to the Registrar of Companies for England and Wales on or before October 31,
2002. Statutory accounts for the fiscal years ended April 30, 2001 and 2000 have been delivered previously to the Registrar of Companies for England and Wales. The auditors' reports on these
accounts were unqualified.

In
this Form 20-F we use the terms 2002 and fiscal 2002 to mean the fiscal year ended April 30, 2002, and we use similar terms to refer to prior years. We use
the terms pounds sterling, £, pence and p to refer to the U.K. currency, and the terms U.S. dollar and $ to indicate the U.S. currency.

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Merant
is a trademark, and PVCS is a registered trademark, of Merant. Other trademarks belonging to other companies appear in this report and are the property of their respective owners.

FORWARD-LOOKING STATEMENTS

We have made forward-looking statements in this annual report about our industry, our business, our plans and objectives and our financial condition and results
of operations that are based on the current expectations, assumptions, estimates and projections of our management and on information currently available to us. These statements constitute
forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to various risks and uncertainties, known and unknown, that could cause our actual
results and financial position to differ materially from
the information presented in this annual report. When used in this document, the words "may," "anticipate," "objective," "believe," "intend," "estimate," "expect," "realize," "likely," "unlikely" and
similar expressions, as they relate to us, or to our management, are intended to identify forward-looking statements.

Forward-looking
statements reflect our current view with respect to future events and are subject to risks, uncertainties and assumptions. Many factors could cause our actual results,
performance or achievements to be materially different from the future results, performance and achievements that may be expressed or implied by the forward-looking statements, including, among
others, those set forth elsewhere in this annual report, especially under Item 3.B "Risk Factors", in our reports filed with the SEC under the Securities Exchange Act of 1934 and the following:



Should
one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this annual
report as anticipated, believed, estimated, expected, planned or intended. We disclaim any obligation to update the forward-looking statements contained herein.

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PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not
required.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not
required.

ITEM 3. KEY INFORMATION

The
table below sets forth selected consolidated financial data at the dates and for the periods indicated. This data has been derived from our audited financial statements, prepared in
accordance
with U.K. GAAP, expressed in pounds sterling, and restated in accordance with current accounting policies.

|                                                                                   |           | Years ended April 30, |         | Three months
ended
April 30,
1998 |         |         |        
|---------------------------------------------------------------------------------- | --------- | --------------------- | ------- | --------------------------------- | ------- | ------- | -------
|
|
|
|OPERATING RESULTS FOR THE PERIOD:                                                  |           |                       |         |                                   |         |         |        
|Revenue                                                                            |           | 118,275               |         | 215,433                           |         | 227,283 |        
|Operating profit(loss)                                                             |           | (45,398               | )       | (39,762                           | )       | (38,132 | )      
|Operating profit (loss) from continuing operations                                 |           | (41,953               | )       | (28,798                           | )       | (41,456 | )      
|Profit(loss) for the period                                                        |           | (62,026               | )       | (50,914                           | )       | (35,461 | )      
|(Loss)/earnings per share: basic                                                   |           | (49.6                 | )p      | (37.9                             | )p      | (24.9   | )p     
|(Loss)/earnings per share: diluted                                                 |           | (49.6                 | )p      | (37.9                             | )p      | (24.9   | )p     
|(Loss)/earnings per share from continuing operations: basic                        |           | (44.3                 | )p      | (21.3                             | )p      | (27.3   | )p     
|(Loss)/earnings per share from continuing operations: diluted                      |           | (44.3                 | )p      | (21.3                             | )p      | (27.3   | )p     
|Weighted average number of shares used in computing earnings per share (thousands) |           |                       |         |                                   |         |         |        
|                                                                                   | Basic:    |                       | 125,092 |                                   | 134,305 |         | 142,163
|                                                                                   | Dilutive: |                       | 125,092 |                                   | 134,305 |         | 142,163
|FINANCIAL POSITION AT END OF PERIOD:                                               |           |                       |         |                                   |         |         |        
|Cash and bank deposits                                                             |           | 71,620                |         | 61,200                            |         | 79,543  |        
|Total assets                                                                       |           | 130,814               |         | 231,044                           |         | 304,893 |        
|Total shareholders funds                                                           |           | 59,215                |         | 128,466                           |         | 198,484 |        
|Total number of shares in issue                                                    |           | 115,027               |         | 134,963                           |         | 149,389 |        
|Share capital                                                                      |           | 2,300                 |         | 2,699                             |         | 2,988   |        
|FINANCIAL CONDITION:                                                               |           |                       |         |                                   |         |         |        
|Working capital                                                                    |           | 38,619                |         | 19,454                            |         | 51,867  |        

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The
table below sets forth selected consolidated financial data at the dates and for the periods indicated, prepared in accordance with U.S. GAAP and expressed in pounds sterling:

|                                                                                   |           | Years ended April 30, |         | Three months
ended
April 30,
1998 |         |         |        
|---------------------------------------------------------------------------------- | --------- | --------------------- | ------- | --------------------------------- | ------- | ------- | -------
|
|
|
|RESULTS OF OPERATIONS                                                              |           |                       |         |                                   |         |         |        
|Revenue                                                                            |           | 87,068                |         | 95,075                            |         | 80,470  |        
|Profit(loss) from operations                                                       |           | (13,784               | )       | (5,518                            | )       | (4,168  | )      
|Profit(loss) from continuing operations                                            |           | (15,185               | )       | (2,960                            | )       | (16,445 | )      
|Profit(loss) for the period                                                        |           | (18,680               | )       | (18,427                           | )       | (1,497  | )      
|(Loss)/earnings per share: basic                                                   |           | (14.9                 | )p      | (13.7                             | )p      | (1.1    | )p     
|(Loss)/earnings per share: diluted                                                 |           | (14.9                 | )p      | (13.7                             | )p      | (1.1    | )p     
|(Loss)/earnings per share from continuing operations: basic                        |           | (22.9                 | )p      | (3.4                              | )p      | (9.7    | )p     
|(Loss)/earnings per share from continuing operations: diluted                      |           | (22.9                 | )p      | (3.4                              | )p      | (9.7    | )p     
|Weighted average number of shares used in computing earnings per share (thousands) |           |                       |         |                                   |         |         |        
|                                                                                   | Basic:    |                       | 125,263 |                                   | 134,305 |         | 142,163
|                                                                                   | Dilutive: |                       | 125,263 |                                   | 134,305 |         | 142,163
|FINANCIAL POSITION AT END OF PERIOD:                                               |           |                       |         |                                   |         |         |        
|Cash and cash equivalents                                                          |           | 71,620                |         | 61,200                            |         | 79,543  |        
|Total assets                                                                       |           | 111,082               |         | 175,018                           |         | 209,386 |        
|Shareholders' equity                                                               |           | 39,483                |         | 72,440                            |         | 102,977 |        
|Total number of shares in issue                                                    |           | 115,027               |         | 134,963                           |         | 149,389 |        
|Share Capital                                                                      |           | 2,300                 |         | 2,699                             |         | 2,988   |        
|FINANCIAL CONDITION:                                                               |           |                       |         |                                   |         |         |        
|Working capital                                                                    |           | 38,619                |         | 19,454                            |         | 51,867  |        

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NOTES:

Exchange
rates

We
prepare our financial statements in accordance with U.K. GAAP, and expressed in pounds sterling. On October 11, 2002, the latest practicable date before printing this report,
the noon buying

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rate was $1.5605 per £1. The following table shows the high and low noon buying rates during the months indicated:

|                           |  | High |  | Low 
|-------------------------- |  | ---- |  | ----
|
|April 2002                 |  | 1.46 |  | 1.43
|May 2002                   |  | 1.47 |  | 1.45
|June 2002                  |  | 1.53 |  | 1.46
|July 2002                  |  | 1.58 |  | 1.52
|August 2002                |  | 1.57 |  | 1.52
|September 2002             |  | 1.56 |  | 1.54
|October 1October 11, 2002 |  | 1.57 |  | 1.55

The
following table shows the average exchange rates for our last six fiscal periods, based on the average of the exchange rates on the last day of each month during the period:

|                                   |  | $ per £1
|---------------------------------- |  | --------
|Year ended April 30, 2002          |  | 1.44    
|Year ended April 30, 2001          |  | 1.46    
|Year ended April 30, 2000          |  | 1.60    
|Twelve months ended April 30, 1999 |  | 1.65    
|Three months ended April 30, 1998  |  | 1.67    
|Year ended January 31, 1998        |  | 1.64    

Not
required.

Not
required.

You
should carefully consider the following risk factors. The risks described below are not the only risks we face. Additional risks not currently known to us or that we currently deem
immaterial may also impair our business operations. Our business, financial condition or results of operations could be materially adversely affected by any of these risks. This annual report also
contains forward-looking statements that involve risks and uncertainties. Our results could materially differ from those anticipated in these forward-looking statements as a result of certain factors,
including the risks we face as described below and elsewhere. See "Forward-Looking Statements."

Our operating results may fluctuate, and any fluctuations could adversely affect the price of our securities.

Our future operating results are subject to quarterly and annual fluctuations. If we fail to meet the expectations of securities analysts and investors as a
result of any future fluctuations in our quarterly operating results, the market price of our securities would likely decrease. The market price of our securities has experienced significant price
volatility. We expect that our operating results may fluctuate in the future due to a variety of factors, including:



8

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Market volatility may cause the price of our securities to decline.

The market price of our securities has been, and is likely to continue to be, highly volatile, particularly since the announcement in June 1998 of our
merger with Intersolv, Inc. The global stock markets have experienced extreme volatility that has particularly affected the market prices of equity securities of
many high technology companies. These market fluctuations, as well as general economic, political and market conditions, may adversely affect the market price of our securities.

Factors
that could adversely affect our market price include:



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The
company and some of its present and former officers and/or directors are presently defendants in a class action lawsuit alleging, among other things, violations of the U.S.
securities laws. The parties to this action have entered into a Stipulation of Settlement to resolve these claims (see note 23 to the financial statements included in Item 17 hereto), There can
be no assurance that the company and/or its officers and directors may not be the subject of additional lawsuits in the future in connection with, among other things, the possible market price
volatility of our securities

Our insignificant backlog and long sales cycle, combined with costs that are fixed, make it difficult to predict future revenue and compensate for a revenue shortfall.

Historically, we have operated with little product backlog because we generally ship our products when we receive an order. As a result, our product revenue in
any quarter will depend on the volume and timing of orders received in that quarter, and our ability to fill those orders. In addition, the purchase process of our customers typically ranges from a
few weeks to several months or longer from initial inquiry to order, which makes it difficult to predict the timing of sales and license fees. Our staffing and operating expenses are based on
anticipated revenue levels, and a high percentage of our costs is fixed in the short term and does not vary with revenue. Because of these factors, small variations between anticipated orders and
actual orders, as well as non-recurring or large orders, can cause disproportionate variations in our operating results from quarter to quarter. As a result, and due to the typical size of
customers' orders, our quarterly operating results and cash flow would suffer from a lost or delayed sale. Historically, we have been dependent upon large enterprise transactions with individual
customers. Moreover, if significant sales occur earlier in a given period than expected, operating results for later quarters may suffer.

Seasonality can cause our operating results to fluctuate.

Our revenue also is affected by seasonal fluctuations resulting from lower sales that typically occur during the summer months in Europe and other parts of the
world. In addition, historically, we have experienced lower revenue for the first quarter of a fiscal year than in the fourth quarter of the prior fiscal year. We typically recognise a high proportion
of quarterly revenue during the last month of a fiscal quarter and significant fluctuations in new order revenue can occur due to the timing of customer orders. Quarterly results therefore can vary to
the extent that sales for a quarter are delayed, particularly since a relatively high proportion of our expenses do not vary with revenue.

If our new products and services fail to achieve customer acceptance, or if we fail to manage product transitions, our business reputation and financial performance would
suffer.

We
are in a market that is subject to rapid technological change. We must continually adapt to that change by improving our products and introducing new products, technologies and
services. Our growth and financial performance will depend in part on our ability to develop and introduce enhancements of existing products and new products that accommodate the latest technological
advances and standards, customer requirements and market conditions on a timely and cost-effective basis. This depends in part on our ability to attract and retain qualified employees. In
the past, we have experienced delays and increased expenses in developing new products. We may not be successful in marketing, on a timely basis or at all, competitive products, product enhancements
and new products that respond to technological change, changes in customer requirements and emerging industry standards.

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Product defects can be expensive to fix and can cause us to lose customers.

Software products as complex as those we offer may contain undetected errors or failures when first introduced or as new versions are released. Despite our
testing, as well as testing and use by current and potential customers, errors might be found in new products after commencement of commercial shipments. The cost of correcting such errors could be
substantial and there could be associated adverse publicity. For these reasons, the occurrence of errors could result in loss of or delay in market acceptance of our products.

Protection of our intellectual property is limited, which may affect our competitive position.

Our success depends upon our proprietary software technology. Despite the precautions we take to protect our proprietary rights, it may be possible for a third
party to copy or otherwise obtain and use our products or technology without authorization, or to develop similar technology independently. Policing unauthorized use of our products is difficult, and
although we are unable to determine the extent to which software piracy of our products exists, software piracy can be expected to be a persistent problem. In addition, effective protection of
intellectual property rights may be unavailable or limited in some foreign countries where we distribute our products. Patents have been granted on fundamental technologies in software, and third
party patents may issue that relate to fundamental technologies incorporated into our products.

Our products may infringe the intellectual property rights of third parties, which may result in lawsuits and prevent us from selling our products.

Third parties may, as has occurred in the past, assert intellectual property infringement claims against us concerning our products, trademarks or other
proprietary rights. If such claims are asserted, we may have to seek licenses, defend infringement actions or challenge the validity of the disputed third party intellectual property rights. Licenses
may not be available on reasonable commercial terms, if at all and the failure to obtain a license from a third party for technology that we use could cause us to incur substantial liabilities and to
suspend the production and sale of certain products. If we cannot obtain required licenses, are found liable for infringement or are not able to have the disputed third party intellectual property
rights declared invalid, we may be liable for significant monetary damages, encounter significant delays in bringing products to market or be precluded from participating in the development, use or
sale of technologies covered by the intellectual property rights of others.

With
regard to those technologies that we license from third parties, we must rely upon those third parties for information on the ownership of the licensed technologies. As a result,
our exposure to infringement claims may increase. We generally obtain representations as to the ownership of licensed technology and seek indemnification to cover any breach of these representations.
However, representations may not be accurate and indemnification, if available, may not provide adequate compensation or protection for breach of the representations.

In
addition, we may initiate claims or litigation against third parties for infringement of our proprietary rights or to establish their validity. Litigation to determine the validity of
any claims could result in significant expense and divert the efforts of our technical and management personnel from operating activities, whether or not the litigation is determined in our favor. In
the event of an adverse ruling in any litigation, we may be required to pay substantial damages, to discontinue the use and sale of infringing products, to expend significant resources to develop
non-infringing technology or to obtain licenses to the infringed technology. Our failure to develop or license a substitute technology could prevent us from selling our products. As the
number of software products in the industry increases and the functionality of these products further overlaps, it is possible that software developers may become increasingly subject to infringement
claims. Any claims against us, with or without merit, as well as

11

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claims we initiate against third parties, can be time consuming and expensive to defend or prosecute and to resolve.

Competition can lead to pricing pressures and loss of market.

Rapid technological change and aggressive competition characterize the markets in which we compete. We expect competition to increase in the future from existing
competitors and from other companies that may enter our existing or future markets with similar or substitute solutions that may be less costly or provide better performance or functionality than our
products. Some of our current and prospective competitors have greater financial, marketing or technical resources and may be able to adapt more quickly to new or emerging technologies, or devote
greater resources to the promotion and sale of their products than we can. Other companies, including customers, may develop competitive products in the future. In addition, the software industry is
characterized generally by low barriers to entry, as a result of which new competitors with technological, marketing or other competitive advantages may emerge and rapidly acquire market share.
Furthermore, we may not be able to compete effectively in the future in the professional services market. If price competition increases significantly, competitive pressures could cause us to reduce
the prices of our products and services, which would result in reduced profit margins and could harm our ability to provide adequate service to our customers.

International sales account for a significant portion of our revenue, which exposes us to the business and economic risks of global operations.

In fiscal years 2002, 2001 and 2000, sales to customers outside of the United States represented approximately 43%, 39% and 42% of our revenue, respectively. We
intend to continue to pursue our non-U.S. business and enter additional international markets, and commit significant time and resources to developing international sales and support
channels. The risks inherent in conducting international business generally include:



If we lose key personnel or are unable to hire additional qualified personnel as necessary, we may not be able to manage our business successfully or sell our products.

Substantially all of our senior management personnel are recent hires, including but not limited to our President and CEO, Gerald Perkel, who joined the company
in September 2001, and our success will depend in part on the successful assimilation and performance of these individuals. Competition for qualified personnel in the software industry is
intense, and we may not be able to attract and retain a sufficient number of qualified personnel to successfully conduct our business in the future. Our

12

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success depends to a significant degree upon the continued contributions of our key management, marketing, product development, professional services and operational personnel, including, as the case
may be, key personnel of acquired companies. We do not have employment agreements with most of our key personnel to ensure their continued employment, and we do not maintain key person life insurance
on any of these persons.

If we are unable to manage growth effectively, our operations will be disrupted.

We recently experienced tremendous organizational and personnel changes, due in large part to the sales of our Application, Creation and Transformation Division
and our Enterprise Data Connectivity Division, as well as the relocation of our operational headquarters from Rockville, Maryland to Hillsboro, Oregon. These changes have placed a significant strain
on our financial, management, operational and other resources. These strains will continue as we transition to a company focused on the enterprise change management market for our PVCS products.

The
process of divesting a significant division of a company's business may also result in unforeseen operating difficulties and expenditures. Our management, personnel, systems,
procedures and controls may not be adequate to support both the new entities' operations, and our own existing and future operations. Moreover, the anticipated financial, strategic and other benefits
of the divestitures might not be realized.

If we engage in future business combinations, we may fail to integrate acquired businesses effectively, which could disrupt our ongoing business and generate negative
publicity.

We have completed a number of business combinations in recent years, most recently the merger with Intersolv, Inc. in September 1998, and the
acquisitions of Essential Software, Inc. in August 1999, EnterpriseLink Technology Corporation in November 1999, Trillium Software Corporation in December 1999, Northern
Software Partners AS in January 2000, and the Enterprise Division of NetObjects, Inc. in February 2001. We made no acquisitions in fiscal 2002. We may complete additional
acquisitions in the future. The process of integrating an acquired company's business into our operations may result in unforeseen operating difficulties and expenditures. It may also absorb
significant management attention that would otherwise be available for the ongoing development and operation of our business. Moreover, the anticipated financial, strategic and other benefits of an
acquisition might not be realized. Future acquisitions could result in potentially dilutive issuances of equity securities, the incurring of debt and contingent liabilities, and amortization
provisions related to goodwill and other intangible assets. In addition, acquisitions involve numerous risks, including:



Introduction of the euro could negatively affect our business

Twelve member countries of the European Union have adopted the euro as their legal currency. The participating countries established fixed euro conversion rates
between their former national currencies and the euro. Merant's internal systems have the ability to price and invoice customers in the euro. We will continue to modify the internal systems that will
be affected by this conversion, but do not expect the costs of further system modifications to be material. There can be no assurance,

13

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however, that we will be able to complete such modifications to comply with euro requirements, which could have a material adverse effect on our business, financial condition and results of
operations. We will continue to evaluate the impact of the euro's introduction on our foreign exchange and hedging activities, functional currency designations and pricing strategies in the new
economic environment. In addition, we face risks to the extent that banks and vendors upon whom we rely are unable to make appropriate modifications to support our operations with respect to euro
transactions. While we will continue to evaluate the impact of the euro, management does not believe its introduction will have a material adverse effect upon our business, financial condition or
results of operations.

The rights of our shareholders may differ from the shareholder rights of a U.S. corporation.

The rights of shareholders and, therefore, some of the rights of holders of ADSs, are governed by English law, including the Companies Act 1985 of Great Britain,
and by our Memorandum and Articles of Association. These rights differ in many respects from the rights of shareholders in typical U.S. corporations. You may have more difficulty asserting your rights
as a shareholder than you would as a shareholder of a company organized in a jurisdiction within the United States.

U.S. investors may have difficulty in serving process or enforcing a judgment against us.

We are a public limited company organized under the laws of England and Wales. Judgments of U.S. courts, including judgments against us, predicated on the civil
liability provisions of the federal securities laws of the United States, may not be enforceable in English courts.

Exchange rate fluctuations can cause operating results to fluctuate.

Historically the majority of our revenue arose in U.S. dollars, whereas our costs were incurred approximately equally in U.S. dollars and other currencies,
predominately pounds sterling. More recently, however, the currencies of revenue and expenses have been closely aligned. Nevertheless, fluctuations in exchange rates, particularly between the U.S.
dollar and the pound sterling, may have a significant impact on our operating results, notably when expressed in pounds sterling. In fiscal years 2002, 2001 and 2000, fluctuations between the U.S.
dollar and the pound sterling were not significant, and net exchange rate gains or losses on operational transactions were not material.

We
prepare consolidated financial statements expressed in pounds sterling. We translate revenue, costs and expenses arising in currencies other than the reporting currency using average
exchange rates. We translate assets and liabilities denominated in currencies other than the reporting currency at exchange rates in effect at the balance sheet date.

The current depressed general economic and market conditions could cause decreases in demand for our software and related services, which could negatively affect our revenue
and operating results and the market price of our securities.

Downturns in general economic and market conditions such as those being experienced at present may result in customers postponing or canceling software purchasing
decisions. If demand for our software and related services decreases, our revenues may decrease and our operating results would be negatively impacted. The market price of our securities could
similarly be negatively impacted as the result of this decreased demand and resulting effect on operating results.

Risks related to doing business with the United States government

We sell our products, maintenance, training, and services, directly and indirectly, from time to time, to agencies of the U.S. government. Companies selling to
the U.S. government may be subject to a variety of specialized regulations governing such areas as employment practices, product pricing and discount practices, and contract management. Our compliance
with the terms and conditions of

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individual government contracts, including, but not limited to contractual disclosures, and sales activity reporting systems, have been audited in the past, are currently being audited, and may be
audited in the future. There can be no assurance that any such audit may not result in a cost adjustment, refund, penalty and/or further investigation. Any of these possible scenarios could be
expensive and distracting to us, in terms of the time and management of personnel and outside professional resources needed to respond to the government's audit or investigation demands, and the
associated costs.

ITEM 4. INFORMATION ON THE COMPANY

Merant
plc is a U.K. resident public limited company (registered company number 1709998) and we operate under the laws of England and Wales. The company was incorporated in England on
March 4, 1983 as a public limited company under the Companies Acts of Great Britain under its original name, Micro Focus Group plc. In May 1983, we obtained a quotation on the Unlisted
Securities Market of the London Stock Exchange, and in June 1984 became a fully listed company on the London Stock Exchange. In May 1992, we became listed on the Nasdaq National Market.
In February 1999, we changed our name from Micro Focus Group plc to Merant plc. Our head and registered office is Abbey View, Everard Close, St. Albans, Hertfordshire AL1 2PS, England, and our
telephone number at that location is 011 44 1727 812812.

Our
operational headquarters and the principal place of business in the United States of our indirect wholly owned subsidiary, Merant Inc., is 3445 NW 211th Terrace,
Hillsboro, Oregon 97124. We have appointed CT Corporation, 818 West Seventh St., 2nd Floor, Los Angeles, CA 90017 as the agent for service of process for Merant Inc.

Important
Events

We
began the fiscal year ended April 30, 2002 operating in three business segments: Enterprise Change Management (or ECM), Enterprise Data Connectivity (or EDC), and Application
Creation and Transformation (or ACT). During the 2002 fiscal year, we restructured our company with the goal of focusing on our ECM business, which provides solutions under the PVCS brand. As part of
this restructuring, we sold our EDC and ACT Divisions.

In
the fourth quarter of fiscal 2001, on February 20, 2001, we completed the acquisition of the Enterprise Division of NetObjects, Inc. and entered the web content
management segment of the enterprise change management market. Merant Collage, formerly NetObjects Collage, is a browser-based, scalable enterprise content management platform that manages the web
content lifecycle and allows joint deployment of content and code through integration with PVCS Dimensions. The total consideration for the transaction was £12.6 million, payable in
cash. This transaction has been accounted for using the purchase accounting method. We capitalized the difference between the purchase price and the estimated fair value of the net tangible
liabilities acquired as goodwill. We are amortizing this amount, which totaled £13.1 million, over its estimated economic life of five years.

In
the third quarter of fiscal 2000, on December 6, 1999, we acquired all of the outstanding stock of Trillium Software Corporation, a privately held supplier of change management
software based in Eden Prairie, Minnesota. The total consideration for the transaction was £2.8 million. This transaction has been accounted for using the purchase accounting
method. We capitalized the excess of the purchase price over the estimated fair value of the net tangible assets acquired as goodwill. We are amortizing this amount, which totaled
£2.7 million, over its estimated economic life of five years.

Discontinued
operationsEDC Division

On
November 8, 2001, we completed the sale of our EDC Division to Golden Gate Capital for £20.5 million, payable in cash, subject to post-closing
adjustment based on the value of assets

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transferred. Our shareholders approved the transaction at an extraordinary general meeting held on October 30, 2001. On completion, we received an initial cash payment of
£15.2 million. We expect that final settlement of the post-closing sale price adjustment will be agreed during fiscal 2003. After writing off the unamortized portion of
goodwill attributed to the EDC Division, we recorded a loss of £2.1 million on the disposal.

Discontinued
operationsACT Division

On
August 10, 2001, we completed the sale of our ACT Division to Golden Gate Capital and Parallax Partners. Our shareholders approved the transaction at an extraordinary general
meeting held on
July 23, 2001. On completion, we received a cash payment of £37.6 million. The final sale price remains subject to a post-closing price adjustment mechanism. We
cannot currently predict when a final settlement of the post-closing purchase adjustment will be reached. After writing off the unamortized portion of goodwill which arose on the
acquisitions for the ACT Division, we recorded a loss of £1.0 million on the disposal.

In
the third quarter of fiscal 2000, on November 23, 1999, we acquired for the ACT Division all of the outstanding stock of EnterpriseLink Technology Corporation, a privately held
supplier of enterprise extension software based in Campbell, California. The total consideration for the transaction was £8.7 million, payable as a combination of cash and
assumption of debt.

Also
in the third quarter of fiscal 2000, on January 8, 2000, we acquired for the ACT Division the remaining 79.9% of the outstanding stock of Northern Software Partners AS, our
distributor for the Nordic region, based in Oslo, Norway. The total consideration for the transaction was £2.6 million, payable in cash. Northern Software Partners AS changed its
name to Merant Nordic AS on January 21, 2000.

In
October 2001 we completed the sale of our real estate in Newbury, England, for £10.8 million. Following the disposal of the ACT Division, we decided it was
no longer appropriate to retain ownership of this facility. We realized a pre-tax loss of £1.8 million on the transaction.

Principal
Capital Expenditures

During
2002, we invested £2.6 million for the purchase of furniture, fixtures and equipment, and for further investment in our management information systems, compared
to £6.8 million in 2001 and £9.9 million in 2000. The decline in these expenditures reflects the disposal of the ACT and EDC Divisions.

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OPERATIONS
AND PRINCIPAL ACTIVITIES

We
design, develop and market software products and services. Our Enterprise Change Management (or ECM) business provides solutions under the PVCS brand. Those solutions help companies
improve their ability to manage change to enterprise digital assets, including software applications, code and web content. Our PVCS product set covers the three essential disciplines of enterprise
change management: software configuration management, web content management, and application change management in corporate packaged application suites from Oracle:



During
the three fiscal years ended April 30, 2002, we also provided solutions through our ACT, EDC, and E-Solutions businesses, which we now report as discontinued
operations:



We
provide services, education and product assistance to help our customers improve their return on investment. Customers who purchase software maintenance services benefit from
SupportNet, an

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award-winning combination of worldwide 24/7 telephone support resources, online Knowledgebase expertise, product updates, diagnostic tools and utilities, informative technical articles and
e-newsletter updates. Merant Consulting offers pre packaged and customized services to assist our customers in
implementation of their Merant solution. Merant University provides education and training solutions including classroom, customer site instruction and online courses that are focused on helping
customers master Merant products and processes.

Principal
Markets

Our
end-user customers consist of corporate data processing center personnel, independent software vendors, individual software developers, value-added resellers and computer
equipment manufacturers worldwide. The customer base is broad, and no individual customer accounted for more than 10% of total revenue in fiscal years 2002, 2001 or 2000. Additionally, our business
does not concentrate on any specific industry.

We
market our products and services throughout the world. For a geographic analysis of our revenue based on operations in the Americas, Europe, and Asia/Pacific, see Item 5.A. "Operating
Results".

Seasonality

Our
revenue is affected by seasonal fluctuations resulting from lower sales that typically occur during the summer months in Europe and other parts of the world. In addition, we have
historically experienced lower revenue for the first quarter of a fiscal year than in the fourth quarter of the prior fiscal year. We typically recognise a high proportion of quarterly revenue during
the last month of a fiscal quarter and significant fluctuations in new order revenue can occur due to the timing of customer orders. Our quarterly results therefore can vary to the extent that sales
for a quarter are delayed, particularly since a relatively high proportion of our expenses do not vary with revenue.

Raw
Materials

The
products that we ship are comprised primarily of software programs copied onto tape or CD-ROM. The raw materials used for these media are widely available.

Marketing
Channels

We
market and distribute our products on a worldwide basis through multiple channels. Sales are made directly, using a combination of telesales, field sales, third party distribution and
the Internet. We currently have local sales and marketing operations in the United States, the United Kingdom, Australia, Belgium, France, Germany, Italy, Japan, Korea, the Netherlands and Singapore.
Our direct
sales effort is augmented with a network of independent software vendors, dealers, distributors, original equipment manufacturers and value added resellers in many countries around the world, in
addition to Merant offices.

In
some cases, our products are embedded in other independent software vendors' products under licensing arrangements. In addition, we have license and distribution arrangements that
enable us to sell products developed by third parties. We pay license fees to these third parties, which typically have a continuing obligation to improve and maintain the products supplied to us.

Intellectual
Property

We
regard much of our intellectual property as proprietary. We seek to protect our intellectual property rights through a combination of copyright, trademark, patent and trade secret
laws, employee and third-party non-disclosure agreements and certain technical measures. We have registered, or have applications pending for, certain trademarks.

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We
market and license our products in many countries worldwide, and the laws of various countries in which our products may be used may not protect proprietary rights to the same extent
as the laws of the United States and the United Kingdom.

For
more information regarding our proprietary technology, see Item 3.D. "Risk Factors'Protection of our intellectual property is limited, which may affect our competitive
position' and 'Our products may infringe the intellectual property rights of third parties, which may result in lawsuits and prevent us from selling our products"

Competition

Rapid
technological change and aggressive competition characterize the markets we serve. We expect competition to increase in the future from existing competitors and from other
companies that may enter our existing or future markets with similar or substitute solutions. These solutions may be less costly or provide better performance or functionality than our products. Some
of our current and prospective competitors have greater financial, marketing or technical resources and may be able to adapt more quickly to new or emerging technologies, or devote greater resources
to the promotion and sale of their products than we can. Other companies, including customers, may develop competitive products. In addition, the software industry is characterized generally by low
barriers to entry, meaning new competitors with technological, marketing or other competitive advantages may emerge and rapidly
acquire market share. Furthermore, we may not be able to compete effectively in the future in the professional services market. If price competition increases significantly, competitive pressures
could cause us to reduce the prices of our products and services, which would result in reduced profit margins and could harm our ability to provide adequate service to our customers.

Government
Regulations

We
are a U.K. company with substantial operations in, and revenue derived from, U.S.-based activities. Accordingly, we are subject to the Companies Act 1985, among other applicable laws
of England and Wales, as well as to U.S. federal securities laws, and other applicable U.S. federal, state and local laws. For more information regarding issues associated with our various corporate
legal relationships, please see Item 3.D. "Risk Factors'The rights of our shareholders may differ from the shareholder rights of a U.S. corporation' and 'U.S. judgments may not be
enforceable against us"'.

We
operate in many countries around the world through direct and indirect subsidiaries, of which two are significantMerant International Ltd., incorporated in England
and Wales, and Merant Inc. incorporated in California. Both of these subsidiaries are wholly-owned and controlled, directly or indirectly, by Merant plc.

In
October 2001, we sold our real estate, which consisted of approximately 80,000 square feet of office space located on an 8-acre site in Newbury, England. We
presently lease approximately 6,000 square feet of office space in this facility from the new owner.

We
also lease office space for our sales, distribution and development operations. Major facility leases at April 30, 2002 include the following:

|Location          |  | Purpose                     |  | Facility size (square feet)
|----------------- |  | --------------------------- |  | ---------------------------
|Rockville, MD     |  | Sales & former headquarters |  | 74,000                     
|Hillsboro, OR     |  | Operational headquarters    |  | 63,785                     
|Mountain View, CA |  | Sales & development         |  | 56,000                     
|St. Albans, U.K   |  | Sales & development         |  | 20,000                     

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We
also maintain facilities, principally sales and distribution offices, around the world. In the United States, these are located in Chicago, IL; Dallas, TX; New York, NY; and Raleigh,
NC. We sub-lease facilities in Raleigh and Morrisville, NC. Outside the United States, we maintain offices in Melbourne, Australia; Duffel, Belgium; Farum, Denmark; Paris, France;
Ismaning, Germany; Milan and Rome, Italy; Tokyo, Japan; Seoul, Korea; Amersfoort, Netherlands; and Singapore.

We
are not aware of any environmental issues that may affect the utilization of any of these facilities. We have no present material plans to construct new facilities, or to expand or
improve any of these existing facilities.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion should be read in conjunction with our consolidated financial statements, set forth elsewhere in this Form 20-F.

In
addition to historical information, this discussion contains forward-looking statements as more fully described above in "Forward-Looking Statements" that involve risks and
uncertainties that could cause actual results to differ materially from those indicated by the forward-looking statements. Factors that might cause or contribute to such differences include, but are
not limited to, those discussed above under Item 3.D. "Risk Factors".

In
preparing the financial statements, our management must make decisions which impact reported amounts and related disclosures. These decisions include the selection of appropriate
accounting principles to be applied and the assumptions on which to base accounting estimates. In reaching these decisions, management applies judgment based on its understanding and analysis of
relevant circumstances. Note 1 to the financial statements, set forth in Item 17 to this Form 20-F, provides a summary of the significant accounting policies followed in the
preparation of the financial statements.

Our
management considers revenue recognition to be one of the most critical to the presentation of the financial statements because it requires difficult and complex judgments. We
consider that our policy on revenue recognition complies with U.S. GAAP (i.e., SOP 97-2 and SAB 101). The majority of our revenue relates to product sales for which revenue is recognised
or deferred upon shipment, with limited judgment required related to product returns. Licensing revenue recognition requires management to estimate effective terms of agreements and identify points at
which performance is met under the contracts such that the revenue earnings process is complete. Deferred revenue relates to time-based and performance-based payments and is recognised
over the contract performance period. For major licensing contracts, this results in the deferral of significant revenue amounts due to the long-term nature of the agreements. Subsequent
factors affecting the initial estimate of the effective terms of agreements could either increase or decrease the period over which the deferred revenue is recognised.

We
design, develop and market software products and services for enterprise application development. We create software for managing digital assets. Our solutions enhance team
collaboration and business decision support. We focus on protecting and tracking multiple uses of software, content and intellectual property. We license our products to other independent software
vendors, software developers and service providers, and offer integrated software solutions to businesses of all sizes. We distribute our products through our offices in North America, Europe, and
Asia, and through a network of distributors and value-added resellers, and directly through our website.

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We
began a process of restructuring our operations during fiscal 2001, with the objectives of concentrating resources on growth opportunities and delivering increased value to
shareholders. We essentially completed this restructuring during fiscal 2002. The major events of the past year were:



Results of Operations

These changes have had a major impact on our results of operations for the year ended April 30, 2002. In the previous fiscal year, the operations of our
ACT and EDC business units contributed 53% of our total revenue; in fiscal 2002 we disclose those businesses as discontinued operations. We disclose the gains and losses on those disposals as an
exceptional item. We also disclose the loss on disposal of our Newbury facility and the costs of the restructuring program as exceptional items.

We
prepare our financial statements in accordance with U.K. GAAP, and expressed in pounds sterling. However, the Company recognises revenue in accordance with U.S. GAAP, which is viewed
as being more stringent and is accepted by U.K. GAAP. U.K. GAAP differ from U.S. GAAP in, amongst other areas, the treatment of mergers, of goodwill and other intangibles acquired in connection with
business combinations, and in other disclosures and presentation. In particular, the presentation of discontinued operations differs, in that, under U.K. GAAP, the results of operations of
discontinued operations are included with those of continuing operations. In the discussion that follows, we comment separately on our continuing and discontinued operations. A detailed analysis of
differences is set forth in note 26 to our financial statements.

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Continuing
operations

The
following table summarises the results of our continuing operations:

|                                                                |  | 2002    |   | Change |   | 2001    |   | Change |   | 2000    |  
|--------------------------------------------------------------- |  | ------- | - | ------ | - | ------- | - | ------ | - | ------- | -
|
|Licence fees                                                    |  | 33,387  |   | -21    | % | 42,193  |   | 9      | % | 38,768  |  
|Maintenance subscriptions                                       |  | 39,779  |   | 13     | % | 35,065  |   | 31     | % | 26,709  |  
|Training and consulting                                         |  | 13,902  |   | -22    | % | 17,817  |   | 20     | % | 14,993  |  
|                                                                |  |         |   |        |   |         |   |        |   |         |  
|Total net revenue from continuing operations                    |  | 87,068  |   | -8     | % | 95,075  |   | 18     | % | 80,470  |  
|Cost of revenue                                                 |  | (21,116 | ) | -15    | % | (24,852 | ) | 14     | % | (21,851 | )
|Research and development                                        |  | (17,833 | ) | 6      | % | (16,807 | ) | 13     | % | (14,912 | )
|Sales and marketing                                             |  | (46,903 | ) |       | % | (47,284 | ) | 4      | % | (45,310 | )
|General and administrative (excluding amortization of goodwill) |  | (13,740 | ) | 76     | % | (7,795  | ) | -45    | % | (14,214 | )
|Total operating expenses (excluding amortization of goodwill)   |  | (78,476 | ) | 9      | % | (71,886 | ) | -3     | % | (74,436 | )
|Operating loss (excluding amortization of goodwill)             |  | (12,524 | ) | 656    | % | (1,663  | ) | -89    | % | (15,816 | )
|Amortization of goodwill                                        |  | (29,429 | ) | 8      | % | (27,135 | ) | 6      | % | (25,640 | )
|Operating loss                                                  |  | (41,953 | ) | 46     | % | (28,798 | ) | -31    | % | (41,456 | )

Revenue:Revenue from continuing operations declined £8.0 million or 8% relative to fiscal 2001. The
decrease in revenue is attributable to the downturn in the information technology market, including the market for enterprise change management software, during 2002. Licence fee revenue decreased by
£8.4 million, primarily due to economic conditions that resulted in a decline in the number of large enterprise deals. Maintenance subscriptions increased by
£4.7 million, because of the addition of new customers along with a high retention rate from our existing customer base. Training and consulting revenue declined by
£3.9 million because of the decline in license fees and in particular a decrease in the number of large enterprise deals.

Revenue
from continuing business was £95.1 million in fiscal 2001, an increase of £14.6 million or 18% relative to 2000. Currency translation
benefited 2001 revenue compared with 2000, primarily because of the dollar strengthening compared to most currencies. Growth at constant currency exchange rates was 12%, driven primarily by
maintenance and service revenues, which increased from a combination of growth in the installed customer base and renewal of existing maintenance contracts for all key products.

The
following table analyses revenue from continuing operations for the last three fiscal years by geographic market:

|                            |  | 2002   |  | Change |   | 2001   |  | Change |   | 2000  
|--------------------------- |  | ------ |  | ------ | - | ------ |  | ------ | - | ------
|
|North America               |  | 57,355 |  | -9     | % | 63,343 |  | 26     | % | 50,229
|Europe                      |  | 26,836 |  | -3     | % | 27,799 |  | 7      | % | 26,015
|Asia/Pacific                |  | 2,877  |  | -27    | % | 3,933  |  | -7     | % | 4,226 
|Continuing operations (ECM) |  | 87,068 |  | -8     | % | 95,075 |  | 18     | % | 80,470

In
fiscal 2002, North America contributed 66% of revenue, compared to 67% in 2001 and 62% in 2000. Europe contributed 31%, compared to 29% in 2001 and 32% in 2000. Over the same period,
Asia Pacific's contribution declined to 3% from 5%.

Cost of revenue:Cost of revenue includes the cost of product materials, packaging and distribution costs, royalties to third
party software developers for the licencing of add-on software products, and salaries and benefits for technical support and training and consulting personnel. These

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costs represented 24% of revenue in 2002, compared to 26% in 2001 and 27% in 2000. The decreases reflect continuing savings in product materials arising from the supply of documentation on
CD-ROM, and the increasing share of higher-margin maintenance revenue, which increased to 46% in 2002, from 37% in 2001 and 33% in 2000.

Operating expenses (excluding amortization of goodwill):Operating expenses include our research and development, sales and
marketing and general and administrative costs. As presented in the profit and loss account included in Item 17 of this Form 20-F, general and administrative costs also include
provisions for amortization of goodwill. However, to provide a better understanding of the underlying levels of our operating expenses, we identify amortization of goodwill separately in this
discussion. Excluding goodwill amortization charges, our operating expenses increased by 9% in 2002 relative to 2001, having declined by 3% in 2001 relative to 2000.

Operating loss (excluding amortization of goodwill):In fiscal 2002 we reported an operating loss from continuing operations,
before non-recurring items, of £12.6 million, compared to £1.7 million in 2001 and £15.8 million in 2000.

Amortization of goodwill:Goodwill amortization charges arise as a result of corporate acquisitions, where the excess of the
purchase price over the respective estimated fair value of the net tangible assets acquired is capitalized as goodwill. We amortize this goodwill over its estimated economic life, but we review
goodwill for impairment if events or circumstances indicate that the carrying value may not be recoverable. In fiscal 2002, we made no acquisitions and no goodwill was capitalized, but in 2000 we
began amortizing goodwill that arose on the acquisition of Trillium Software Corporation, and in 2001 we additionally began amortizing goodwill that arose on the acquisition of the Enterprise Division
of NetObjects, Inc. Consequently, we recorded increased amortization charges in fiscal 2002 and 2001, relative to 2000.

Discontinued
operations

The
following table summarises the results of our discontinued operations:

|                        |  | 2002    |   | Change |   | 2001     |   | Change |   | 2000     |  
|----------------------- |  | ------- | - | ------ | - | -------- | - | ------ | - | -------- | -
|
|Revenue                 |  | 31,207  |   | -74    | % | 120,358  |   | -18    | % | 146,813  |  
|Costs and expenses      |  | (34,652 | ) | -74    | % | (131,322 | ) | -8     | % | (143,489 | )
|Operating (loss)/profit |  | (3,445  | ) | -69    | % | (10,964  | ) | n/a    |   | 3,324    |  

Discontinued
operations consists of the pre-disposal operations of our ACT and EDC Divisions, which we sold in fiscal 2002, and our E-Solutions Division, which we
terminated in fiscal 2001. We sold our ACT Division at the end of the first quarter of 2002, and our EDC Division at the end of the second quarter of fiscal 2002. In 2001, the ACT and EDC Divisions
contributed revenue of £114.7 million, and our E-Solutions business contributed £5.7 million.

Revenue:The decrease in revenue in 2002 reflects the disposal of the ACT Division at the end of the first quarter, and the
sale of the EDC Division at the end of the second quarter. In fiscal 2001, the ACT and EDC Divisions contributed 39% and 14%, respectively, of our total revenue. In fiscal 2000, the ACT and EDC
Divisions contributed 44% and 13%, respectively, of our total revenue. Our E-Solutions Division, from which we withdrew in February 2001, contributed approximately 3% of our revenue
in 2001 and 9% in 2000. Revenue growth in new service offerings focused on E-Solutions was not great enough to offset the decrease in demand for Year 2000 consulting solutions.

Costs and expenses:Costs and expenses incurred by our discontinued operations declined by 74% in fiscal 2002, relative to
2001. This matched the decline in revenue between the two fiscal years. In fiscal 2001, costs declined by 8%.

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Operating loss:We continued to incur losses on our discontinued operations. In fiscal 2002 we reported operating
lossesfor the periods prior to disposalof £3.4 million, compared to £11.0 million in 2001. In fiscal 2000, our discontinued operations
generated an operating income of £3.3 million.

Total
operations

In
fiscal 2002, we reported a loss on our total operations (incorporating continuing and discontinued operations) of £45.4 million, compared to
£39.8 million in fiscal 2001 and £38.1 million in 2000. These losses are after providing for amortization of goodwill totaling £35.3 million in
2002, £42.5 million in 2001, and £39.1 million in 2000.

Exceptional items:

In the fiscal years 2002 and 2001, we reported exceptional items as disclosed in the following table and discussed in the commentary below:

|                                           |  | 2002    |   | Change |  | 2001    |   | Change |  | 2000
|------------------------------------------ |  | ------- | - | ------ |  | ------- | - | ------ |  | ----
|
|Fundamental restructuring                  |  | (13,342 | ) | n/a    |  |        |   | n/a    |  |    
|Loss on disposal of fixed assets           |  | (1,761  | ) | n/a    |  |        |   | n/a    |  |    
|Loss on termination of business operations |  | (3,139  | ) | n/a    |  | (11,317 | ) | n/a    |  |    
|Amounts written off on investments         |  |        |   | n/a    |  | (3,254  | ) | n/a    |  |    

In
the year ended April 30, 2002 we:



In
the year ended April 30, 2001, we:



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Income taxes

Our tax rate in each of the last three years has been significantly distorted by the permanent differences between accounting profits and taxable profits,
primarily the difference in the treatment of amortization of goodwill, which is generally not an allowable expense for tax purposes. The tax rate is also impacted by reserves being established for tax
benefits of net operating losses for which realization is not assured and by the distribution of taxable profits and losses among the tax jurisdictions in which we operate. We include an analysis of
the charge for income taxes, and an analysis of differences between the effective rate and the U.K. statutory rates, in note 11 to the consolidated financial statements.

The
income tax returns of some of our U.S. subsidiary undertakings for the years ended January 31, 1993 to 1997 have been examined by the IRS, which has proposed increases to the
amount of U.S. income taxes due in respect of those years. We do not expect that any adjustments that may result from this examination will have a material adverse impact on our consolidated operating
results or financial position.

Loss for the period

Net loss for 2002 was £62.0 million or 49.6p per share. This compares to a net loss of £50.9 million or 37.9p per share in
2001 and £35.5 million or 24.9p per share in 2000.

Business combinations

We have made several acquisitions in recent years. Each of these transactions was accounted for using the acquisition method (similar to the "purchase method"
under U.S. GAAP). Where the purchase price exceeded the estimated fair value of the net tangible assets acquired, the excess was allocated to goodwill. We provide for amortization of the goodwill over
its economic life, which we estimate to be five years.

In
the third quarter of fiscal 2001, on February 20, 2001, we completed the acquisition of the Enterprise Division of NetObjects, Inc., a developer of web content
management software based in Redwood City, California. Through this acquisition, we bought products and services for the continuing operations of our ECM Division. The total consideration was
approximately £12.6 million, payable in cash. Goodwill arising on this transaction totalled £13.1 million.

In
the third quarter of fiscal 2000, on December 6, 1999, we acquired all of the outstanding stock of Trillium Software Corporation, a privately held supplier of change management
software based in Eden Prairie, Minnesota. Through this acquisition, we bought products and services for the continuing operations of our ECM Division. The total consideration was
£2.8 million. Goodwill arising on this transaction totalled £2.7 million.

In
fiscal 2000, we also completed three acquisitions for divisions of our business which we now report as discontinued operations:

On
August 3, 1999, we acquired all of the share capital of Essential Software, Inc., a privately held Internet professional services firm based in Raleigh, North Carolina.
The total consideration for the transaction, which amounted to £10.1 million, was payable in cash. Essential Software, Inc. formed part of our E-Solutions
business, and when we terminated the E-Solutions Division, we included the unamortised portion of the goodwill, which amounted to £6.5 million, in the loss on
discontinued operations (see note 9 to the financial statements included in Item 17 of this Form 20-F).

On
November 23, 1999, we acquired all of the share capital of EnterpriseLink Technology Corporation, a privately held supplier of enterprise extension software based in Campbell,
California. The total consideration was £8.7 million. The EnterpriseLink technology was incorporated into the

25

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ACT Division, and the unamortised portion of the goodwill which arose on this acquisition was set against the net loss on the disposal of the ACT Division reported in 2002.

On
January 8, 2000, we acquired for the ACT Division the remaining 79.9% of the outstanding stock of Northern Software Partners AS, its distributor for the Nordic region, based in
Oslo, Norway. The total consideration for the transaction was £2.6 million, payable in cash. Northern Software Partners AS, which changed its name to Merant Nordic AS on
January 21, 2000, was incorporated into the ACT Division, and the unamortised portion of the goodwill which arose on this acquisition was set against the net loss on the disposal of the ACT
Division reported in 2002.

Additional
information on these transactions is given in note 3 to the consolidated financial statements.

Exchange rate fluctuations

For an explanation of the impact to our business of exchange rate fluctuations, see Item 11.

During
fiscal 2002, our cash balances increased by £10.4 million to £71.6 million. We earned £10.8 million from the sale of our
Newbury facility, and £45.0 million from the sale of our ACT and EDC Divisions. We used £22.7 million to fund our operating activities and
£23.1 million to repurchase approximately 20.25 million of our ordinary shares for cancellation.

In
fiscal 2001, operating activities generated £19.7 million in cash. We spent £12.9 million on the acquisition of the Enterprise Division of
NetObjects, Inc, and invested £6.8 million in computer and telecommunications equipment and other fixed assets. In addition, £1.4 million, net, was absorbed by
corporate share plans, as the amount we invested in our own shares exceeded the proceeds we earned from selling shares to option-holders on the exercise of their options and to participants in the
Employee Share Purchase Plan. We also spent £13.8 million on the shares which we purchased for cancellation in August 2000. Our cash balances declined in the year by
£18.3 million to £61.2 million.

In
fiscal 2000, operating activities generated £36.8 million in cash. We invested £37.7 million in the business: £27.8 million
was spent on the corporate acquisitions referred to above under "Business combinations", and £9.9 million was invested in computer and telecommunications equipment and other fixed
assets, and in developing new software. We generated £8.5 million from our corporate share plans,
as the proceeds we earned from selling shares to option-holders on the exercise of their options exceeded the amount we invested in our own shares. After payment of corporate taxes of
£6.4 million, and other cash inflows totalling £2.9 million, net, cash balances increased during the year by £4.1 million to
£79.5 million.

We
expect to continue our investing activities, including expenditures for computer systems for research and development, sales and marketing and administrative staff. Furthermore, we
may use cash reserves to purchase our shares and to acquire software companies, products or technologies that are complementary to our business.

We
are authorized to acquire our own shares, subject to market and business conditions, for the benefit of our employee share plans. In accordance with this authority, Merant Trustees
Limited acquired 5.4 million ordinary shares during 2001 at a cost of £5.2 million and 0.8 million ordinary shares during 2000 at a cost of
£3.0 million. Merant Trustees Limited did not acquire any shares under this authority in fiscal 2002.

Our
cash and bank deposits consist of high interest deposit accounts. At April 30, 2002 we had no debt. We had a line of credit in place during fiscal 2002 under the terms of
which unsecured financing of up to £5.0 million was available. At April 30, 2001, we had borrowings of £1.4 million against this line of credit. We
canceled this facility in April 2002.

26

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We
have contractual obligations under operating leases. An analysis of our future commitments under these leases is set forth in note 19 to the financial statements, set forth in
Item 17 of this Form 20-F. As of April 30, 2002, we had no material capital expenditure commitments.

We
believe it is important to maintain a conservative capital structure and a strong cash position. Our investment policy is designed to minimize risk while maximizing return on cash
given such levels of risk, and to keep uninvested cash at a minimum. Cash management is centralized, although some cash is held at various subsidiaries around the world to meet local operating
requirements.

We
believe that our existing cash and bank deposits, in combination with internally generated funds, will be more than sufficient to meet cash requirements in fiscal 2003.

For
a discussion of our research and development activities, patents and licenses, see Item 4.B "Business Overview".

For
a discussion of our expectations regarding our future operating expenses and capital resources, see Items 5.A. "Operating Results" and 5.B "Liquidity and Capital Resources".

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

The
directors and senior management (and their ages) as of April 30, 2002 were as follows:

|Name               |  | Age |  | Position                                           
|------------------ |  | --- |  | ---------------------------------------------------
|J. Michael Gullard |  | 57  |  | Chairman of the Board                              
|Gerald Perkel      |  | 46  |  | President and Chief Executive Officer              
|Harold Hughes      |  | 56  |  | Non-executive director                             
|Michel Berty       |  | 62  |  | Non-executive director                             
|Barry X Lynn       |  | 51  |  | Non-executive director                             
|Don C. Watters     |  | 59  |  | Non-executive director                             
|Scott Hildebrandt  |  | 46  |  | Senior Vice President, Chief Financial Officer     
|Stephen King       |  | 43  |  | Senior Vice President & General Manager            
|Robert F. Dunne    |  | 48  |  | Senior Vice President, Sales                       
|Robert Blaskowsky  |  | 37  |  | Chief Information Officer                          
|Diane Williams     |  | 48  |  | Vice President, Human Resources                    
|John Stuart        |  | 46  |  | Vice President & General ManagerEMEA Region       
|Stephen M. Going   |  | 38  |  | Vice President, General Counsel & Company Secretary

27

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Mr. Gullard was appointed a non-executive director in May 1995 and was elected chairman in March 1996. He is General Partner of Cornerstone Management, a
California based venture capital and consulting firm that provides strategic focus and direction for technology companies primarily in the software and data communications industries. He is also a
director of JDA Software Group, Inc., and is Chairman of Netsolve, Inc., both publicly traded U.S. companies. Mr. Gullard's 27 years in the technology industry include a
number of executive and management posts at Telecommunications Technology Inc. and the Intel Corporation. He holds a masters of business administration and a bachelor of arts degree from
Stanford University in California.

Mr. Perkel
joined us on September 20, 2001 as the company's President and Chief Executive Officer, and was appointed an executive director on the same date. He joined us
from Xerox Corporation where he served as senior Vice President and President of the Office Printing Business. He joined Xerox in January 2000 when Xerox acquired the Color Printing and Imaging
Division of Tektronix, Inc., where he served as president. Mr. Perkel serves as a board member for the Juvenile Diabetes Research Foundation. He holds a Bachelor of Science degree in
system science engineering from the University of California at Los Angeles.

Mr. Hughes
was appointed a non-executive director in December 1993. Mr. Hughes worked for 26 years with Intel Corporation, where he held senior
positions in financial and operational management. He is currently a director of the London Pacific Group Ltd., a publicly traded financial services company, Atsana, a venture-backed
semiconductor company, and eVineyard, a privately held company.

Mr. Berty
was appointed a non-executive director of the company following the acquisition of Intersolv, Inc. in September 1998. He had been a
non-executive director of Intersolv, Inc. since 1997. He is also on the board of directors of Sapiens International Corporation N.V., a publicly traded software solutions provider
based in the Netherlands Antilles, and iGate Capital Corporation, a U.S. publicly traded company listed on Nasdaq. He is also a director of Buysmart, e-Vantage Solutions, Inc., and
NetGain all of which are privately-owned U.S.-based corporations, and a Paris-based French company, Asterop, S.A. From 1972 until 1997 he was an executive of the Cap Gemini Group and served as Chief
Executive Officer of Cap Gemini America from 1993 to 1997.

Mr. Lynn
was appointed a non-executive director in September 1999. He is the President and CEO of Be eXceL management, inc. and Director/General Partner
of Shoreline Venture Management. Prior to founding Be eXceL, Mr. Lynn was with Wells Fargo for 16 years, his last position as the President of Wells Fargo Technology Services.
Previously, he served as the company's Chief Information Officer.
Before that, he ran Wells Fargo's Private Banking Operations and their Investment Operations. Mr. Lynn founded and became the first President of Wells Fargo Securities.

Mr. Watters
was appointed a non-executive director in December 1999. He retired from McKinsey & Co in 1997 after 28 years service, most recently
as a director, and continues to act as a consultant and as a member of the McKinsey Advisory Board.

Mr. Hildebrandt
joined the company as Senior Vice President and Chief Financial Officer in November 2001. He has over 24 years experience in executive and financial
management positions primarily focused in the high technology industry. Before joining us, Mr. Hildebrandt served as the Senior Vice President, Finance and Chief Financial Officer of InFocus
Corporation. Prior to InFocus, he spent over 14 years in various executive and financial management positions at Tektronix, Inc. Mr. Hildebrandt is a CPA.

Mr. King
joined the company as Senior Vice President and General Manager in February 2002. Before joining Merant, he led Terayon Communications Systems' cable solutions
group and was Chief Operating Officer at Imedia Corporation, a digital video startup that was acquired by Terayon. Mr. King began his career as a software engineer in the United Kingdom, and
later went on to hold

28

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several key sales, marketing and general management positions with Tektronix, Inc. in Europe and the United States.

Mr. Dunne
joined the company as Senior Vice President, Sales, in February 2002. Previously, he led worldwide sales for RadiSys Corporation and Webridge, Inc. Prior
to that, Mr. Dunne spent 12 years at Tektronix, Inc. in a variety of key management positions, including Vice President of Sales and General Manager of its Network Computing
Group.

Mr. Blaskowsky
joined the company as Chief Information Officer in January 2002. Before joining us, Rob was Vice President and Chief Information Officer of Niku Corporation.
Prior to Niku, Rob served as information systems director, Color Printing and Video and Networking Divisions of Tektronix, Inc.

Ms. Williams
joined the company in December 2001 as Vice President of Human Resources. Before joining us, she served as Vice President of Human Resources for
Tektronix, Inc., for RadiSys Corporation and for Sequent Computer Systems. She also held sales management positions at Sequent and at Compaq Computer Corporation.

Mr. Stuart
joined Merant in April 2000 as U.K. general manager. In April 2001, he was promoted to the role of Vice President, Sales, EMEA, before gaining general
management responsibility for EMEA in
April 2002. Mr. Stuart has been involved in the software industry for more than 20 years and has been instrumental in the growth and profitability of companies such as Informix,
Software AG and Pansophic within their EMEA operations.

Mr. Going
joined the company as Vice President and General Counsel in March 2002. Mr. Going was appointed Corporate Secretary in April 2002. Prior to joining
Merant, Mr. Going was a Partner in the Portland, Oregon office of Perkins Coie LLP serving emerging growth companies in the areas of corporate finance and mergers and acquisitions. Prior to
joining Perkins Coie as a Partner in September 2000, Mr. Going was a Partner in the Portland office of Ater Wynne LLP.

There
is no family relationship among any of the above named persons. There are no arrangements or understandings with major shareholders, customers, suppliers or others, pursuant to
which any person named above was selected as a director or member of senior management.

The
following table sets forth information concerning total compensation earned or paid to our directors, and to our executive officers (as a group) for the fiscal year ended
April 30, 2002:

Name

Salary

Bonus

Other*

Total£'000

£'000

£'000

£'000J. Michael Gullard

101





101Harold Hughes

29





29Michel Berty

31





31Barry X Lynn

24





24Don C. Watters

29





29Gary Greenfield

163

791

1,691

2,645Gerald Perkel

160

261

139

560Executive officers, as a group (7 persons)

401

269

118

788938

1,321

1,948

4,207


---

29

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The
following table sets forth information concerning options granted to our directors and executive officers during the fiscal year ended April 30, 2002:

|Name               |  | Number of
Options to
Purchase ordinary
Shares Granted |  | Exercise Price
Per Share in
Pounds Sterling |  | Expiration        
|------------------ |  | ----------------------------------------------------- |  | ------------------------------------------- |  | ------------------
|J. Michael Gullard |  | 20,000                                                |  | 1.02                                        |  | December 14, 2011 
|Gerald Perkel      |  | 2,750,000                                             |  | 0.69                                        |  | September 20, 2011
|Harold Hughes      |  | 10,000                                                |  | 1.02                                        |  | December 14, 2011 
|Michel Berty       |  | 10,000                                                |  | 1.02                                        |  | December 14, 2011 
|Barry X Lynn       |  | 10,000                                                |  | 1.02                                        |  | December 14, 2011 
|Don C. Watters     |  | 10,000                                                |  | 1.02                                        |  | December 14, 2011 
|Scott Hildebrandt  |  | 1,000,000                                             |  | 0.89                                        |  | November 18, 2011 
|Stephen King       |  | 1,250,000                                             |  | 1.08                                        |  | February 3, 2012  
|Robert F. Dunne    |  | 750,000                                               |  | 1.04                                        |  | February 12, 2012 
|Robert Blaskowsky  |  | 350,000                                               |  | 1.11                                        |  | January 1, 2012   
|Diane Williams     |  | 500,000                                               |  | 1.02                                        |  | December 9, 2011  
|John Stuart        |  | 200,000                                               |  | 1.07                                        |  | February 11, 2012 
|Stephen M. Going   |  | 250,000                                               |  | 1.16                                        |  | March 17, 2012    

30

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The
following table sets forth information concerning our directors and executive officers as of April 30, 2002:

|Name               |  | Current
Office(s) Held                              |  | Commencement
of Office |  | Termination/
Renewal Date
of Office
|------------------ |  | --------------------------------------------------- |  | ---------------------- |  | -----------------------------------
|J. Michael Gullard |  | Chairman of the Board                               |  | May 1995               |  | Annual general meeting 2003        
|Gerald Perkel      |  | President and Chief Executive Officer               |  | September 2001         |  | Annual general meeting 2004        
|Harold Hughes      |  | Non-executive director                              |  | December 1993          |  | Annual general meeting 2002        
|Michel Berty       |  | Non-executive director                              |  | September 1998         |  | Annual general meeting 2002        
|Barry X Lynn       |  | Non-executive director                              |  | September 1999         |  | Annual general meeting 2004        
|Don C. Watters     |  | Non-executive director                              |  | December 1999          |  | Annual general meeting 2003        
|Scott Hildebrandt  |  | Senior Vice President, Chief Financial Officer      |  | November 2001          |  | Not applicable                     
|Stephen King       |  | Senior Vice President & General Manager             |  | February 2002          |  | Not applicable                     
|Robert F. Dunne    |  | Senior Vice President, Sales                        |  | February 2002          |  | Not applicable                     
|Robert Blaskowsky  |  | Chief Information Officer                           |  | January 2002           |  | Not applicable                     
|Diane Williams     |  | Vice President, Human Resources                     |  | December 2001          |  | Not applicable                     
|John Stuart        |  | Vice President & General ManagerEMEA Region        |  | April 2000             |  | Not applicable                     
|Stephen M. Going   |  | Vice President, General Counsel & Company Secretary |  | March 2002             |  | Not applicable                     

The
board as a whole determines compensation for non-executive directors, based upon the advice of an independent professional advisor who has provided details of compensation awarded to
directors of comparable companies. Non-executive directors receive an annual retainer and earn additional fees for attendance at board meetings and for time spent on other company-related
business. Fees are set within the limits stipulated in the company's Articles of Association. Non-executive directors are eligible to participate in our share option plans, details of
which are set out in note 24 to the financial statements, included in Item 17 of this Form 20-F.

The
board has appointed a remuneration committee (see below, under this Item 6.C "Sub-committees of the board"). The remuneration committee evaluates executive compensation
and advises the board of directors regarding the compensation package for our executive director, based on the need to attract, motivate, and retain individuals of the necessary calibre. It is
determined by reference to relevant market data for the countries in which the director performs his duties, and recognises the
continuing competitive market in the sectors in which we operate. The chief components of the executive director's remuneration, as applied to the two holders of that office during fiscal 2002, are as
follows:



31

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Sub-committees
of the board:

The
board is assisted by committees that have been established with written terms of reference. Their roles and composition are set out below.

The
audit committee consists of Mr. Hughes (chairman), Mr. Gullard and Mr. Watters, all of whom are non-executive directors. The audit committee meets at
least quarterly to consider the adequacy of the group's system of internal controls, policies and procedures and the outcome of the external audit, and to review the group's annual and quarterly
reports and accounts. It also involves the group's auditors in that process, focusing particularly on compliance with legal requirements,

32

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accounting standards and the requirements of the U.K. Financial Services Authority, the SEC and Nasdaq, and on an ongoing basis reviews the effectiveness of our systems of internal financial
controls. It also advises the board on the appointment of the group's auditors together with their remuneration for both audit and non-audit work. The committee is authorized to
investigate any activity within its terms of reference, to seek any information it requires from any employee and to obtain independent professional advice if it considers this necessary. Members of
senior management and the external auditor normally attend its meetings. The committee regularly meets in private session to confer with the auditors without the attendance of executive officers and
other members of the company's management. The ultimate responsibility for reviewing and approving our annual and quarterly reports and accounts remains with the board of directors.

Management
prepares a comprehensive system of budgets and forecasts with monthly reporting of actual results against targets, and provides the directors with regular updates on our
financial
performance. At the quarterly board meetings, the board is provided with an analysis of financial information that includes key performance and risk indicators. Our auditors are engaged to review our
reported results and balance sheet at each quarter end, and to audit the annual results and balance sheet. The board is responsible for reviewing and approving for publication the financial results
for the previous quarter. In addition, the audit committee meets with our auditors to discuss the results of their audit work.

We
do not currently have an internal audit function. The board has reviewed the need for an internal audit function but has decided that the current control mechanisms are sufficient for
our size. The board reviews the situation on an annual basis.

The
remuneration committee consists of three non-executive directors, Mr. Berty (Chairman), Mr. Lynn and Mr. Watters. Mr. Berty has been a member
of the committee since 1999, and was appointed committee chairman in 2000. Mr. Watters was appointed a member of the committee in 2000, and Mr. Lynn was appointed a member of the
committee in April 2002. None of the committee members has any personal financial interests (other than as shareholders and/or optionholders), conflicts of interests arising from
cross-directorships or day-to-day involvement in running the business. The committee is responsible for recommending to the board the framework of executive remuneration and
then determining individual terms of employment. These responsibilities cover salary and bonus arrangements, benefits, contracts of employment and share option grants. The committee operates in
accordance with written terms of reference and is authorized to seek appropriate professional advice if it considers this necessary. It ensures that remuneration is appropriate to each executive
director's responsibilities, taking into consideration our overall financial and business position, the highly competitive industry of which we are a part, salary scales within the company, and the
importance of recruiting and retaining management of the appropriate caliber.

The
nomination committee presently consists of Mr. Gullard (chairman), Mr. Perkel and Mr. Berty. The committee meets from time to time when required to do so, and
makes recommendations to the board on all proposed new appointments of directors. These appointments are subject to subsequent confirmation by the shareholders.

As
of April 30, 2002, we had 701 full-time employees, with 159 based in the U.K., 81 based outside of the U.K. in Europe, 429 based in North America and 32 based in
Australia, Japan, Korea and Singapore. These employees include 117 in product development, 96 in consulting, 27 in marketing, 14 in product management, 214 in sales, 66 in answerline and 167 in
finance, legal, administration and information technology. Our employees are not represented by any collective bargaining organizations and we have never experienced any work stoppages. We consider
our relations with our employees to be good.

33

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The
following table sets forth information concerning the share ownership (including outstanding share options) of our directors and executive officers as of April 30, 2002:

|Name               |  | Number of
Ordinary
Shares Owned |  | Number of
Ordinary Shares
Which May Be
Acquired Under
Option Schemes |  | Range of
Exercise Price
of Options in
Pounds Sterling |  | Expiration Date
of Options                                                          
|------------------ |  | ------------------------------- |  | -------------------------------------------------------------------- |  | ----------------------------------------------------- |  | ------------------------------------------------------------------------------------
|J. Michael Gullard |  | 64,361                          |  | 100,000
20,000
20,000
20,000                                         |  | 1.67
2.87
0.78
1.02                                   |  | June 21, 2006
September 16, 2009
November 30, 2010
December 14, 2011                
|Gerald Perkel      |  |                                |  | 2,750,000                                                            |  | 0.69                                                  |  | September 20, 2011                                                                  
|Harold Hughes      |  | 116,861                         |  | 50,000
10,000
10,000
10,000
10,000                                   |  | 3.00
2.40
2.87
0.78
1.02                              |  | August 19, 2002
June 16, 2004
September 16, 2009
November 30, 2010
December 14, 2011
|Michel Berty       |  | 6,861                           |  | 10,000
10,000                                                        |  | 0.78
1.02                                             |  | November 30, 2010
December 14, 2011                                                 
|Barry X Lynn       |  | 6,861                           |  | 10,000
10,000
10,000                                                 |  | 2.87
0.78
1.02                                        |  | September 16, 2009
November 30, 2010
December 14, 2011                              
|Don C. Watters     |  | 6,861                           |  | 10,000
10,000
10,000                                                 |  | 4.59
0.78
1.02                                        |  | December 8, 2009
November 30, 2010
December 14, 2011                                
|Scott Hildebrandt  |  |                                |  | 1,000,000                                                            |  | 0.89                                                  |  | November 18, 2011                                                                   
|Stephen King       |  |                                |  | 1,250,000                                                            |  | 1.08                                                  |  | February 3, 2012                                                                    
|Robert F. Dunne    |  |                                |  | 750,000                                                              |  | 1.04                                                  |  | February 24, 2012                                                                   
|Robert Blaskowsky  |  |                                |  | 350,000                                                              |  | 1.11                                                  |  | January 1, 2012                                                                     
|Diane Williams     |  |                                |  | 500,000                                                              |  | 1.02                                                  |  | December 9, 2011                                                                    
|John Stuart        |  | 12,000                          |  | 40,000
200,000                                                       |  | 3.10
1.07                                             |  | April 5, 2010
February 11, 2012                                                     
|Stephen M. Going   |  |                                |  | 250,000                                                              |  | 1.16                                                  |  | March 17, 2012                                                                      

We
currently operate four share option plans: the 1991, 1996 and 1998 share option plans, and the 1994 employee benefit trust. These plans provide for the grant of options to acquire
shares to persons who devote substantially all their working time to the company and other eligible persons as determined by the board. The exercise price of options issued under these plans is the
fair market value at the time the options are granted. Options are generally exercisable in monthly or annual instalments commencing one year after the date of grant. Unexercised options lapse when
the optionholder ceases to be employed by the company or at a predetermined expiry date (of up to ten years from the date of grant), whichever occurs first.

In
September 1998 shareholders approved the 1998 Share Option Plan, which authorised the Company to grant options over a maximum of 21,552,000 shares. This authority will expire
on September 24 2008.

Options
are also outstanding as a result of grants made under our previous share option plans and under share option plans we adopted when we acquired Intersolv, Inc. Authority to
grant new options under these plans has expired, but options granted under those plans continue to be exercisable in accordance with the original grant rules, or the acquisition agreement.

34

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At
April 30, 2002, there were outstanding stock options under the Merant plans and the Intersolv plan to purchase a total of 25,061,376 ordinary shares with exercise prices
ranging from £0.65 to £7.15 and expiration dates ranging from May 2002 to April 2012.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

At
October 11, 2002, the following interests of 5% or more in our share capital have been reported:

Shares held

Percentage
holdingSchroder Investment Management Limited

16,489,792

16.0
%Fidelity International Limited

12,876,750

12.5
%UBS Asset Management Limited

6,887,196

6.7
%


We
have previously reported interests of 5% or more in our share capital, as shown below:



At
April 30, 2002, The Bank of New York, acting as Depositary Bank, held approximately 14% of our ordinary shares in respect of which American depositary shares (or ADSs) have
been issued, evidenced by American depositary receipts (or ADRs). The Bank of New York held 12% of our ordinary shares at April 30, 2001 and 11% at April 30, 2000. The ADRs are traded on
the Nasdaq National Market. On March 13, 1998, we split our ordinary shares on a 5-for-1 basis, but our ADSs did not split and, consequently, each ADS now represents
five ordinary shares. Some of the holdings reported above may be held in the form of ADSs, but for the purposes of the table, numbers of ADSs have been converted to numbers of ordinary shares.

We
are not directly or indirectly owned or controlled by another corporation, by any foreign government or by any other natural or legal person.

Our
major shareholders do not have different voting rights.

In
fiscal 2000, one of our subsidiaries, Merant, Inc., a California corporation, entered a loan agreement with Mr. Greenfield, who was Chief Executive Officer at the time.
Details of the loan are set out in note 25 to the financial statements.

On
February 20, 2002, Merant Inc. made a loan in the principal amount of $120,000 to Robert Dunne, the company's Senior Vice President of Sales. Under the terms of this
loan, the outstanding principal balance bears interest at a rate of 5.25% per annum and the loan must be repaid through fixed and regular payroll deductions from salary and bonuses, if any, until such
time as the loan is repaid in full.

Not
required.

35

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ITEM 8. FINANCIAL INFORMATION

The
"Consolidated Profit and Loss Account", "Consolidated Balance Sheet", "Consolidated Cash Flow Statement", "Notes to the Consolidated Cash Flow Statement", "Consolidated Statement of
Total Recognised Gains and Losses", "Movement in Shareholders' Funds", "Notes to the Financial Statements", and "Report of the Auditors" are set forth elsewhere in this Form 20-F.

Legal
Proceedings

In
December 1998 and January 1999, seven class action securities complaints were filed in the United States District Court for the Southern District of New York against the
company and certain of its officers and directors. The Court ordered the seven cases consolidated, appointed lead plaintiffs and lead counsel, and ordered the filing of a consolidated amended
complaint, which was filed on June 9, 1999. The lead plaintiffs sought to have the matter certified as a class action of purchasers of the American depositary shares of the company during the
period from June 17, 1998 to November 12, 1998, including the former shareholders of Intersolv, Inc. who acquired American depositary shares of the company in connection with the
merger involving the two companies. The consolidated complaint alleged various violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 and sought unspecified compensatory
damages for alleged failure to disclose material non-public information concerning the company's business condition and prospects. In May 1999, the company filed a motion to
transfer the matter to the Northern District of California, and the Court granted the company's motion in November 1999. The action was transferred in December 1999 to the Northern
District of California. After the action was transferred to California, plaintiffs again amended their complaint alleging the same claims as described in the prior amended complaint but without the
1934 Act claims or the class period. The defendants filed a motion to dismiss the newly amended complaint in June 2000 and plaintiffs opposed this motion. A hearing on the motion took place in
September 2000. On December 20, 2000, the Court issued a ruling granting in part and denying in part defendant's motion to dismiss. The Court dismissed all of plaintiffs' allegations,
with the exception of certain allegations that defendants misled the market regarding the company's plans for its Y2K business. On February 16, 2001, defendants answered the second consolidated
amended complaint, denying the remaining allegations and asserting affirmative defenses against the claim. Because of the Court's ruling, the mandatory discovery stay of the Reform Act is no longer in
effect. The plaintiffs have served document requests on the company and document production has begun on a rolling schedule. The plaintiffs filed their motion for class certification and supporting
materials on April 20, 2001. On June 19, 2001, the Court entered a Stipulation and Order Regarding Class Certification ("Class Certification Order"). The Class Certification Order
certified this action to proceed as a class action while preserving the defendants' rights to challenge, at a later date, the propriety of this action proceeding as a class action, the definition of
the class, and the class representatives. On October 25, 2001, at a Joint Case Management Conference, the Court established a pre-trial schedule and set a trial date of
April 7, 2003.

On
August 21, 2002, the parties entered into a Stipulation of Settlement (the "Settlement Agreement") under which all claims in this litigation were settled. All payments made
under the Settlement Agreement to settle this litigation and all associated costs will be paid by the company's insurance carrier. A number of conditions remain to be satisfied before the settlement
reflected in the Settlement Agreement becomes effective, including approval of the settlement by the United States District Court for the Northern District of California.

If
the settlement fails to become effective for any reason, the company will continue to defend this litigation vigorously, but, due to the inherent uncertainties of litigation, the
company cannot accurately predict the ultimate outcome of the litigation. Any unfavourable outcome of the litigation could have a material adverse impact on our business, financial condition and
results of operations.

36

---

We
and our subsidiaries are also involved in legal proceedings, claims and litigation arising in the ordinary course of business. Although the ultimate results of these legal
proceedings, claims and litigation are not currently determinable, in the opinion of management, none of these matters will materially affect our financial position, results of operations, or
liquidity.

Dividend
Distribution Policy

We
have never paid cash dividends on our ordinary shares, and we do not anticipate paying any regular cash dividends in the near future.

On
June 6, 2002 we held an extraordinary general meeting at which our shareholders approved the Company's proposal to repurchase up to an additional 17,253,922 of our outstanding
shares, representing approximately 15% of the outstanding share capital at that time. We began the repurchase of our own shares under this authority on June 11 2002. Between that date and
September 19 2002 (the last date prior to publication of this annual report that shares were repurchased) we repurchased for cancellation 11,776,229 ordinary shares for an aggregate
consideration of £11,337,705, representing an average price of approximately £0.96 per ordinary share.

ITEM 9. THE OFFER AND LISTING

Market
Price Information

Our
ordinary shares are listed on the London Stock Exchange under the symbol MRN. They are also traded on the Nasdaq National Market in the United States in the form of ADSs, evidenced
by American depositary receipts, under the symbol MRNT. In March 1998, we undertook a subdivision (or stock split) of our ordinary shares on a 5-for-1 basis and adjusted
the value of our ADSs such that each ADS now represents five ordinary shares. All share and per-share amounts included in this report reflect the impact of this stock split.

The
following table sets forth the highest and lowest middle market quotation as reported in the Daily Official List of the United Kingdom Listing Authority (in respect of ordinary
shares) for the periods indicated:

High

LowYear ended January 31, 1998



£5.66

£2.04Three months ended April 30, 1999



£7.18

£5.10Year ended April 30, 1999



£6.75

£0.97Year ended April 30, 2000



£4.87

£1.47Year ended April 30, 2001:

First quarter
Second quarter
Third quarter
Fourth quarter

£1.65
£1.41
£1.10
£1.03

£1.31
£0.71
£0.77
£0.62Year ended April 30, 2002:

First quarter
Second quarter
Third quarter
Fourth quarter

£1.17
£1.13
£1.18
£1.18

£0.64
£0.61
£0.81
£1.01Year ended April 30, 2003:

First quarter
August, 2002
September, 2002
October 1-11, 2002

£1.10
£0.85
£0.88
£0.79

£0.81
£0.84
£0.79
£0.70


37

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The
following table sets forth the highest and lowest bid price as reported by the Nasdaq National Market System in respect of ADSs, (each of which represents five ordinary shares) for
the periods indicated:

High

LowYear ended January 31, 1998



$
47.50

$
16.35Three months ended April 30, 1998



$
60.64

$
39.13Year ended April 30, 1999



$
57.25

$
7.90Year ended April 30, 2000



$
39.00

$
12.13Year ended April 30, 2001:

First quarter
Second quarter
Third quarter
Fourth quarter

$$$$
14.75
10.88
8.69
8.00

$$$$
9.38
5.00
5.19
4.05Year ended April 30, 2002:

First quarter
Second quarter
Third quarter
Fourth quarter

$$$$
8.43
8.43
8.49
8.65

$$$$
4.45
4.00
5.75
6.84Year ended April 30, 2003:

First quarter
August, 2002
September, 2002
October 1-11, 2002

$$$$
8.40
7.00
6.97
6.25

$$$$
6.00
5.90
5.95
5.22


Not
required.

Our
ordinary shares are listed on the London Stock Exchange under the symbol MRN. They are also traded on the Nasdaq National Market in the United States in the form of ADSs, evidenced
by American depositary receipts, under the symbol MRNT. In March 1998, we undertook a subdivision (or stock split) of our ordinary shares on a 5-for-1 basis and adjusted
the value of the ADSs such that each ADS now represents five ordinary shares. All share and per-share amounts included in this report reflect the impact of this stock split.

Not
required.

Not
required.

Not
required.

ITEM 10. ADDITIONAL INFORMATION

Not
required.

38

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Our
Memorandum of Association, as amended, filed as Exhibit 2.01 to our annual report on Form 20-F for the fiscal year ended January 1, 1997 (SEC File
No. 0-19696) and our Articles of Association filed as Exhibit 2.02 to the same report, are incorporated in this Form 20-F by reference. In addition, we
incorporate by reference the "Description of Securities to be Registered" included in the annual report on Form 20-F for the fiscal year ended April 30, 2000. The Transfer
Agent and Registrar for our ADSs is Bank of New York.

Acquisitions

On
February 20, 2001, we completed the acquisition of the Enterprise Division of NetObjects, Inc. The acquired business, which was based in Redwood City, California, was a
provider of web content management software. The total consideration for the transaction was £12.6 million, payable in cash. The transaction has been accounted for using the
purchase accounting method.

Dispositions

On
August 10, 2001, we completed the sale of our ACT Division to Golden Gate Capital and Parallax Partners. The transaction was conditional upon shareholder approval and other
customary conditions of closing. Our shareholders approved the transaction at an extraordinary general meeting held on July 23, 2001. On completion, we received an initial cash payment of
£37.6 million. The final sale price remains subject to a post-closing price adjustment mechanism. We cannot currently predict when a final settlement of the
post-closing purchase adjustment will be reached. After writing off the unamortized portion of goodwill which arose on the acquisitions for the ACT Division, we recorded a loss of
£1.0 million on the disposal.

On
November 8, 2001, we completed the sale of our EDC Division to Golden Gate Capital for £20.5 million, payable in cash, subject to adjustments based on the
value of assets transferred. The transaction was conditional upon shareholder approval and other customary conditions of closing. Our shareholders approved the transaction at an extraordinary general
meeting held on October 30, 2001. On completion, we received an initial cash payment of £15.2 million, subject to a post-closing price adjustment mechanism. We
expect that final settlement of the post-closing sale price adjustment will be agreed to during fiscal 2003. After writing off the unamortized portion of goodwill attributed to the EDC
Division, we recorded a loss of £2.1 million on the disposal.

In
October 2001 we completed the sale of our real estate in Newbury, England, for £10.8 million. Following the disposal of the ACT Division, we decided it was
no longer appropriate to retain ownership of this facility. We realized a pre-tax loss of £1.8 million on the transaction.

There
are currently no decrees or regulations under the laws of the United Kingdom restricting the import or export of capital or affecting the remittance of dividends or other payments
to holders of our ordinary shares or American depositary shares (ADSs) who are non-residents of the United Kingdom.

There
are no limitations relating only to non-residents of the United Kingdom under U.K. law or our Memorandum and Articles of Association or on the right to be a holder of,
and to vote, our ordinary shares.

Merant
plc and its subsidiaries are not permitted under English law to hold ordinary shares in the capital of Merant plc. Although we are presently authorized to repurchase our
outstanding ordinary shares, as detailed herein, any repurchased shares must be cancelled. Our investment in own shares represents shares held by Merant Trustees Limited, which are included in our
consolidated financial

39

---

statements in accordance with U.K. GAAP (see note 15 to the financial statements, set forth in Item 17 to this Form 20-F).

We
are subject to legal restrictions on the amount of dividends we can pay our shareholders. In particular, the Companies Act 1985 of Great Britain provides that a publicly held company
may pay dividends only if:



In
addition, we may only declare a dividend if we have sufficient distributable profits available for this purpose. Distributable profits are accumulated realized profits not previously
distributed or capitalized less accumulated realized losses not previously written off, in a reduction or reorganization of capital duly made.

Holders
of ADSs on the relevant record date will be entitled to receive any dividends payable on the ordinary shares underlying the ADSs, subject to the terms of the deposit agreement
under which the ADSs are issued. Subject to exceptions provided in the deposit agreement, cash dividends paid in pounds sterling will be converted by the depositary to U.S. dollars and paid by the
depositary to holders of ADSs, net of conversion expenses of the depositary, and in accordance with the deposit agreement. The rights of holders of ADSs to any dividends or other distributions on the
ordinary shares underlying the ADSs will be governed by the deposit agreement and may be different from the rights of holders of ordinary shares.

The
statements below are based on the laws in force in the United Kingdom and the United States at the date of this annual report. They are subject to any subsequent changes in law.
Changes could be made on a retroactive basis. The following summary does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to acquire, hold
or dispose of shares or ADSs. It does not purport to deal with the tax consequences applicable to all categories of investors. Some investors may be subject to special rules. We are not making any
representations with respect to the tax consequences to any particular holder. You should consult your own tax advisors concerning the overall tax consequences of your ownership of shares or ADSs.

ADSs

You
generally may be entitled to the benefits of the tax treaty between the United States and the United Kingdom. Under the terms of the existing treaty, you will be a U.S. shareholder
if you are:



U.K.
Taxation

The
following generally applies to U.S. shareholders.

40

---

Taxation
of dividends

Current
U.K. taxation legislation does not require tax to be withheld at source from cash dividends paid on shares.

Under
the terms of the tax treaty between the United States and the United Kingdom, U.S. shareholders may be, in principle, entitled to receive a payment equal to the amount of the tax
credit that is usually available to U.K. residents, less a withholding tax levied on that payment. The tax credit is one-ninth of the amount of the dividend, that is, 10% of the aggregate
of the dividend and the tax credit. However, in practice, U.S. shareholders will not receive any payment from the U.K. Inland Revenue in respect of the tax credit because the tax treaty provides for a
U.K. withholding tax greater than the amount of the U.K. tax credit. The withholding tax, however, is treated as fully satisfied by the amount withheld from the tax credit.

In
July 2001, the U.K. Chancellor of the Exchequer and the U.S. Treasury Secretary signed a new U.K./U.S.A. Double Taxation Convention. If the new U.K./U.S.A. Double Taxation
Convention is ratified in the form signed, there will be no practical difference to the way U.S. residents are treated.

Taxation
of capital gains

A
U.S. shareholder who is not resident, and in the case of an individual also not ordinarily resident, in the United Kingdom for U.K. tax purposes will not be liable for U.K. taxation on
capital gains realized on the disposal of his or her shares or ADSs unless at the time of the disposal:



A
U.S. shareholder who is an individual and who has ceased to be resident and ordinarily resident for tax purposes in the United Kingdom on or after March 17, 1998, is subject to
special anti-avoidance rules. If the individual continues to be not resident and not ordinarily resident in the United Kingdom for a period of less than five complete U.K. tax years of assessment
following departure from the U.K. and disposes of shares or ADSs during that period (that were owned on departure from the U.K.), they will also be liable upon recommencing U.K. tax residence to U.K.
tax on capital gains, subject to any available exemption or relief, even though the shareholder is neither resident nor ordinarily resident in the United Kingdom at the time of the disposal. These
anti-avoidance rules will not apply if the individual has been not resident and not ordinarily resident for UK tax purposes for 4 whole UK tax years out of the 7 UK tax years prior to the year of
departure from the UK. Capital gains made after the physical date of leaving the UK but in the UK tax year of departure will be liable to tax in the UK tax year of departure (again, unless the
individual has been not ordinarily resident for UK tax purposes for 4 whole UK tax years out of the 7 UK tax years prior to the year of departure from the UK).

The
position of U.S. shareholders in respect of taxation of capital gains, as outlined above is expected to remain virtually unchanged if the new U.K./U.S.A. Double Taxation Convention
comes into force in the form signed in July 2001.

U.K.
stamp duty and stamp duty reserve tax

U.K.
stamp duty or stamp duty reserve tax is payable upon the transfer or issue of shares to, or to a nominee or agent of, a person whose business is or includes issuing depositary
receipts or providing clearance services. For this purpose, the current rate of stamp duty and stamp duty reserve tax is 1.5%, rounded up, in the case of stamp duty, to the nearest £5. The
rate is applied, in each case, to the amount or value of the consideration or, in some circumstances, to the value of the shares.

41

---

Provided
that the instrument of transfer is not executed in the United Kingdom and remains at all subsequent times outside the United Kingdom, no U.K. stamp duty will be payable on the
transfer of ADSs. An agreement to transfer ADSs will not give rise to a liability to stamp duty reserve tax.

The
purchase of shares, as opposed to ADSs, may give rise to a charge to U.K. stamp duty or stamp duty reserve tax at the rate of 0.5%, rounded up, in the case of stamp duty, to the
nearest £5. The rate is applied to the price payable for the shares at the time of the transfer or agreement to transfer. Stamp duty reserve tax is generally the liability of the purchaser
and U.K. stamp duty is usually paid by the purchaser.

U.S.
Taxation

Introduction

The
following narrative summarizes the principal U.S. federal income tax consequences of acquiring, holding and disposing of shares or ADSs. It does not consider:



U.S.
federal income tax consequences to U.S. shareholders

The
following applies to U.S. shareholders that are fully eligible for the benefits of the tax treaty between the United States and the United Kingdom.

For
U.S. federal income tax purposes, U.S. shareholders of ADSs will be treated as the owners of the shares represented by those ADSs.

Distributions
on shares or ADSs

In
general, if you are a U.S. shareholder, you will be required to include distributions made by us with respect to shares or ADSs in your gross income. As described above, U.S.
shareholders are entitled, under the treaty to claim a payment of a tax credit from the United Kingdom, but that payment would be offset by applicable withholding taxes imposed by the United Kingdom
under the treaty. A U.S. shareholder that makes an election to be treated as receiving the payment of the tax credit and paying the applicable withholding tax must make this election by so indicating
on Line 5 of Form 8833 (Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b)) and filing the completed Form 8833 with the shareholder's income tax return for the
relevant year, in addition to any other filings that may be required.

A
U.S. shareholder making this election will be treated as having received an additional dividend equal to the gross amount of the tax credit (unreduced by amounts withheld), and as
having paid the withholding tax due on the date of the distribution. Thus, the U.S. shareholder must include in income the gross payment deemed received, and may claim, subject to limitations, a
foreign tax credit for the

42

---

withholding tax treated as paid to the United Kingdom or deduct that amount from the U.S. shareholder's federal taxable income. Dividends received with respect to the shares or ADSs will be treated
as foreign source income, which may be relevant in calculating your foreign tax credit limitation. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific
classes of income. For this purpose, dividends paid with respect to the shares or ADSs generally will constitute "passive income" or, in the case of certain shareholders, "financial services income."

Dividends
paid by us will not be eligible for the dividends received deduction available to certain U.S. corporate shareholders under Internal Revenue Code.

The
amount of any cash distribution paid in pounds sterling will equal the U.S. dollar value of the distribution, calculated by reference to the exchange rate in effect at the time the
dividends are included in income. You should not recognise any foreign currency gain or loss if such foreign currency is converted into U.S. dollars on the date included in income. Foreign currency
gain or loss recognised upon a subsequent sale or other disposition of the pounds sterling, if any, will be U.S. source ordinary income or loss for U.S. federal income tax purposes. For accrual basis
U.S. shareholders making the election described above relating to payment of the U.K. tax credit and withholding tax, although the gross dividend is translated into U.S. dollars and included in income
at the spot rate on the payment date, the taxes treated as withheld from the dividend are translated into U.S. dollars at the average rate for the taxable year for foreign tax credit purposes. A cash
basis U.S. shareholder claiming foreign tax credits translates both the gross dividend and withholding tax into U.S. dollars at the exchange rate on the date the dividend is included in income.

If
the new U.K./U.S.A. Double Taxation Convention comes into force in the form signed in July 2001, it will render the above discussion of the U.K. tax credit election
inapplicable. You should consult your own tax advisor concerning the potential effects of the new tax treaty.

Sale
or exchange of shares or ADSs

You
will generally recognise capital gain or loss upon the sale or exchange of the shares or ADSs measured by the difference between the amount realized on the sale or exchange and your
tax basis in the shares or ADSs. Your gain or loss will be long-term capital gain or loss if you have held the shares or ADSs for more than one year. In the case of
non-corporate U.S. shareholders, the maximum tax rate on capital gains arising on the disposition of assets held for more than one year is 20%, but may be lower depending on the U.S.
shareholder's tax bracket and holding period. In general, any capital gain or loss recognised upon the sale or exchange of shares or ADSs will be treated as U.S. source income or loss, as the case may
be, for U.S. foreign tax purposes. Your ability to deduct capital losses is subject to limitations.

U.S.
federal income tax consequences to non-U.S. shareholders

The
following summarizes the U.S. federal income tax consequences of acquiring, holding and disposing of shares or ADSs by a shareholder that is not a U.S. person (a Non-U.S.
shareholder).

Distributions
on shares or ADSs and sale or exchange of shares or ADSs

Subject
to the discussion below with respect to U.S. backup withholding, a foreign shareholder generally will not be subject to U.S. federal income tax on distributions on shares or
ADSs, or gain from the sale or exchange of shares or ADSs unless:



43

---



If
you are a corporate foreign shareholder, effectively connected income may, under some circumstances, be subject to an additional branch profits tax at a 30 per cent rate or at a lower
rate if you are eligible for the benefits of an income tax treaty that provides for a lower rate.

U.S.
Information Reporting and Backup Withholding

In
general, information reporting requirements may apply to payments of dividends and the proceeds from the sale or disposal of shares or ADSs paid within the United States, unless an
exemption applies. In connection with this information reporting, backup withholding tax at the rate of 30% for 2002 and 2003 (currently scheduled to be reduced to 28% by 2006) may apply if:



Some
shareholders, including corporations and shareholders that provide appropriate certifications as to non-U.S. status, will be exempt from backup withholding. Amounts withheld as backup withholding
tax may be credited against a holder's U.S. federal income tax liability. A shareholder may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate
claim for refund with the IRS and furnishing any required information.

Shareholders
should consult their own tax advisers regarding the application of information reporting and backup withholding tax in their particular situations, the availability of an
exemption and the procedure for obtaining such an exemption, if available. Shareholders should note U.S. Treasury regulations that have been in effect since January 1, 2001, generally
have expanded the circumstances under which information reporting and backup withholding tax may apply. For example, in the case of payments made within the United States to a foreign simple trust, a
foreign grantor trust or a foreign partnership (other than payments to a qualifying "withholding foreign trust" or "withholding foreign partnership" within the meaning of the applicable U.S. Treasury
regulations and payments that are effectively connected with the recipient's conduct of a U.S. trade or business), the beneficiaries, owners, or partners, as the case may be, will be required to
provide the certification discussed above in order to establish an exemption from backup withholding tax and information reporting requirements. Moreover, a payer or middleman may rely on a
certification provided by a payee that is not a U.S. person only if such payer or middleman does not have actual knowledge or a reason to know that any information or certification stated in such
certificate is incorrect. Information reporting on Form 5471 may be required by U.S. shareholders who acquire 10% or more of the shares of Merant plc.

Not
required.

Not
required.

44

---

We
are subject to the information requirements of the Securities Exchange Act of 1934, as amended. In accordance with these requirements, we file an annual report on
Form 20-F and furnish other information with the SEC. These materials, including this annual report and related exhibits, may be inspected at the SEC's public reference facility
located at:



You
may also obtain copies of these materials from the SEC, upon payment of a duplication fee. Please call the SEC at +1 (800) 732-0330 for further information.

Not
required.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Our principal financial instruments, other than derivatives, comprise cash and short-term deposits. The main purpose of these financial instruments is
to fund the operations of the business. We have various other financial instruments, such as trade debtors and trade creditors, that arise directly from our operations. It is, and has been throughout
the period under review, our policy that no trading in financial instruments is undertaken.

The
main risks arising from our operations are liquidity risk and foreign currency risk. The board reviews and agrees on policies for managing each of these risks and they are summarized
below. These policies have remained unchanged during the period under review.

Liquidity
risks

Our
objective is to maintain a balance between maximization of investment returns and liquidity by restriction of the permitted investments and the duration to maturity of those
investments. We currently invest surplus cash in high interest current accounts.

Foreign
currency risk

Our
operations are based principally in the United States and the United Kingdom but we also operate in many other countries around the world. Consequently we are exposed to the effects
of foreign currency exchange rate fluctuations, particularly, but not exclusively, between the U.S. dollar and pounds sterling. We also have transactional exposures. Such exposures arise from sales or
purchases by an operating unit in currencies other than that unit's functional currency.

Exchange
rate fluctuations

We
prepare our consolidated financial statements in pounds sterling. Revenue, costs and expenses arising in currencies other than pounds sterling are translated using average exchange
rates. Assets and liabilities denominated in currencies other than pounds sterling are translated at exchange rates in effect at the balance sheet date. Historically, the majority of our revenue arose
in U.S. dollars, whereas our costs were incurred approximately equally in U.S. dollars and other currencies, predominately pounds sterling. More recently, however, the currencies of revenue and
expenses have been closely aligned. Nevertheless, fluctuations in exchange rates, particularly between the U.S. dollar and the pound sterling, may have a significant impact on our operating results.
In 2002, 2001 and 2000,

45

---

fluctuations between the U.S. dollar and the pound sterling have not been significant, and net exchange rate gains or losses on operational transactions have been immaterial.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not
required.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS.

Neither we nor any other person has modified materially the instruments defining the rights of holders of any class of our registered securities or issued or
modified any other class of securities or withdrawn or substituted a material amount of the assets securing any class of our registered securities.

The
trustees and paying agents for our registered securities have not changed during the fiscal year ending April 30, 2002.

ITEM 15. CONTROLS AND PROCEDURES

Not applicable

ITEM 16. [RESERVED]

46

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PART III

ITEM 17. FINANCIAL STATEMENTS

The following consolidated financial statements and related schedule, together with the report of Ernst & Young LLP., independent auditors, are filed as
part of this annual report:

|                                                           |                                                                                                               | Page
|---------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------- | ----
|Report of Independent Auditors                             |                                                                                                               | 48  
|Financial statements:                                      |                                                                                                               |     
|                                                           | Consolidated Profit and Loss Account for the years ended April 30, 2002, 2001 and 2000                        |     
|                                                           | Consolidated Balance Sheet as at April 30, 2002 and 2001                                                      |     
|                                                           | Consolidated Cash Flow Statement for the years ended April 30, 2002, 2001 and 2000                            |     
|                                                           | Notes to the Consolidated Cash Flow Statement for the years ended April 30, 2002, 2001 and 2000               |     
|                                                           | Consolidated Statement of Total Recognised Gains and Losses for the years ended April 30, 2002, 2001 and 2000 |     
|                                                           | Consolidated Statement of Movements in Shareholders' Funds for the years ended April 30, 2002, 2001 and 2000  |     
|                                                           | Notes to the Financial Statements for the years ended April 30, 2002, 2001 and 2000                           |     
|Schedule for the years ended April 30, 2002, 2001 and 2000 |                                                                                                               |     
|                                                           | Schedule IIValuation and Qualifying Accounts                                                                 |     

47

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Merant PLC  REPORT OF INDEPENDENT AUDITORS

To
the shareholders of Merant plc

We
have audited the accompanying consolidated balance sheets of Merant plc as at April 30, 2002 and 2001, and the related consolidated profit and loss accounts, consolidated
statements of cash flow, total recognised gains and losses and movements in shareholders' funds for each of the three years in the period ended April 30, 2002. Our audits also included the
financial statement schedule listed in the Index at Item 17. These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on
these financial statements and schedule based on our audits.

We
conducted our audits in accordance with United Kingdom Auditing Standards and United States generally accepted auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Merant plc at April 30,
2002 and 2001, and the consolidated results of its operations and its consolidated cash flows for each of the three years in the period ended April 30, 2002 in conformity with accounting
principles generally accepted in the United Kingdom which differ in certain respects from those generally accepted in the United States (see Note 26 of the Notes to the Financial Statements).
Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information
set forth therein.

| |  | ERNST & YOUNG LLP
| |  | -----------------

Reading, England October 25, 2002

48

---



MERANT PLC  CONSOLIDATED PROFIT AND LOSS ACCOUNT

|Years ended April 30                                  |  | Notes |  | 2002    |    | 2001    |    | 2000    |   
|----------------------------------------------------- |  | ----- |  | ------- | -- | ------- | -- | ------- | --
|
|Revenue: continuing business                          |  |       |  |         |    |         |    |         |   
|Licence fees                                          |  |       |  | 33,387  |    | 42,193  |    | 38,768  |   
|Maintenance subscriptions                             |  |       |  | 39,779  |    | 35,065  |    | 26,709  |   
|Training and consulting                               |  |       |  | 13,902  |    | 17,817  |    | 14,993  |   
|                                                      |  |       |  |         |    |         |    |         |   
|                                                      |  |       |  | 87,068  |    | 95,075  |    | 80,470  |   
|Revenue: discontinued business                        |  | 4     |  | 31,207  |    | 120,358 |    | 146,813 |   
|                                                      |  |       |  |         |    |         |    |         |   
|Total revenue                                         |  |       |  | 118,275 |    | 215,433 |    | 227,283 |   
|                                                      |  |       |  |         |    |         |    |         |   
|Cost of revenue: continuing business                  |  |       |  |         |    |         |    |         |   
|Cost of licence fees                                  |  |       |  | 1,429   |    | 2,164   |    | 1,903   |   
|Cost of maintenance revenue                           |  |       |  | 5,855   |    | 5,490   |    | 4,827   |   
|Cost of service revenue                               |  |       |  | 13,832  |    | 17,198  |    | 15,121  |   
|                                                      |  |       |  |         |    |         |    |         |   
|                                                      |  |       |  | 21,116  |    | 24,852  |    | 21,851  |   
|Cost of revenue: discontinued business                |  | 4     |  | 5,510   |    | 29,534  |    | 35,287  |   
|                                                      |  |       |  |         |    |         |    |         |   
|Total cost of revenue                                 |  |       |  | 26,626  |    | 54,386  |    | 57,138  |   
|                                                      |  |       |  |         |    |         |    |         |   
|Gross profit                                          |  |       |  | 91,649  |    | 161,047 |    | 170,145 |   
|                                                      |  |       |  |         |    |         |    |         |   
|Operating expenses                                    |  |       |  |         |    |         |    |         |   
|Research and development                              |  | 5     |  | 24,187  |    | 39,774  |    | 41,526  |   
|Sales and marketing                                   |  |       |  | 58,922  |    | 103,667 |    | 108,959 |   
|General and administrative                            |  | 6     |  | 53,938  |    | 57,368  |    | 57,792  |   
|                                                      |  |       |  |         |    |         |    |         |   
|Total operating expenses                              |  |       |  | 137,047 |    | 200,809 |    | 208,277 |   
|                                                      |  |       |  |         |    |         |    |         |   
|Operating (loss):                                     |  |       |  |         |    |         |    |         |   
|Continuing business                                   |  |       |  | (41,953 | )  | (28,798 | )  | (41,456 | ) 
|Discontinued business                                 |  |       |  | (3,445  | )  | (10,964 | )  | 3,324   |   
|                                                      |  |       |  |         |    |         |    |         |   
|Total operating (loss)                                |  | 7     |  | (45,398 | )  | (39,762 | )  | (38,132 | ) 
|Exceptional items:                                    |  |       |  |         |    |         |    |         |   
|Continuing operations:                                |  |       |  |         |    |         |    |         |   
|Fundamental restructuring                             |  | 9     |  | (13,342 | )  |        |    |        |   
|Loss on disposal of fixed assets                      |  | 9     |  | (1,761  | )  |        |    |        |   
|Amounts written off on investments                    |  | 9     |  |        |    | (3,254  | )  |        |   
|Discontinued operations                               |  |       |  |         |    |         |    |         |   
|(Loss) on termination of business operation           |  | 4/9   |  | (3,139  | )  | (11,317 | )  |        |   
|                                                      |  |       |  |         |    |         |    |         |   
|(Loss) on ordinary activities, before interest income |  |       |  | (63,640 | )  | (54,333 | )  | (38,132 | ) 
|Interest income                                       |  |       |  | 1,751   |    | 4,466   |    | 2,953   |   
|Interest expense                                      |  | 10    |  | (137    | )  | (179    | )  | (190    | ) 
|                                                      |  |       |  |         |    |         |    |         |   
|(Loss) on ordinary activities before taxation         |  |       |  | (62,026 | )  | (50,046 | )  | (35,369 | ) 
|Taxation                                              |  | 11    |  |        |    | (868    | )  | (92     | ) 
|                                                      |  |       |  |         |    |         |    |         |   
|(Loss) for the period                                 |  |       |  | (62,026 | )  | (50,914 | )  | (35,461 | ) 
|                                                      |  |       |  |         |    |         |    |         |   
|(Loss) per share: basic                               |  | 12    |  | (49.6   | )p | (37.9   | )p | (24.9   | )p
|(Loss) per share: diluted                             |  | 12    |  | (49.6   | )p | (37.9   | )p | (24.9   | )p
|                                                      |  |       |  |         |    |         |    |         |   

The
accompanying notes form part of these financial statements.
A summary of the significant adjustments to the loss for the period that would be required had U.S. GAAP been applied instead of U.K. GAAP is set out in note 26 to the financial statements.

49

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MERANT PLC  CONSOLIDATED BALANCE SHEET

|                                               |  |    |  | April 30
2002 |   | April 30
2001 |  
|---------------------------------------------- |  | -- |  | ------------- | - | ------------- | -
|
|Fixed assets                                   |  |    |  |               |   |               |  
|Intangible fixed assets                        |  | 13 |  | 21,782        |   | 75,383        |  
|Tangible fixed assets                          |  | 14 |  | 6,284         |   | 28,313        |  
|Investments                                    |  | 15 |  | 5,858         |   | 6,860         |  
|                                               |  |    |  |               |   |               |  
|Total fixed assets                             |  |    |  | 33,924        |   | 110,556       |  
|                                               |  |    |  |               |   |               |  
|Current assets                                 |  |    |  |               |   |               |  
|Stocks                                         |  | 16 |  | 94            |   | 610           |  
|Debtors                                        |  | 17 |  | 25,176        |   | 58,678        |  
|Cash and bank deposits                         |  |    |  | 71,620        |   | 61,200        |  
|                                               |  |    |  |               |   |               |  
|Total current assets                           |  |    |  | 96,890        |   | 120,488       |  
|                                               |  |    |  |               |   |               |  
|Creditors: amounts falling due within one year |  | 18 |  | 58,271        |   | 101,034       |  
|                                               |  |    |  |               |   |               |  
|Net current assets                             |  |    |  | 38,619        |   | 19,454        |  
|                                               |  |    |  |               |   |               |  
|Total assets less current liabilities          |  |    |  | 72,543        |   | 130,010       |  
|Provisions for liabilities and charges         |  | 21 |  | 13,328        |   | 1,544         |  
|                                               |  |    |  |               |   |               |  
|Net assets                                     |  |    |  | 59,215        |   | 128,466       |  
|                                               |  |    |  |               |   |               |  
|Capital and reserves                           |  |    |  |               |   |               |  
|Called up share capital                        |  |    |  | 2,300         |   | 2,699         |  
|Share premium account                          |  |    |  | 200,865       |   | 200,625       |  
|Capital redemption reserve                     |  |    |  | 697           |   | 292           |  
|Profit and loss account                        |  |    |  | (144,647      | ) | (75,150       | )
|                                               |  |    |  |               |   |               |  
|Total shareholders' funds                      |  |    |  | 59,215        |   | 128,466       |  
|                                               |  |    |  |               |   |               |  

The
accompanying notes form part of these financial statements.
A summary of the significant adjustments to shareholders' funds that would be required had U.S. GAAP been applied instead of U.K. GAAP is set out in note 26 to the financial statements.

50

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MERANT PLC  CONSOLIDATED CASH FLOW STATEMENT

|Years ended April 30                                                         |  | 2002    |   | 2001    |   | 2000    |  
|---------------------------------------------------------------------------- |  | ------- | - | ------- | - | ------- | -
|
|Net cash (outflow)/inflow from operating activities (note i)                 |  | (22,752 | ) | 19,718  |   | 36,756  |  
|                                                                             |  |         |   |         |   |         |  
|Returns on investments and servicing of finance:                             |  |         |   |         |   |         |  
|Interest received                                                            |  | 1,751   |   | 4,466   |   | 2,936   |  
|Interest paid                                                                |  | (137    | ) | (179    | ) | (190    | )
|                                                                             |  |         |   |         |   |         |  
|Net cash inflow from returns on investments and servicing of finance         |  | 1,614   |   | 4,287   |   | 2,746   |  
|                                                                             |  |         |   |         |   |         |  
|Taxation:                                                                    |  |         |   |         |   |         |  
|U.K. corporation tax refunded                                                |  | 309     |   | 256     |   | (5,542  | )
|Overseas tax (paid)                                                          |  | (2,335  | ) | (2,145  | ) | (854    | )
|                                                                             |  |         |   |         |   |         |  
|Tax paid                                                                     |  | (2,026  | ) | (1,889  | ) | (6,396  | )
|                                                                             |  |         |   |         |   |         |  
|Capital expenditure and financial investment:                                |  |         |   |         |   |         |  
|Purchases of tangible fixed assets                                           |  | (2,592  | ) | (6,785  | ) | (9,041  | )
|Capitalised software product assets and other intangibles                    |  |        |   | (62     | ) | (2,361  | )
|Investment in own shares                                                     |  |        |   | (5,212  | ) | (2,982  | )
|Proceeds from sale of own shares                                             |  | 1,316   |   | 3,836   |   | 241     |  
|Disposal of tangible fixed assets                                            |  | 11,594  |   |        |   | 1,523   |  
|                                                                             |  |         |   |         |   |         |  
|Net cash inflow/(outflow) from capital expenditure and financial investment: |  | 10,318  |   | (8,223  | ) | (12,620 | )
|                                                                             |  |         |   |         |   |         |  
|Acquisitions and disposals:                                                  |  |         |   |         |   |         |  
|Proceeds from/(investment in) subsidiary undertakings                        |  | 50,106  |   | (12,962 | ) | (28,276 | )
|Net cash (sold) with subsidiary undertakings                                 |  | (5,122  | ) |        |   | 518     |  
|                                                                             |  |         |   |         |   |         |  
|Net cash inflow/(outflow) from acquisitions and disposals                    |  | 44,984  |   | (12,962 | ) | (27,758 | )
|                                                                             |  |         |   |         |   |         |  
|Cash inflow/(outflow) before financing                                       |  | 32,138  |   | 931     |   | (7,272  | )
|Issue of ordinary shares                                                     |  | 161     |   | 207     |   | 11,285  |  
|Cancellation of ordinary shares                                              |  | (23,052 | ) | (13,688 | ) |        |  
|Expenses attributable to issue/cancellation of ordinary shares               |  | (403    | ) | (150    | ) |        |  
|Bank loan                                                                    |  | (1,404  | ) | (362    | ) | 72      |  
|                                                                             |  |         |   |         |   |         |  
|Net cash inflow from financing                                               |  | (24,698 | ) | (13,993 | ) | 11,357  |  
|                                                                             |  |         |   |         |   |         |  
|Increase/(decrease) in cash                                                  |  | 7,440   |   | (13,062 | ) | 4,085   |  
|                                                                             |  |         |   |         |   |         |  

The
accompanying notes form part of these financial statements.
The significant differences between the cash flow statement presented above and that required under U.S. GAAP are described in note 26 to the financial statements.

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MERANT PLC  NOTES TO CONSOLIDATED CASH FLOW STATEMENT

|Years ended April 30                                                                           |  | 2002    |   | 2001    |   | 2000    |  
|---------------------------------------------------------------------------------------------- |  | ------- | - | ------- | - | ------- | -
|
|(i) Reconciliation of operating(loss) to "Net cash (outflow)/inflow from operating activities" |  |         |   |         |   |         |  
|Operating (loss)                                                                               |  | (45,398 | ) | (39,762 | ) | (38,132 | )
|Depreciation charges                                                                           |  | 7,632   |   | 8,789   |   | 5,931   |  
|Amortisation charges                                                                           |  | 35,896  |   | 43,967  |   | 43,890  |  
|Loss on sale of tangible fixed assets                                                          |  | (1,761  | ) | 837     |   | 146     |  
|Exceptional items                                                                              |  | (8,854  | ) | (9,901  | ) | (2,737  | )
|Decrease/(increase) in stocks                                                                  |  | 56      |   | 834     |   | 379     |  
|Decrease/(increase) in debtors                                                                 |  | (5,149  | ) | 7,452   |   | 12,148  |  
|Increase in creditors                                                                          |  | (5,174  | ) | 7,502   |   | 15,131  |  
|                                                                                               |  |         |   |         |   |         |  
|                                                                                               |  | (22,752 | ) | 19,718  |   | 36,756  |  
|                                                                                               |  |         |   |         |   |         |  
|(ii) Reconciliation to net funds                                                               |  |         |   |         |   |         |  
|Increase in cash during the period                                                             |  | 7,440   |   | (13,062 | ) | 4,085   |  
|Cash outflow from decrease in debt                                                             |  | 1,404   |   | 362     |   | (84     | )
|                                                                                               |  |         |   |         |   |         |  
|                                                                                               |  | 8,844   |   | (12,700 | ) | 4,001   |  
|Translation difference                                                                         |  | 2,977   |   | (5,281  | ) | 90      |  
|                                                                                               |  |         |   |         |   |         |  
|                                                                                               |  | 11,821  |   | (17,981 | ) | 4,091   |  
|Net funds, beginning of period                                                                 |  | 59,799  |   | 77,780  |   | 73,689  |  
|                                                                                               |  |         |   |         |   |         |  
|Net funds, end of period                                                                       |  | 71,620  |   | 59,799  |   | 77,780  |  
|                                                                                               |  |         |   |         |   |         |  

|(iii) Analysis of net funds |  | Balances at
April 30 1999 |   | Cash flow |   | Exchange
differences |  | Balances at
April 30 2000 |  
|--------------------------- |  | ------------------------- | - | --------- | - | -------------------- |  | ------------------------- | -
|
|Cash                        |  | 75,394                    |   | 4,085     |   | 64                   |  | 79,543                    |  
|Finance lease obligations   |  | (9                        | ) | 9         |   |                     |  |                          |  
|Short term loans            |  | (1,696                    | ) | (93       | ) | 26                   |  | (1,763                    | )
|                            |  |                           |   |           |   |                      |  |                           |  
|                            |  | 73,689                    |   | 4,001     |   | 90                   |  | 77,780                    |  
|                            |  |                           |   |           |   |                      |  |                           |  

|                 |  | Balances at
April 30 2000 |   | Cash flow |   | Exchange
differences |   | Balances at
April 30 2001 |  
|---------------- |  | ------------------------- | - | --------- | - | -------------------- | - | ------------------------- | -
|
|Cash             |  | 79,543                    |   | (13,062   | ) | (5,281               | ) | 61,200                    |  
|Short term loans |  | (1,763                    | ) | 362       |   |                     |   | (1,401                    | )
|                 |  |                           |   |           |   |                      |   |                           |  
|                 |  | 77,780                    |   | (12,700   | ) | (5,281               | ) | 59,799                    |  
|                 |  |                           |   |           |   |                      |   |                           |  

|                 |  | Balances at
April 30 2001 |   | Cash flow |  | Exchange
differences |   | Balances at
April 30 2002
|---------------- |  | ------------------------- | - | --------- |  | -------------------- | - | -------------------------
|
|Cash             |  | 61,200                    |   | 7,440     |  | 2,980                |   | 71,620                   
|Short term loans |  | (1,401                    | ) | 1,404     |  | (3                   | ) |                         
|                 |  |                           |   |           |  |                      |   |                          
|                 |  | 59,799                    |   | 8,844     |  | 2,977                |   | 71,620                   
|                 |  |                           |   |           |  |                      |   |                          

The
accompanying notes form part of these financial statements.

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MERANT PLC  CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

|Years ended April 30                             |  | 2002    |   | 2001    |   | 2000    |  
|------------------------------------------------ |  | ------- | - | ------- | - | ------- | -
|
|(Loss) for the period                            |  | (62,026 | ) | (50,914 | ) | (35,461 | )
|Currency translation adjustment                  |  | 4,252   |   | (5,116  | ) | 5,561   |  
|                                                 |  |         |   |         |   |         |  
|Total recognised gains and losses for the period |  | (57,774 | ) | (56,030 | ) | (29,900 | )
|                                                 |  |         |   |         |   |         |  

The
accompanying notes form part of these financial statements.
The statement of comprehensive income required under U.S. GAAP is set out in note 26 to the financial statements.

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MERANT PLC  CONSOLIDATED STATEMENT OF MOVEMENTS IN SHAREHOLDERS' FUNDS

|                                |  | Ordinary shares of 2p each: |  |         |   |       |   |         |  |     | 
|------------------------------- |  | --------------------------- |  | ------- | - | ----- | - | ------- |  | --- | 
|
|
|
|Balance, May 1, 1999            |  | 212,000                     |  | 143,673 |   | 2,873 |   | 189,261 |  |    | 
|Share options exercised         |  |                            |  | 5,716   |   | 115   |   | 11,160  |  |    | 
|(Loss) for the period           |  |                            |  |        |   |      |   |        |  |    | 
|Currency translation adjustment |  |                            |  |        |   |      |   |        |  |    | 
|                                |  |                             |  |         |   |       |   |         |  |     | 
|Balance, April 30, 2000         |  | 212,000                     |  | 149,389 |   | 2,988 |   | 200,421 |  |    | 
|Share buy-back                  |  |                            |  | (14,409 | ) | (288  | ) |        |  | 288 | 
|Share options exercised         |  |                            |  | 182     |   | 3     |   | 204     |  |    | 
|Shares cancelled                |  |                             |  | (200    | ) | (4    | ) |        |  | 4   | 
|(Loss) for the period           |  |                            |  |        |   |      |   |        |  |    | 
|Currency translation adjustment |  |                            |  |        |   |      |   |        |  |    | 
|                                |  |                             |  |         |   |       |   |         |  |     | 
|Balance, April 30, 2001         |  | 212,000                     |  | 134,962 |   | 2,699 |   | 200,625 |  | 292 | 
|Share buy-back                  |  |                             |  | (20,247 | ) | (405  | ) |        |  | 405 | 
|Share options exercised         |  |                            |  | 312     |   | 6     |   | 240     |  |    | 
|Goodwill previously written off |  |                             |  |        |   |      |   |        |  |    | 
|(Loss) for the period           |  |                            |  |        |   |      |   |        |  |    | 
|Currency translation adjustment |  |                            |  |        |   |      |   |        |  |    | 
|                                |  |                             |  |         |   |       |   |         |  |     | 
|Balance, April 30, 2002         |  | 212,000                     |  | 115,027 |   | 2,300 |   | 200,865 |  | 697 | 
|                                |  |                             |  |         |   |       |   |         |  |     | 

---

Notes:

The
accompanying notes form part of these financial statements.

54

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MERANT PLC  NOTES TO THE FINANCIAL STATEMENTS

Note 1    Significant accounting policies

Basis of preparation

The financial statements have been prepared under the historical cost convention and in accordance with applicable United Kingdom Accounting Standards.

In
preparing the financial statements for the current year, Merant has adopted FRS 18 'Accounting Policies' and FRS 19 'Deferred Tax'.

Basis of consolidation

The consolidated financial statements are those of Merant plc and all of its subsidiary undertakings for the year ended April 30, 2002. Inter-company
balances and transactions have been eliminated on consolidation.

Acquisitions
are accounted for using the acquisition method of accounting. Accordingly, the results of operations and cash flows of an acquired business are included in Merant's
consolidated results for the period since its acquisition. The cost of acquisition represents the cash value of the consideration and/or the market value of the shares issued on the date the offer
became unconditional and/or the discount on share options assumed, plus expenses. The purchase consideration is allocated between the
identifiable tangible assets and liabilities on the basis of fair value at the date of acquisition. The excess of the consideration over the fair value of the net assets acquired is attributed to
goodwill and is amortised over its estimated economic life.

Revenue recognition

The company's revenue recognition policies meet the requirements of U.S. GAAP.

Licence fees:the Company's standard end user licence agreement provides for an initial fee to use the product in perpetuity
up to a maximum number of users. The Company also enters into other types of licence agreements, typically with major end user customers, which allow for the use of the Company's products, usually
restricted by the number of employees, the number of users, or the licence term. Licence fees are recognised as revenue upon product shipment, provided a signed agreement is in place, fees are fixed
or determinable, no significant vendor obligations remain and collection of the resulting debt is deemed probable. Fees from licences sold together with consulting services are generally recognised
upon shipment if the above criteria have been met and payment of the licence fees is not dependent upon the performance of the consulting services. Where these criteria have not been met, both the
licence and consulting fees are recognised under the percentage of completion method of contract accounting.

Maintenance subscriptions:maintenance agreements generally call for the Company to provide technical support and software
updates to customers. Revenue on technical support and software update rights is recognised over the term of the support agreement on a pro-rata basis. Payments for maintenance fees are
generally made in advance and are nonrefundable.

Training and consulting:the Company recognises revenue from consulting and education as the services are performed.

Software product assetsdevelopment costs

Costs related to the initial development and design of new software products prior to the establishment of technological feasibility are written off to research
and development costs when

55

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incurred. Once technological feasibility has been reasonably established, either by the completion and successful testing of a detailed program design, or by the creation and testing of an operative
working model, any subsequent development costs incurred prior to general release are capitalised as software product assets.

Software
product assets are amortised using the straight-line method over the economic life of the products, which is generally three to four years. Software product assets
are reviewed for impairment if events or circumstances indicate that the carrying value may not be recoverable. Amortisation of software product assets is included in research and development costs.

Goodwill

Goodwill arising on acquisitions prior to January 31, 1998 was set off directly against reserves. Goodwill previously eliminated against reserves has not
been reinstated on implementation of FRS 10.

Goodwill
arising on acquisitions since the adoption of FRS 10 is capitalised as an intangible fixed asset and is stated at cost less accumulated amortisation. Cost represents the excess
of amounts paid on the acquisition of businesses over the aggregate fair value of the net assets acquired. Amortisation is computed using the straight-line method over the estimated
economic life of the asset, which will depend on the length of the future period expected to benefit from the purchase. Present estimated economic lives are between three and five years. Goodwill is
reviewed for impairment if events or circumstances indicate that the carrying value may not be recoverable.

When
a subsidiary or business is subsequently sold or closed, any goodwill arising on acquisition that was written off directly to reserves or has not been fully amortised through the
profit and loss account is taken into account in determining the profit or loss on the sale or closure.

Tangible fixed assets

Tangible fixed assets are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over estimated
economic lives from the time the asset is put into use. Present estimated economic lives are as follows:

Freehold office buildings

40 yearsLeasehold improvements

over the lease termComputer equipment

35 yearsOffice equipment

511 yearsTransportation equipment

34 years


The
carrying values of tangible fixed assets are reviewed for impairment when events or circumstances indicate that the carrying value may not be recoverable.

Leasing

Rentals paid under operating leases are charged to income on a straight-line basis over the term of the lease.

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Deferred taxation

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have
occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more tax, with the following exceptions:



Deferred
tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted at the balance
sheet date.

Stocks

Stocks, consisting principally of diskettes and technical manuals, are stated at the lower of cost and net realisable value, using the first-in,
first-out method. Contracts in progress, representing engineering costs associated with non-cancellable licence agreements prior to delivery, are included in stocks and charged
to income when the related revenue is recognised.

Cash and bank deposits

All cash balances are repayable on demand and can be withdrawn at any time without notice or penalty. The Company's policy on investments is set out in
note 22.

Investments

Investments are recorded at cost less any provision for impairment.

Translation of foreign currencies

Monetary assets and liabilities denominated in foreign currencies are translated at exchange rates in effect at the balance sheet date. Revenues and expenses are
translated using average rates. All differences are taken to the profit and loss account. Translation adjustments resulting from the process of translating financial statements denominated in foreign
currencies are dealt with through reserves.

Earnings/(loss) per share

Basic earnings/(loss) per share is computed as the profit/(loss) for the period after taxation, divided by the weighted average number of ordinary shares
outstanding during the period. Shares held by the
employee share ownership trust are excluded, except for those that are contingently issuable, and for which all the conditions of issue have been met (see note 12).

Diluted
earnings/(loss) per share is computed based on basic earnings/(loss) per share, as adjusted for shares issuable upon exercise of dilutive share options. The computation assumes
the proceeds from the exercise of dilutive share options are used to repurchase the Company's ordinary shares at their average market price during each period.

57

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Pensions

Merant has entered into arrangements under which it makes matching contributions to retirement plans independently administered by insurance companies and other
financial institutions. Contributions are charged to income in the year they become payable.

New accounting standards

During the year the Company adopted FRS 18 "Accounting Policies" which deals primarily with the selection, application and disclosure of accounting policies and
FRS 19 "Deferred Tax" which requires companies to provide for deferred tax on a 'full' rather than 'partial' provision basis. Compliance with these standards has required a revision to the financial
statements for the current and prior years. This has no impact on shareholders' funds or the tax charge in either year (see notes 17 and 18)

On
June 7, 2002 the European Council of Ministers agreed to the adoption of International Accounting Standards by all listed EU companies by January 1, 2005. The Company
has not yet fully evaluated the impact on its operating results or financial position of conversion to International Accounting Standards.

Note 2    Segmental information

During fiscal 2001, the Company was organised into four business segments, each based around a group of products or services. The Company withdrew from its
E-Solutions Division during the year ended April 30 2001, and disposed of its Application Creation & Transformation and Enterprise Data Connectivity Divisions during the year
ended April 30 2002. The operating results of those businesses are disclosed as discontinued operations. The Company now operates in one business segment,
Enterprise Change Management. The following table analyses revenue and net operating (liabilities)/assets by business segment for the years ended April 30, 2002 and 2001. It is not practicable
to identify revenue, operating loss and net assets by segment for the year ended April 30, 2000.

|Years ended April 30                           |  | 2002    |   | 2001   
|---------------------------------------------- |  | ------- | - | -------
|
|Revenue:                                       |  |         |   |        
|Enterprise Change Management Division          |  | 87,068  |   | 95,075 
|Discontinued operations:                       |  |         |   |        
|Application Creation & Transformation Division |  | 17,481  |   | 83,513 
|Enterprise Data Connectivity Division          |  | 13,726  |   | 31,196 
|E-Solutions Division                           |  |        |   | 5,649  
|                                               |  |         |   |        
|                                               |  | 118,275 |   | 215,433
|                                               |  |         |   |        
|Net operating (liabilities)/assets:            |  |         |   |        
|Enterprise Change Management Division          |  | (18,263 | ) | 39,305 
|Discontinued operations:                       |  |         |   |        
|Application Creation & Transformation Division |  |        |   | 16,777 
|Enterprise Data Connectivity Division          |  |        |   | 5,725  
|                                               |  |         |   |        
|                                               |  | (18,263 | ) | 61,807 
|                                               |  |         |   |        

58

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The
following table analyses revenue by geographical area, based on customer location.

|Years ended April 30    |  | 2002    |  | 2001    |  | 2000   
|----------------------- |  | ------- |  | ------- |  | -------
|
|United Kingdom          |  | 21,813  |  | 31,594  |  | 28,735 
|United States           |  | 67,980  |  | 132,438 |  | 132,458
|Europe (excluding U.K.) |  | 19,423  |  | 37,212  |  | 47,857 
|Japan                   |  | 2,657   |  | 6,345   |  | 7,556  
|Other                   |  | 6,402   |  | 7,844   |  | 10,677 
|                        |  |         |  |         |  |        
|                        |  | 118,275 |  | 215,433 |  | 227,283
|                        |  |         |  |         |  |        

The
following table analyses worldwide operations by geographical area, based on the location of Merant facilities.

|Years ended April 30                |                         | 2002    |         | 2001    |         | 2000    |        
|----------------------------------- | ----------------------- | ------- | ------- | ------- | ------- | ------- | -------
|
|Total revenue:                      |                         |         |         |         |         |         |        
|                                    | United Kingdom          |         | 21,368  |         | 36,561  |         | 54,289 
|                                    | United States           |         | 75,468  |         | 132,316 |         | 132,407
|                                    | Europe (excluding U.K.) |         | 18,836  |         | 39,473  |         | 42,246 
|                                    | Other                   |         | 6,771   |         | 14,347  |         | 12,699 
|                                    |                         |         |         |         |         |         |        
|                                    |                         | 122,443 |         | 222,697 |         | 241,641 |        
|                                    |                         |         |         |         |         |         |        
|Inter-segment revenue:              |                         |         |         |         |         |         |        
|                                    | United Kingdom          |         | (3,851  | )       | (5,290  | )       | (12,308
|                                    | United States           |         |        |         | (126    | )       |       
|                                    | Europe (excluding U.K.) |         | (317    | )       | (1,848  | )       | (1,513 
|                                    | Other                   |         |        |         |        |         | (537   
|                                    |                         |         |         |         |         |         |        
|                                    |                         | (4,168  | )       | (7,264  | )       | (14,358 | )      
|                                    |                         |         |         |         |         |         |        
|Third party revenue                 |                         |         |         |         |         |         |        
|                                    | United Kingdom          |         | 17,517  |         | 31,271  |         | 41,981 
|                                    | United States           |         | 75,468  |         | 132,190 |         | 132,407
|                                    | Europe (excluding U.K.) |         | 18,519  |         | 37,625  |         | 40,733 
|                                    | Other                   |         | 6,771   |         | 14,347  |         | 12,162 
|                                    |                         |         |         |         |         |         |        
|                                    |                         | 118,275 |         | 215,433 |         | 227,283 |        
|                                    |                         |         |         |         |         |         |        
|Operating (loss):                   |                         |         |         |         |         |         |        
|                                    | United Kingdom          |         | (40,834 | )       | (39,944 | )       | (48,762
|                                    | United States           |         | (1,377  | )       | 1,550   |         | 1,178  
|                                    | Europe (excluding U.K.) |         | 875     |         | (2,205  | )       | 7,674  
|                                    | Other                   |         | (4,062  | )       | 837     |         | 1,778  
|                                    |                         |         |         |         |         |         |        
|                                    |                         | (45,398 | )       | (39,762 | )       | (38,132 | )      
|                                    |                         |         |         |         |         |         |        
|Net operating (liabilities)/assets: |                         |         |         |         |         |         |        
|                                    | United Kingdom          |         | (2,422  | )       | 73,166  |         | 130,064
|                                    | United States           |         | (14,049 | )       | (17,500 | )       | (19,087
|                                    | Europe (excluding U.K.) |         | (666    | )       | 4,253   |         | 1,555  
|                                    | Other                   |         | (1,126  | )       | 1,888   |         | 741    
|                                    |                         |         |         |         |         |         |        
|                                    |                         | (18,263 | )       | 61,807  |         | 113,273 |        
|                                    |                         |         |         |         |         |         |        

59

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Inter-segment
revenue principally represents charges for product transfers and for administrative costs between locations. Operating (loss) excludes interest income and expense and,
correspondingly, net operating (liabilities)/assets exclude interest-bearing assets and liabilities. The following table reconciles net operating (liabilities)/assets as shown above to net assets as
shown in the balance sheet:

|Years ended April 30               |  | 2002    |   | 2001    |   | 2000    |  
|---------------------------------- |  | ------- | - | ------- | - | ------- | -
|
|Net operating (liabilities)/assets |  | (18,263 | ) | 61,807  |   | 113,273 |  
|Cash and bank deposits             |  | 71,620  |   | 61,200  |   | 79,543  |  
|Bank loan                          |  | 0       |   | (1,401  | ) | (1,763  | )
|Investment in own shares           |  | 5,858   |   | 6,860   |   | 7,431   |  
|Net assets                         |  | 59,215  |   | 128,466 |   | 198,484 |  

Note 3    Acquisitions

The Company made no acquisitions in the year ended April 30, 2002.

On
February 20, 2001 the Company acquired the Enterprise Division of NetObjects, Inc., a developer of web content management software based in Redwood City, California,
U.S.A. The total consideration for the transaction was £12,575,000, payable in cash. In accordance with the policy set out in note 1, the transaction was accounted for as an
acquisition. Goodwill arising on the acquisition was capitalised as an intangible asset and amortisation was computed based on an estimated economic life of five years (see note 13).

Note 4    Discontinued business

The Company sold its Application Creation and Transformation (ACT) Division in August 2001 and sold its Enterprise Data Connectivity (EDC) Division in
November 2001. In the previous year the Company discontinued its E-Solutions business. The Company has reported the operating results of these businesses as discontinued operations.
The following table discloses the operating results of each

60

---

division for the last two financial years. It is not practicable to identify revenue and operating profit/(loss) by segment for the year ended April 30, 2000.

|                                 |  | ACT
Division |   | EDC
Division |   | E-Solutions
Division |   | TOTAL   |  
|-------------------------------- |  | ------------ | - | ------------ | - | -------------------- | - | ------- | -
|
|Year ended April 30, 2000        |  |              |   |              |   |                      |   |         |  
|Revenue                          |  |              |   |              |   |                      |   | 146,813 |  
|Cost of revenue                  |  |              |   |              |   |                      |   | (35,287 | )
|                                 |  |              |   |              |   |                      |   |         |  
|Gross profit                     |  |              |   |              |   |                      |   | 111,526 |  
|                                 |  |              |   |              |   |                      |   |         |  
|Research and development costs   |  |              |   |              |   |                      |   | (26,614 | )
|Sales and marketing costs        |  |              |   |              |   |                      |   | (63,649 | )
|General and administrative costs |  |              |   |              |   |                      |   | (17,939 | )
|                                 |  |              |   |              |   |                      |   |         |  
|Operating profit before taxation |  |              |   |              |   |                      |   | 3,324   |  
|Taxation                         |  |              |   |              |   |                      |   |        |  
|                                 |  |              |   |              |   |                      |   |         |  
|Operating profit after taxation  |  |              |   |              |   |                      |   | 3,324   |  
|                                 |  |              |   |              |   |                      |   |         |  
|
|Revenue                          |  | 83,513       |   | 31,196       |   | 5,649                |   | 120,358 |  
|Cost of revenue                  |  | (18,170      | ) | (2,841       | ) | (8,523               | ) | (29,534 | )
|                                 |  |              |   |              |   |                      |   |         |  
|Gross profit                     |  | 65,343       |   | 28,355       |   | (2,874               | ) | 90,824  |  
|Research and development costs   |  | (17,358      | ) | (5,609       | ) |                     |   | (22,967 | )
|Sales and marketing costs        |  | (38,322      | ) | (13,168      | ) | (4,893               | ) | (56,383 | )
|General and administrative costs |  | (9,428       | ) | (11,500      | ) | (1,510               | ) | (22,438 | )
|                                 |  |              |   |              |   |                      |   |         |  
|Operating (loss) before taxation |  | 235          |   | (1,922       | ) | (9,277               | ) | (10,964 | )
|Taxation                         |  |             |   |             |   |                     |   |        |  
|                                 |  |              |   |              |   |                      |   |         |  
|Operating (loss) after taxation  |  | 235          |   | (1,922       | ) | (9,277               | ) | (10,964 | )
|                                 |  |              |   |              |   |                      |   |         |  
|
|Revenue                          |  | 17,481       |   | 13,726       |   |                     |   | 31,207  |  
|Cost of revenue                  |  | (3,833       | ) | (1,677       | ) |                     |   | (5,510  | )
|                                 |  |              |   |              |   |                      |   |         |  
|Gross profit                     |  | 13,648       |   | 12,049       |   |                     |   | 25,697  |  
|Research and development costs   |  | (3,738       | ) | (2,616       | ) |                     |   | (6,354  | )
|Sales and marketing costs        |  | (6,215       | ) | (5,803       | ) |                     |   | (12,018 | )
|General and administrative costs |  | (4,866       | ) | (5,904       | ) |                     |   | (10,770 | )
|                                 |  |              |   |              |   |                      |   |         |  
|Operating (loss) before taxation |  | (1,171       | ) | (2,274       | ) |                     |   | (3,445  | )
|Taxation                         |  |             |   |             |   |                     |   |        |  
|                                 |  |              |   |              |   |                      |   |         |  
|Operating (loss) after taxation  |  | (1,171       | ) | (2,274       | ) |                     |   | (3,445  | )
|                                 |  |              |   |              |   |                      |   |         |  

61

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The
gain or loss arising on the termination of the divisions consists of the following:

|Years ended April 30                       |  | ACT
Division |   | EDC
Division |   | 2002    |   | 2001    |   | 2000
|------------------------------------------ |  | ------------ | - | ------------ | - | ------- | - | ------- | - | ----
|
|Net proceeds                               |  | 37,605       |   | 20,455       |   | 58,060  |   |        |   |    
|                                           |  |              |   |              |   |         |   |         |   |     
|Deduct:                                    |  |              |   |              |   |         |   |         |   |     
|Carrying value of goodwill now written off |  | (7,494       | ) | (8,702       | ) | (16,196 | ) | (6,520  | ) |    
|Severance payments                         |  |             |   |             |   |        |   | (620    | ) |    
|Other disposal costs*                      |  | (31,127      | ) | (13,876      | ) | (45,003 | ) | (4,177  | ) |    
|                                           |  |              |   |              |   |         |   |         |   |     
|                                           |  | (38,621      | ) | (22,578      | ) | (61,199 | ) | (11,317 | ) |    
|                                           |  |              |   |              |   |         |   |         |   |     
|Loss on business disposal, before taxation |  | (1,016       | ) | (2,123       | ) | (3,139  | ) | (11,317 | ) |    
|Taxation                                   |  |             |   |             |   |        |   |        |   |    
|                                           |  |              |   |              |   |         |   |         |   |     
|Loss on business disposal, after taxation  |  | (1,016       | ) | (2,123       | ) | (3,139  | ) | (11,317 | ) |    
|                                           |  |              |   |              |   |         |   |         |   |     

---

Note 5    Research and development costs

|Years ended April 30                                  |  | 2002   |  | 2001   |   | 2000   |  
|----------------------------------------------------- |  | ------ |  | ------ | - | ------ | -
|
|Research and development costs, before capitalisation |  | 23,613 |  | 38,351 |   | 34,485 |  
|Costs capitalised as software product assets          |  |       |  | (62    | ) | (2,356 | )
|Amortisation of capitalised costs                     |  | 574    |  | 1,485  |   | 4,740  |  
|Non-recurring charge for impairment                   |  |       |  |       |   | 4,657  |  
|                                                      |  |        |  |        |   |        |  
|                                                      |  | 24,187 |  | 39,774 |   | 41,526 |  
|                                                      |  |        |  |        |   |        |  

Note 6    General and administrative costs

General and administrative costs includes amortisation of the goodwill arising on corporate acquisitions amounting to £35,322,000 (2001:
£42,482,000; 2000: £39,150,000).

62

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Note 7    Operating (loss)

Operating (loss) is stated after charging (or crediting):

|Years ended April 30                    |                              | 2002   |       | 2001   |       | 2000   |      
|--------------------------------------- | ---------------------------- | ------ | ----- | ------ | ----- | ------ | -----
|
|Auditors' remuneration:                 |                              |        |       |        |       |        |      
|                                        | audit services: U.K.         |        | 165   |        | 109   |        | 133  
|                                        | audit services: overseas     |        | 458   |        | 583   |        | 379  
|                                        | non-audit services: U.K.     |        | 153   |        | 168   |        | 392  
|                                        | non-audit services: overseas |        | 44    |        | 320   |        | 292  
|Operating lease rentals:                |                              |        |       |        |       |        |      
|                                        | equipment                    |        | 1,964 |        | 3,455 |        | 3,102
|                                        | land and buildings           |        | 4,863 |        | 6,033 |        | 5,808
|Rental income                           |                              | (277   | )     | (339   | )     | (358   | )    
|Gain/(loss) on foreign exchange         |                              | 869    |       | (443   | )     | (325   | )    
|Depreciation of tangible fixed assets   |                              | 7,632  |       | 8,789  |       | 5,931  |      
|Amortisation of intangible fixed assets |                              | 35,896 |       | 43,967 |       | 43,890 |      

Note 8    Directors and employees

The following table analyses the remuneration earned by each director in the year ended April 30 2002 and discloses summary information for the years ended
April 30, 2001 and 2000:

|                                             |  | Salary |  | Performance
related pay |  | Fees  |  | Benefits-
in-kind(1) |  | Other(2) |  | 2002  |  | 2001
|-------------------------------------------- |  | ------ |  | ----------------------- |  | ----- |  | -------------------- |  | -------- |  | ----- |  | ----
|
|J Michael Gullard                            |  |       |  |                        |  | 101   |  |                     |  |         |  | 101   |  | 63  
|Michel Berty                                 |  |       |  |                        |  | 31    |  |                     |  |         |  | 31    |  | 15  
|Harold Hughes                                |  |       |  |                        |  | 29    |  |                     |  |         |  | 29    |  | 16  
|Barry X Lynn                                 |  |       |  |                        |  | 24    |  |                     |  |         |  | 24    |  | 15  
|Gerald Perkel (appointed September 20, 2001) |  | 160    |  | 261                     |  |      |  |                     |  | 139      |  | 560   |  |    
|Don C Watters                                |  |       |  |                        |  | 29    |  |                     |  |         |  | 29    |  | 13  
|Kevin Burns (resigned November 30, 2000)     |  |       |  |                        |  |      |  |                     |  |         |  |      |  | 12  
|Gary Greenfield (resigned October 31, 2001)  |  | 163    |  | 791                     |  | 844   |  | 3                    |  | 844      |  | 2,645 |  | 327 
|                                             |  |        |  |                         |  |       |  |                      |  |          |  |       |  |     
|                                             |  | 323    |  | 1,052                   |  | 1,058 |  | 3                    |  | 983      |  | 3,419 |  | 461 
|                                             |  |        |  |                         |  |       |  |                      |  |          |  |       |  |     

---

The
average monthly numbers of staff employed by Merant was as follows:

|Years ended April 30 |  | 2002 |  | 2001  |  | 2000 
|-------------------- |  | ---- |  | ----- |  | -----
|
|U.K.                 |  | 199  |  | 448   |  | 450  
|U.S.                 |  | 575  |  | 1,027 |  | 1,111
|Other                |  | 180  |  | 402   |  | 420  
|                     |  |      |  |       |  |      
|                     |  | 954  |  | 1,877 |  | 1,981
|                     |  |      |  |       |  |      

63

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Staff
costs, which include salaries, bonus and commissions, amounted to:

|Years ended April 30  |  | 2002   |  | 2001    |  | 2000   
|--------------------- |  | ------ |  | ------- |  | -------
|
|U.K.                  |  | 13,891 |  | 21,225  |  | 22,082 
|U.S.                  |  | 44,235 |  | 70,962  |  | 66,131 
|Other                 |  | 10,576 |  | 18,569  |  | 18,822 
|                      |  |        |  |         |  |        
|                      |  | 68,702 |  | 110,756 |  | 107,035
|Social security costs |  | 5,701  |  | 9,773   |  | 9,805  
|Other pension costs   |  | 1,570  |  | 2,699   |  | 2,884  
|                      |  |        |  |         |  |        
|                      |  | 75,973 |  | 123,228 |  | 119,724
|                      |  |        |  |         |  |        

Other
pension costs principally represent amounts paid by Merant to personal pension schemes operated by its employees. In the United Kingdom, Merant contributes to employee pensions on
a percentage-of-salary basis, subject to certain predetermined limits. Arrangements for employees in other countries have been established on similar bases, subject to local
regulations and practices in the countries concerned.

64

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Note 9    Exceptional items

In the year ended April 30, 2002 the Company reported three non-operating exceptional items:



In
the year ended April 30, 2001 the Company reported two non-operating exceptional items:



In
the year ended April 30, 2000, the Company reported one-time charges totalling £8,491,000 and included these charges in the appropriate cost categories
within operating expenses in the profit and loss account:

£'000Research and development

4,657Sales and marketing

3,502General and administrative

3328,491


The
charges resulted from management actions which recognised the Company's accelerated transition to e-business solutions and the relative decline in demand for Year 2000
and traditional COBOL-based products and services. Of this total, £4,657,000 represented provisions for impairment of previously capitalised software product assets, where the book values
attributed to certain products could not be justified by the future revenue streams projected for those products. The balance of £3,834,000 related to provisions for severance costs for
approximately 50 employees in our COBOL related business and for the costs associated with closing of excess facilities.

65

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Note 10    Interest expense

|Years ended April 30         |  | 2002 |  | 2001 |  | 2000
|---------------------------- |  | ---- |  | ---- |  | ----
|
|On bank loans and overdrafts |  | 124  |  | 110  |  | 125 
|Other                        |  | 13   |  | 69   |  | 65  
|                             |  |      |  |      |  |     
|                             |  | 137  |  | 179  |  | 190 
|                             |  |      |  |      |  |     

Note 11    Taxation

The taxation charge consists of the following:

|Years ended April 30                             |  | 2002 |   | 2001 |   | 2000 |  
|------------------------------------------------ |  | ---- | - | ---- | - | ---- | -
|
|U.K. corporation tax                             |  | (307 | ) | 659  |   | (89  | )
|Overseas taxation                                |  | 269  |   | 209  |   | 607  |  
|                                                 |  |      |   |      |   |      |  
|                                                 |  | (38  | ) | 868  |   | 518  |  
|Corporation tax underprovided in previous years: |  | 38   |   |     |   | (426 | )
|                                                 |  |      |   |      |   |      |  
|Total current tax                                |  |     |   | 868  |   | 92   |  
|                                                 |  |      |   |      |   |      |  
|Effective tax rates                              |  |     |   | -2   | % |     |  
|                                                 |  |      |   |      |   |      |  

The
following table analyses differences between taxes at the U.K. statutory tax rate and taxes at the effective rate:

|Years ended April 30                              |  | 2002    |   | 2001    |   | 2000    |  
|------------------------------------------------- |  | ------- | - | ------- | - | ------- | -
|
|Estimated U.K. corporation tax, calculated at 30% |  | 18,608  |   | 15,014  |   | 10,638  |  
|Tax losses carried forward                        |  | (8,122  | ) | (2,269  | ) | 592     |  
|Foreign taxes                                     |  | 111     |   | 868     |   | 607     |  
|Goodwill                                          |  | (10,597 | ) | (12,745 | ) | (11,745 | )
|                                                  |  |         |   |         |   |         |  
|Total current tax                                 |  |        |   | 868     |   | 92      |  
|                                                  |  |         |   |         |   |         |  

The
Company's effective tax rate in each of the past two years has been significantly distorted by the impact of permanent differences between accounting profits and taxable profits,
principally amortisation of goodwill, that are not an allowable expense for tax purposes. The tax rate is also impacted by the distribution of corporate profits and losses among the tax jurisdictions
in which the Company operates. The Company expects that its effective tax rate will continue to be significantly impacted by provisions for amortisation of goodwill in the year ended April 30,
2003.

The
corporation tax returns of certain U.S. subsidiary undertakings for the financial years ended January 31, 1993 to January 31, 1997 have been examined by the Internal
Revenue Service, which has proposed increases to the amount of U.S. income taxes due in respect of those years. The Company believes that the outcome of the examination will not give rise to any
material profit and loss account adjustment to the financial statements.

66

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Note 12    (Loss)/earnings per share

(Loss)/earnings per share is computed from the following data and in accordance with the bases set out in note 1.

|Years ended April 30                                 |                                         | 2002    |         | 2001    |         | 2000    |        
|---------------------------------------------------- | --------------------------------------- | ------- | ------- | ------- | ------- | ------- | -------
|
|(Loss) after taxation                                |                                         | (62,026 | )       | (50,914 | )       | (35,461 | )      
|                                                     |                                         |         |         |         |         |         |        
|Weighted average number of ordinary shares:          |                                         |         |         |         |         |         |        
|                                                     | In issue                                |         | 130,702 |         | 139,952 |         | 145,958
|                                                     | Owned by employee share ownership trust |         | (5,610  | )       | (5,647  | )       | (3,795 
|                                                     |                                         |         |         |         |         |         |        
|Used in computing basic and diluted (loss) per share |                                         | 125,092 |         | 134,305 |         | 142,163 |        
|                                                     |                                         |         |         |         |         |         |        
|(Loss) per share: basic                              |                                         | (49.6   | )p      | (37.9   | )p      | (24.9   | )p     
|(Loss) per share: diluted                            |                                         | (49.6   | )p      | (37.9   | )p      | (24.9   | )p     
|                                                     |                                         |         |         |         |         |         |        

Share
options were anti-dilutive and therefore excluded from the computations.

Note 13    Intangible fixed assets

|                                              |  | Software
product
assets |   | Goodwill |   | Total   |  
|--------------------------------------------- |  | ----------------------- | - | -------- | - | ------- | -
|
|Cost:                                         |  |                         |   |          |   |         |  
|At April 30, 2000                             |  | 35,316                  |   | 178,030  |   | 213,346 |  
|Currency fluctuations                         |  | 504                     |   | (257     | ) | 247     |  
|Acquisitions                                  |  | 62                      |   | 5,692    |   | 5,754   |  
|Amounts written off                           |  |                        |   | (9,311   | ) | (9,311  | )
|                                              |  |                         |   |          |   |         |  
|At April 30, 2001                             |  | 35,882                  |   | 174,154  |   | 210,036 |  
|Currency fluctuations                         |  | (77                     | ) |         |   | (77     | )
|Amounts written off on disposals (see note 4) |  | (31,749                 | ) | (54,791  | ) | (86,540 | )
|                                              |  |                         |   |          |   |         |  
|At April 30, 2002                             |  | 4,056                   |   | 119,363  |   | 123,419 |  
|                                              |  |                         |   |          |   |         |  
|Amortisation:                                 |  |                         |   |          |   |         |  
|At April 30, 2000                             |  | 31,766                  |   | 61,375   |   | 93,141  |  
|Currency fluctuations                         |  | 461                     |   | (125     | ) | 336     |  
|Amounts written off                           |  |                        |   | (2,791   | ) | (2,791  | )
|Provision for the period                      |  | 1,485                   |   | 42,482   |   | 43,967  |  
|                                              |  |                         |   |          |   |         |  
|At April 30, 2001                             |  | 33,712                  |   | 100,941  |   | 134,653 |  
|Currency fluctuations                         |  | (67                     | ) |         |   | (67     | )
|Amounts written off on disposals (see note 4) |  | (30,250                 | ) | (38,595  | ) | (68,845 | )
|Provision for the period                      |  | 574                     |   | 35,322   |   | 35,896  |  
|                                              |  |                         |   |          |   |         |  
|At April 30, 2002                             |  | 3,969                   |   | 97,668   |   | 101,637 |  
|                                              |  |                         |   |          |   |         |  
|Net book values:                              |  |                         |   |          |   |         |  
|At April 30, 2001                             |  | 2,170                   |   | 73,213   |   | 75,383  |  
|                                              |  |                         |   |          |   |         |  
|At April 30, 2002                             |  | 87                      |   | 21,695   |   | 21,782  |  
|                                              |  |                         |   |          |   |         |  

67

---

Note 14    Tangible fixed assets

|                         |  | Freehold
land and
buildings |   | Leasehold
Improvements |   | Office
equipment |   | Computer &
Communications
equipment
& software |   | Transportation
equipment |   | Total   |  
|------------------------ |  | --------------------------- | - | ---------------------- | - | ---------------- | - | ---------------------------------------------- | - | ------------------------ | - | ------- | -
|
|Cost:                    |  |                             |   |                        |   |                  |   |                                                |   |                          |   |         |  
|At May 1, 2000           |  | 13,833                      |   | 6,730                  |   | 8,784            |   | 49,602                                         |   | 215                      |   | 79,164  |  
|Currency fluctuations    |  |                            |   | 555                    |   | 470              |   | 3,066                                          |   | (18                      | ) | 4,073   |  
|Additions                |  |                            |   | 657                    |   | 778              |   | 5,350                                          |   |                         |   | 6,785   |  
|Disposals                |  |                            |   | (72                    | ) | (514             | ) | (10,838                                        | ) | (108                     | ) | (11,532 | )
|                         |  |                             |   |                        |   |                  |   |                                                |   |                          |   |         |  
|At April 30, 2001        |  | 13,833                      |   | 7,870                  |   | 9,518            |   | 47,180                                         |   | 89                       |   | 78,490  |  
|Currency fluctuations    |  |                            |   | (85                    | ) | (49              | ) | (25                                            | ) | 1                        |   | (158    | )
|Additions                |  |                            |   | 730                    |   | 146              |   | 1,716                                          |   |                         |   | 2,592   |  
|Discontinued operations  |  |                            |   |                       |   |                 |   |                                               |   |                         |   |        |  
|Disposals                |  | (13,833                     | ) | (1,705                 | ) | (4,211           | ) | (36,449                                        | ) | (72                      | ) | (56,270 | )
|At April 30, 2002        |  |                            |   | 6,810                  |   | 5,404            |   | 12,422                                         |   | 18                       |   | 24,654  |  
|                         |  |                             |   |                        |   |                  |   |                                                |   |                          |   |         |  
|Depreciation:            |  |                             |   |                        |   |                  |   |                                                |   |                          |   |         |  
|At May 1, 2000           |  | 709                         |   | 3,673                  |   | 6,003            |   | 38,592                                         |   | 112                      |   | 49,089  |  
|Currency fluctuations    |  |                            |   | 293                    |   | 332              |   | 2,377                                          |   | (8                       | ) | 2,994   |  
|Provision for the period |  | 20                          |   | 925                    |   | 947              |   | 6,897                                          |   |                         |   | 8,789   |  
|Disposals                |  |                            |   | (36                    | ) | (493             | ) | (10,106                                        | ) | (60                      | ) | (10,695 | )
|                         |  |                             |   |                        |   |                  |   |                                                |   |                          |   |         |  
|At April 30, 2001        |  | 729                         |   | 4,855                  |   | 6,789            |   | 37,760                                         |   | 44                       |   | 50,177  |  
|Currency fluctuations    |  |                            |   | (50                    | ) | (44              | ) | (19                                            | ) | 1                        |   | (112    | )
|Provision for the period |  | 9                           |   | 777                    |   | 1,279            |   | 5,563                                          |   | 4                        |   | 7,632   |  
|Discontinued operations  |  |                            |   |                       |   |                 |   |                                               |   |                         |   |        |  
|Disposals                |  | (738                        | ) | (1,701                 | ) | (3,415           | ) | (33,434                                        | ) | (39                      | ) | (39,327 | )
|At April 30, 2002        |  |                            |   | 3,881                  |   | 4,609            |   | 9,870                                          |   | 10                       |   | 18,370  |  
|                         |  |                             |   |                        |   |                  |   |                                                |   |                          |   |         |  
|Net book values:         |  |                             |   |                        |   |                  |   |                                                |   |                          |   |         |  
|At April 30, 2001        |  | 13,104                      |   | 3,015                  |   | 2,729            |   | 9,420                                          |   | 45                       |   | 28,313  |  
|                         |  |                             |   |                        |   |                  |   |                                                |   |                          |   |         |  
|At April 30, 2002        |  |                            |   | 2,929                  |   | 795              |   | 2,552                                          |   | 8                        |   | 6,284   |  
|                         |  |                             |   |                        |   |                  |   |                                                |   |                          |   |         |  

68

---

Note 15    Investments

Investment in own shares represents the cost of ordinary shares in Merant plc acquired by Merant Trustees Limited on behalf of the Merant Employee Benefit Trust
1994 ("the Trust"). The shares have been acquired for the employee share option plans and the Employee Share Purchase Plan (see note 24).

|                               |  | Cost   |   | Provisions |   | Net book
value |  
|------------------------------ |  | ------ | - | ---------- | - | -------------- | -
|
|At May 1, 2000                 |  | 7,431  |   |           |   | 7,431          |  
|Acquired                       |  | 5,212  |   |           |   | 5,212          |  
|Sold on exercise of options    |  | (572   | ) |           |   | (572           | )
|Sold to participants of ESPP   |  | (3,263 | ) |           |   | (3,263         | )
|Provision for loss on disposal |  |       |   | (1,948     | ) | (1,948         | )
|                               |  |        |   |            |   |                |  
|At April 30, 2001              |  | 8,808  |   | (1,948     | ) | 6,860          |  
|Sold to participants of ESPP   |  | (2,056 | ) | 1,054      |   | (1,002         | )
|                               |  |        |   |            |   |                |  
|At April 30, 2002              |  | 6,752  |   | (894       | ) | 5,858          |  
|                               |  |        |   |            |   |                |  

As
at April 30, 2002 the Trust owned 5,565,869 shares, representing 4.8% of the Company's issued ordinary shares, with a nominal value of £111,000 and a market value
of £5,955,000. At April 30, 2001 the Trust owned 7,260,448 shares, representing 5.4% of the Company's issued ordinary shares, with a nominal value of £145,000 and a
market value of £5,119,000. The Company has made provisions to reflect anticipated losses on the future sale of these shares to optionholders and participants in the Employee Share
Purchase Plan. The Trust has not waived its right to dividends in respect of this shareholding. The assets and liabilities of the Trust, as well as its operating costs, are included in Merant's
consolidated financial statements.

Note 16    Stocks

The replacement value of stocks is not considered to be materially different from the balance sheet value.

Note 17    Debtors

|                                                 |  | April 30
2002 |  | April 30
2001
|------------------------------------------------ |  | ------------- |  | -------------
|
|Trade debtors                                    |  | 22,115        |  | 52,789       
|Deferred tax asset                               |  | 269           |  | 269          
|Other debtors and prepaid expenses (see note 25) |  | 2,792         |  | 5,620        
|                                                 |  |               |  |              
|                                                 |  | 25,176        |  | 58,678       
|                                                 |  |               |  |              

The
deferred tax asset shown above represents capital allowances in advance of depreciation and amortization. There has been no movement during the year.

In
addition to the above, Merant has unprovided deferred tax assets at April 30, 2002 of £15,480,000 (April 30, 2001: £7,681,000). These assets
relate to losses brought forward from previous years. The directors do not consider it appropriate to recognise this asset at the year-end.

69

---

Note 18    Creditors: amounts falling due within one year

|                                              |  | April 30
2002 |  | April 30
2001
|--------------------------------------------- |  | ------------- |  | -------------
|
|Bank loan (note 22)                           |  |              |  | 1,401        
|Trade creditors                               |  | 2,612         |  | 7,319        
|Current corporation tax                       |  | 9,950         |  | 12,882       
|Other taxes and social security costs         |  | 1,533         |  | 1,808        
|Product royalties and purchases               |  | 789           |  | 1,629        
|Accrued employee compensation and commissions |  | 5,220         |  | 13,700       
|Deferred revenue                              |  | 27,967        |  | 51,498       
|Other accrued expenses                        |  | 10,200        |  | 10,797       
|                                              |  |               |  |              
|                                              |  | 58,271        |  | 101,034      
|                                              |  |               |  |              

The
Company has reclassified £9,370,000 (2001: £10,276,000) from provision for deferred taxation to current corporation tax following the adoption of
FRS 19. The deferred tax asset of £269,000 (2001: £269,000) has been reclassified within debtors (see note 17). The deferred tax charge of
£870,000 in 2001 (2000: credit £701,000) has been reclassified to current corporation tax.

Note 19    Lease commitments

Operating leases:

|                                             |                                        | Land and buildings |       | Other
|-------------------------------------------- | -------------------------------------- | ------------------ | ----- | -----
|
|
|Annual commitment under leases which expire: |                                        |                    |       |      
|                                             | within one year                        |                    | 235   |      
|                                             | in the second to fifth years inclusive |                    | 3,413 |      
|                                             | thereafter                             |                    | 1,683 |      
|                                             |                                        |                    |       |      
|                                             |                                        | 5,331              |       | 6,137
|                                             |                                        |                    |       |      

Note 20    Capital commitments

At April 30, 2002 and 2001 Merant had no material capital expenditure commitments.

Note 21    Provisions for liabilities and charges

|                        |  | Contingent
liabilities |   | Restructuring
provisions |   | Total  |  
|----------------------- |  | ---------------------- | - | ------------------------ | - | ------ | -
|
|As at May 1, 2000       |  | 6,190                  |   | 4,904                    |   | 11,094 |  
|Utilised                |  | (6,190                 | ) | (3,360                   | ) | (9,550 | )
|As at April 30, 2001    |  |                       |   | 1,544                    |   | 1,544  |  
|Arising during the year |  |                       |   | 12,266                   |   | 12,266 |  
|Utilised                |  |                       |   | (472                     | ) | (472   | )
|Currency fluctuations   |  |                       |   | (10                      | ) | (10    | )
|                        |  |                        |   |                          |   |        |  
|As at April 30, 2002    |  |                       |   | 13,328                   |   | 13,328 |  
|                        |  |                        |   |                          |   |        |  

70

---

Restructuring
provisions include amounts that arose in respect of the Company's 2002 and 2000 restructuring programs, as described in note 9. The Company expects that the majority
of the outstanding amounts will be settled during the current financial year.

Contingent
liabilities represented estimates of amounts payable to vendors of companies acquired by Merant. Amounts payable were dependant on meeting performance targets.

Note 22    Financial instruments

An explanation of the group's objectives, policies and strategies for the role of financial instruments in creating and changing the risks of the group in its
activities is set out below.

Merant's
principal financial instruments comprise cash and short-term deposits. The main purpose of these financial instruments is to fund the operations of the business.
Merant has various other financial instruments, such as trade debtors and trade creditors, that arise directly from its operations. It is, and has been throughout the period under review, the group's
policy that no trading in financial instruments is undertaken.

The
main risks arising from the group's operations are liquidity risk and foreign currency risk. The Board reviews and agrees policies for managing each of these risks and they are
summarised below. These policies have remained unchanged during the period under review.



The group's objective is to maintain a balance between maximisation of investment returns and liquidity by restriction of the permitted investments and the
duration to maturity of those investments.



As a result of the significant investment in overseas operations, movements in foreign currency exchange rates can significantly affect the group's balance sheet.
Historically, the majority of our revenue arose in U.S. dollars, whereas our costs were incurred approximately equally in U.S. dollars and other currencies, predominately pounds sterling. More
recently, however, the currencies of revenue and expenses have been closely aligned. Nevertheless,fluctuations in exchange rates, particularly between the U.S. dollar and the pound sterling, may have
a significant impact on the Company's operating results. In 2002 and 2001 fluctuations between the U.S. dollar and the pound sterling have not been significant, and net exchange rate gains or losses
on operational transactions have not been significant.

The
group also has transactional exposures. Such exposures arise from sales or purchases by an operating unit in currencies other than that unit's functional currency.

Interest rate exposures:

The interest rate risk profile of the Company's financial liabilities, excluding short-term debtors and creditors, consisted of a floating rate
liability denominated in euros. The euro liability represented borrowings against an unsecured revolving multi-currency facility which was terminated by the Company in April 2002, as the
directors did not consider it necessary to maintain the facility. Borrowings under the facility bore interest at 0.75% above LIBOR (the London Interbank Offered Rate). At April 30, 2002 the
balance outstanding was £nil (2001: £1,401,000, denominated in euros). The group's financial liabilities at April 30, 2002 and April 30, 2001 all mature within
one year, or on demand.

71

---

The
interest rate risk profile of the Company's financial assets, excluding short-term debtors and creditors, is as follows:

April 30
2002

April 30
2001£'000

£'000Floating rate financial assets:U.S. dollars

64,466

42,653Euro

4,352

1,376Sterling

1,299

6,637Deutschemarks

n/a

2,161Canadian dollars



1,402Belgian francs

n/a

1,239Norwegian kroner



1,132Spanish pesetas

n/a

1,069Japanese yen

594

1,027Australian dollars

332

798Dutch florins

n/a

604French francs

n/a

438Italian lire

n/a

247Korean won

295

Indian rupees

244

214Portuguese escudos

n/a

155Other currencies

38

4871,620

61,200


---

n/a = not
applicable

Floating
rate financial assets comprise cash balances on current accounts and money market deposits at call. Where these assets are interest-bearing, interest rates are set by the
respective depositaries.

Currency exposures:

The group's objectives in managing currency exposures arising from its net investments overseas are explained above. Net foreign currency monetary
assets/liabilities held by the group's sterling operations are as follows:

April 30
2002

April 30
2001£'000

£'000U.S. dollar

19,198

1,117Euros

926

Japanese yen

354

Other currencies

20

8820,498

1,205


72

---

Fair values:

The fair values of all the group's financial assets and liabilities, excluding short-term debtors and creditors, which have been determined on the
basis of market value, are not materially different from the book values shown below:

April 30
2002

April 30
2001£'000

£'000Primary financial instruments:Short term borrowings



(1,401
)Cash

71,620

61,20071,620

59,799


Note 23    Contingent liability

In December 1998 and January 1999 seven class action securities complaints were filed in the United States District Court for the Southern District
of New York against the Company and certain of its officers and directors. The Court ordered the seven cases consolidated, appointed lead plaintiffs and lead counsel, and ordered the filing of a
consolidated amended complaint, which was filed on June 9, 1999. The lead plaintiffs sought to have the matter certified as a class action of purchasers of American depositary shares of the
Company during the period from June 17, 1998 to November 12, 1998, including the former shareholders of Intersolv, Inc. who acquired American depositary shares of the Company in
connection with the merger involving the two companies. The consolidated complaint alleged various violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 and sought
unspecified compensatory damages for alleged failure to disclose material non-public information concerning the Company's business condition and prospects. In May 1999, the Company
filed a motion to transfer the matter to the Northern District of California, and the Court granted the Company's motion in November 1999. The action was transferred in December 1999 to
the Northern District of California. After the action was transferred to California, plaintiffs again amended their complaint alleging the same claims as described in the prior amended complaint but
without the 1934 Act claims or the class period. The defendants filed a motion to dismiss the newly amended complaint in June 2000 and plaintiffs opposed this motion. A hearing on the motion
took place in September 2000. On December 20, 2000 the Court issued a ruling granting in part and denying in part defendant's motion to dismiss. The court dismissed all of plaintiffs'
allegations, with the exception of certain allegations that defendants misled the market regarding the Company's plans for its Y2K business. On February 16, 2001, defendants answered the second
consolidated amended complaint, denying the remaining allegations and asserting affirmative defences against the claim. Because of the Court's ruling, the mandatory discovery stay of the Reform Act is
no longer in effect. Plaintiffs served document requests on the Company and document production has begun on a rolling schedule. The plaintiffs filed their motion for class certification and
supporting materials on April 20, 2001. On June 19, 2001 the Court entered a
Stipulation and Order Regarding Class Certification ("Class Certification Order"). The Class Certification Order certified this action to proceed as a class action while preserving the defendants'
rights to challenge, at a later date, the propriety of this action proceeding as a class action, the definition of the class, and the class representatives. On October 25, 2001, at a Joint Case
Management Conference, the Court established a pre-trial schedule and set a trial date of April 7, 2003.

On
August 21 2002 the parties entered into a Stipulation of Settlement (the "Settlement Agreement") under which all claims in this litigation were settled. All payments made under
the Settlement Agreement to settle this litigation and all associated costs will be paid by the Company's insurance carrier. A number of conditions remain to be satisfied before the settlement
reflected in the

73

---

Settlement Agreement becomes effective, including approval of the settlement by the United States District Court for the Northern District of California.

If
the settlement fails to become effective for any reason, the Company will continue to defend this litigation vigorously. If the settlement fails to become effective for any reason,
due to the inherent uncertainties of litigation, the Company cannot accurately predict the ultimate outcome of the litigation. Any unfavourable outcome of the litigation could have a material adverse
impact on Merant's business, financial condition and results of operations.

The
Company and its subsidiaries are also involved in legal proceedings, claims and litigation arising in the ordinary course of business. Although the ultimate results of these legal
proceedings, claims and litigation are not currently determinable, in the opinion of management these matters will not materially affect Merant's financial position, results of operations, or
liquidity.

Note 24    Share Plans

Employee share option plans

The Company's share option plans provide for the grant of options to acquire shares to persons who devote substantially all their working time to Merant and other
eligible persons as determined by the Board. The exercise price of options issued under these plans is 100% of the fair market value at the time such options are granted. Options are generally
exercisable in monthly or annual instalments commencing one year after the date of grant. Unexercised options lapse as a consequence of the optionholder ceasing to be employed by Merant or at a
predetermined expiry date (of up to ten years from the date of grant), whichever occurs first.

In
September 1998 shareholders approved the 1998 Share Option Plan, which authorised the Company to grant options over a maximum of 21,552,000 shares under the 1998, 1996 and 1991
Share Option Plans. This authority will expire on September 24, 2008.

Options
are also outstanding as a result of grants made under Merant's previous share option plans and under share option plans adopted by Merant as a result of corporate acquisitions.
Authority to grant new options under these plans has expired, but options granted under those plans continue to be exercisable in accordance with the original grant rules, or the acquisition
agreements.

In
addition to options granted by the Company, Merant Trustees Limited ("MTL") is permitted to acquire ordinary shares in the Company and to grant options over them, under
the terms of the Merant Employee Benefit Trust 1994 ("the Trust"). The Trust was established to further the Company's policy of encouraging employee share ownership. At April 30, 2002 MTL owned
5,565,869 shares, of which 3,164,680 were reserved for options which had been granted by MTL and remained outstanding at April 30, 2002, and a further 60,000 shares were reserved for options
granted before MTL purchased the shares. The remaining 2,341,189 shares were available for issuance under the Employee Share Purchase Plan (see "Employee share purchase plans", below) and for the
grant of further options. The shares held by the Trust are included in Investments (see note 15).

74

---

Share
option activity under all of the share option plans is summarised below:

Number
of shares

Option price
per shareOutstanding, April 30, 1999

25,678,104

£0.11-£7.41Options granted

11,628,119

£2.46-£4.54Option obligations assumed

481,731

£0.34-£1.02Options exercised

(5,954,997
)
£0.11-£7.41Options cancelled

(3,544,707
)
£1.06-£6.28Outstanding, April 30, 2000

28,288,250

£0.34-£7.15Options granted

3,685,500

£0.68-£1.37Options exercised

(287,841
)
£1.06-£1.37Options cancelled

(9,137,686
)
£1.06-£6.28Outstanding, April 30, 2001

22,548,223

£0.34-£7.15Options granted

12,755,650

£0.65-£1.18Options exercised

(311,765
)
£0.73-£1.06Options cancelled

(9,930,732
)
£0.34-£7.15Outstanding, April 30, 2002

25,061,376

£0.65-£7.15


Options
outstanding at April 30 2002 were granted under the authorities indicated below:

Authority for grant of options

Number
of shares

Option price
per share1991 Share Option Plan

277,215

£1.37-£3.491996 Share Option Plan

122,200

£2.12-£7.151998 Share Option Plan

17,673,471

£0.65-£4.54INTERSOLV plans

3,823,810

£1.62-£3.9821,896,696

£0.65-£7.15The Trust

3,164,680

£0.69-£1.67Outstanding, April 30, 2002

25,061,376

£0.65-£7.15


These
options are exercisable between 2002 and 2012. The proceeds on exercise of all outstanding options at April 30, 2002 would be £35,497,000 (2001:
£42,922,000).

Not
all of the outstanding options are currently exercisable. At April 30, 2002 options for 9,759,000 shares (2001: 12,710,000 shares) were currently exercisable at prices per
share of between £0.65 and £7.15; the proceeds from exercise of these options at April 30, 2002 would be £19,077,000 (2001: £26,431,000).

Employee share purchase plans

All full-time employees are eligible to participate in the Employee Share Purchase Plan (ESPP), which was approved by shareholders at the 1999 annual
general meeting. Under the terms of the ESPP, payroll deductions are made during six-month offering periods for the purpose of purchasing ordinary shares at the end of an offering period.
Participants may purchase shares at a price equivalent to 85% of the market value at either the beginning or the end of the offering period, whichever is the lower. In the year ended April 30,
2002, employees participating in the ESPP acquired approximately 1,695,000
ordinary shares in the Company. At April 30, 2002, amounts totaling £355,000 had been collected under the plan's fifth offering period, which expired in June 2002.

75

---

Note 25    Related party transaction

"Other debtors and prepaid expenses" includes a loan to Mr. Greenfield, a former director of the Company, amounting to U.S.$627,000 (equivalent to
£429,000 using year-end exchange rates).

In
August 1999, one of the Company's subsidiary undertakings, Merant, Inc., a California corporation, entered into a loan agreement with Mr. Greenfield, who was
Chief Executive Officer of the Company at the time. The loan was made in conjunction with a home purchase by Mr. Greenfield and is secured by that property. The following table shows the
movements on the loan account:

|Years ended April 30                          |  | 2002 |   | 2001 |  
|--------------------------------------------- |  | ---- | - | ---- | -
|
|Loan outstanding, beginning of year           |  | 873  |   | 772  |  
|Repaid                                        |  | (476 | ) | (35  | )
|Interest charged                              |  | 41   |   | 60   |  
|Difference arising from currency fluctuations |  | (9   | ) | 76   |  
|                                              |  |      |   |      |  
|Loan outstanding, end of year                 |  | 429  |   | 873  |  
|                                              |  |      |   |      |  
|Of which:                                     |  |      |   |      |  
|Principal                                     |  | 429  |   | 826  |  
|Interest                                      |  |     |   | 47   |  

The
loan is denominated in U.S. dollars and accrues interest at a rate of 7.5% per annum, which was comparable to mortgage interest rates in the United States at the time of the loan and
higher than the rate that Merant generally earned on invested cash. The maximum principal outstanding during 2002 was £880,000. The loan matures on or before August 30, 2003. The
Company has made no provision (within the meaning of Schedule 4 to the Companies Act) in respect of delinquency in repayment of the loan, as it has every expectation that the loan will be
repaid in accordance with the terms. As of the date of this report, Mr. Greenfield is current on all interest payments.

On
February 20, 2002, Merant Inc. made a loan in the principal amount of $120,000 to Robert Dunne, the company's Senior Vice President of Sales. Under the terms of this
loan, the outstanding principal balance bears interest at a rate of 5.25% per annum and the loan must be repaid through fixed and regular payroll deductions from salary and bonuses, if any, until such
time as the loan is repaid in full.

76

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Note 26    Reconciliation of U.K. GAAP financial statements to U.S. GAAP financial statements

The consolidated financial statements have been prepared in accordance with U.K. GAAP which, as explained in note 1, differ in certain material respects
from U.S. GAAP. The following table provides a reconciliation of the loss for the year and shareholders' funds prepared under U.K. GAAP to the equivalent information prepared under U.S. GAAP.

|                                                                  |                          | 2002    |          | 2001    |          | 2000    |         
|----------------------------------------------------------------- | ------------------------ | ------- | -------- | ------- | -------- | ------- | --------
|
|Loss for the period, in accordance with U.K. GAAP                 |                          | (62,026 | )        | (50,914 | )        | (35,461 | )       
|Goodwill amortisation(a)                                          |                          | 31,614  |          | 34,244  |          | 33,964  |         
|Acquired in-process research and development(b)                   |                          |        |          | (5,011  | )        |        |         
|Loss on disposal of fixed assets                                  |                          |        |          | 3,254   |          |        |         
|Loss on termination of operations(c)                              |                          | 11,732  |          |        |          |        |         
|Net loss in accordance with U.S. GAAP                             |                          | (18,680 | )        | (18,427 | )        | (1,497  | )       
|                                                                  | Continuing operations    |         | (28,674  | )       | (4,552   | )       | (13,774 
|                                                                  | Discontinued operations  |         | 9,994    |         | (13,875  | )       | 12,277  
|Net loss                                                          |                          | (18,680 | )        | (18,427 | )        | (1,497  | )       
|Shareholders' funds as reported in the consolidated balance sheet |                          | 59,215  |          | 128,466 |          | 198,484 |         
|Intangible fixed assets:                                          |                          |         |          |         |          |         |         
|                                                                  | Goodwill(a)    Cost      |         | (106,704 | )       | (140,598 | )       | (140,602
|                                                                  | Accumulated amortisation |         | 92,830   |         | 91,432   |         | 52,526  
|Fixed asset investment(e)                                         |                          | (5,858  | )        | (6,860  | )        | (7,431  | )       
|Shareholders' equity in accordance with U.S. GAAP                 |                          | 39,483  |          | 72,440  |          | 102,977 |         

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77

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Net income (loss) per share

The following table discloses net income (loss) per share, in pence, computed in accordance with U.S. GAAP:

|                                                                                    |                            | 2002  |         | 2001  |         | 2000 |        
|----------------------------------------------------------------------------------- | -------------------------- | ----- | ------- | ----- | ------- | ---- | -------
|Basic net income (loss) per share                                                   |                            | (14.9 | )p      | (13.7 | )p      | (1.1 | )p     
|                                                                                    | Continuing operations      |       | (22.9   | )p    | (3.4    | )p   | (9.7   
|                                                                                    | Discontinued operations(1) |       | 8.0     | p     | (10.3   | )p   | 8.6    
|Diluted net income (loss) per share(2)                                              |                            | (14.9 | )p      | (13.7 | )p      | (1.1 | )p     
|                                                                                    | Continuing operations      |       | (22.9   | )p    | (3.4    | )p   | (9.7   
|                                                                                    | Discontinued operations(1) |       | 8.0     | p     | (10.3   | )p   | 8.6    
|Weighted average number of shares used in computing earnings per share (thousands): |                            |       |         |       |         |      |        
|                                                                                    | Basic:                     |       | 125,263 |       | 134,305 |      | 142,163
|                                                                                    | Diluted:                   |       | 125,263 |       | 134,305 |      | 142,163

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Comprehensive (loss)

The following table reconciles net (loss) to comprehensive (loss), computed in accordance with U.S. GAAP:

|                            |                                                             | 2002    |       | 2001    |        | 2000   |       
|--------------------------- | ----------------------------------------------------------- | ------- | ----- | ------- | ------ | ------ | ------
|
|Net (loss)                  |                                                             | (18,680 | )     | (18,427 | )      | (1,497 | )     
|Other comprehensive income: |                                                             |         |       |         |        |        |       
|                            | Unrealized gain (loss) on marketable securities, net of tax |         | 69    |         | 87     |        | (127  
|                            | Currency translation difference                             |         | 6,532 |         | (3,868 | )      | (1,386
|Comprehensive (loss)        |                                                             | (12,079 | )     | (22,208 | )      | (3,010 | )     

Consolidated statement of cash flows

The consolidated statement of cash flows prepared under U.K. GAAP presents substantially the same information as that required under U.S. GAAP but may differ with
regard to classification of items within the statements and as regards the definition of cash under U.K. GAAP and cash and cash equivalents under U.S. GAAP.

78

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Under
U.S. GAAP cash and cash equivalents include short-term highly liquid investments but do not include bank overdrafts. Under U.K. GAAP, cash flows are presented
separately for operating activities, returns on investments and servicing of finance, taxation, capital expenditure and financial investment, acquisitions and management of liquid resources and
financing. U.S. GAAP, however, requires only
three categories of cash flow activity to be reported: operating, investing and financing. Cash flows from taxation and returns on investments and servicing of finance shown under U.K. GAAP would be
included as operating activities under U.S. GAAP. The payment of dividends would be included as a financing activity under U.S. GAAP. Under U.K. GAAP all interest is treated as part of returns on
investments and servicing of finance. Under U.S. GAAP capital expenditure and financial investment and acquisitions are reported within investing activities.

|                                                                |                  | 2002    |        | 2001    |        | 2000    |       
|--------------------------------------------------------------- | ---------------- | ------- | ------ | ------- | ------ | ------- | ------
|
|Cash flow from operating activities in accordance with U.S.GAAP |                  | (23,164 | )      | 22,116  |        | 33,106  |       
|Cash flow on investing activities                               |                  | 55,969  |        | (9,426  | )      | (28,699 | )     
|Cash flow from financing activities                             |                  | (23,379 | )      | (15,369 | )      | 10,295  |       
|Cash and cash equivalents                                       |                  |         |        |         |        |         |       
|Effect of foreign exchange rate changes                         |                  | 2,977   |        | (5,281  | )      | 90      |       
|Cash and cash equivalents:                                      |                  |         |        |         |        |         |       
|                                                                | At start of year |         | 59,217 |         | 67,177 |         | 52,385
|                                                                | At end of year   |         | 71,620 |         | 59,217 |         | 67,177

At
April 30, 2001, cash and cash equivalents under U.K. GAAP included short-term investments totaling £1,983,000 (April 30, 2000: £12,366,000). The
company had no short-term investments at April 30, 2002.

New U.S. Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 141,Business
Combinations, and No. 142,Goodwill and Other Intangible Assets. Statement 141 requires that the purchase method of
accounting be used for all business combinations initiated after June 30, 2001. Statement 141 also includes guidance on the initial recognition and measurement of goodwill and other intangible
assets arising from business combinations completed after June 30, 2001. Statement 142 prohibits the amortisation of goodwill and intangible assets with indefinite useful lives. Statement 142
requires that these assets be reviewed for impairment at least annually. Intangible assets with finite lives will continue to be amortised over their estimated useful lives. Additionally, Statement
142 requires that goodwill included in the carrying value of equity method investments no longer be amortised.

Merant
will apply Statement 142 effective May 1, 2002. Application of the nonamortisation provisions of Statement 142 is expected to result in an increased net income of
£2,372,000 in 2003. The Company will test goodwill for impairment using the two-step process prescribed in Statement 142. The first step is a screen for potential impairment,
while the second step measures the amount of the impairment, if any. The company expects to perform the first of the required impairment tests of goodwill as of May 1, 2002 in the second
quarter of fiscal 2003. Any impairment charge resulting from these transitional impairment tests will be reflected as the cumulative effect of a change. Merant has not yet determined what the effect
of these tests will be on the earnings and financial position of the Company.

In
August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144,Accounting for the Impairment
or Disposal of Long-Lived Assets, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes
Statement No. 121,Accounting for the Impairment of Long-Lived Assets and for Long-Lived

79

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Assets to be Disposed Of,and the accounting and reporting provisions of APB Opinion No. 30,Reporting the Results of
Operationsfor a disposal of a segment of a business. Statement 144 is effective for fiscal years beginning after December 15, 2001, with earlier application
encouraged. Merant expects to adopt Statement 144 as of May 1, 2002 and it does not expect that the adoption of the Statement will have a significant impact on Merant's financial
position and results of operations.

In
August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 146,Accounting for Costs Associated
with Exit or Disposal Activities, which addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies EITF Issue
No. 94-3,Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including certain costs incurred in
Restructuring). The principal difference between Statement
146 and Issue 94-3 relates to Statement 146's requirements for recognition of a liability for a cost associated with an exit or disposal activity. Statement 146 requires that a liability
for a cost associated with an exit or disposal activity be recognised when the liability is incurred. Under 94-3, a liability for an exit cost as generally defined in Issue
94-3 was recognized at the date of an entity's commitment to an exit plan. The provisions of this Statement are effective for exit or disposal activities that are initiated after
December 31, 2002, with early application encouraged. Merant will adopt the provisions of Statement 146 for exit or disposal activities that are initiated after December 31, 2002.

Note 27    Subsequent events

At an extraordinary general meeting held on June 6, 2002, shareholders approved the Company's proposal to repurchase up to an additional 17,253,922 of the
Company's outstanding shares, representing approximately 15% of its then outstanding issued share capital. The Company began the repurchase of its own shares under this authority on June 11,
2002 and between that date and September 19, 2002 (the last date prior to publication of this annual report that shares were repurchased) repurchased for cancellation 11,776,229 ordinary shares
for an aggregate consideration of £11,337,705, representing an average price of approximately £0.96 per ordinary share.

As
more fully described in note 23, the Company and certain of its present and former officers and/or directors are presently defendants in a class action lawsuit alleging, among
other things, violations of the U.S. securities laws. On August 21, 2002 the parties entered into a Stipulation of Settlement (the "Settlement Agreement") under which all claims in this
litigation were settled. All payments made under the Settlement Agreement to settle this litigation and all associated costs will be paid by the Company's insurance carrier. A number of conditions
remain to be satisfied before the settlement reflected in the Settlement Agreement becomes effective, including approval of the settlement by the United States District Court for the Northern District
of California.

Note 28    Companies Act 1985

These financial statements do not comprise the company's "statutory accounts" within the meaning of Section 240 of the Companies Act 1985 of Great Britain.
Statutory accounts for the year ended April 30, 2002 will be delivered to the Registrar of Companies for England and Wales in due course and statutory accounts for the year ended
April 30, 2001 and 2000 have been delivered. The auditors' reports on these accounts were unqualified.

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SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS

|Description                           |  | Balance at
Beginning of
Period |  | Charged to
Costs and
Expenses |  | Charged to/
Credited from
Other Accounts(*) |   | Write-offs |   | Balance at
End of Period
|------------------------------------- |  | ------------------------------ |  | ----------------------------- |  | ------------------------------------------- | - | ---------- | - | ------------------------
|PROVISION FOR BAD AND DOUBTFUL DEBTS: |  |                                |  |                               |  |                                             |   |            |   |                         
|Year ended April 30:                  |  |                                |  |                               |  |                                             |   |            |   |                         
|2000                                  |  | 2,973                          |  | 1,914                         |  | 323                                         |   | (2,182     | ) | 3,028                   
|2001                                  |  | 3,028                          |  | 1,905                         |  | 419                                         |   | (1,592     | ) | 3,760                   
|2002                                  |  | 3,760                          |  | 1,433                         |  | (1,253                                      | ) | (2,744     | ) | 1,196                   

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All
other schedules have been omitted because the required information is not significant or is not applicable.

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ITEM 18. FINANCIAL STATEMENTS

See Item 17

ITEM 19. EXHIBITS

|2.01(2 | )  | Memorandum of Association of Merant dated as of March 28, 1983, as amended and restated to date                                                                                                             
|------ | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.02(1 | )  | Articles of Association of Merant adopted as of June 19, 1996, as amended and restated to date                                                                                                              
|2.03(1 | )  | Form of Specimen Certificate for Merant's ordinary shares at GBP 0.02 each                                                                                                                                  
|2.04(2 | )  | Amended and Restated Deposit Agreement dated as of March 16, 1998 among Merant, the Bank of New York and all owners and holders from time to time of American Depositary Receipts                           
|2.05(3 | )+ | Merant's 1994 Employee Benefit Trust                                                                                                                                                                        
|2.06(1 | )+ | Merant's 1998 Share Option Plan, as amended                                                                                                                                                                 
|2.07(1 | )+ | Merant's 1998 Inland Revenue Approved Share Option Scheme                                                                                                                                                   
|2.08(1 | )+ | Merant's 1999 Employee Share Purchase Plan                                                                                                                                                                  
|2.09(2 | )  | Form of Indemnification Agreement entered into by Merant with each of its directors and certain executive officers                                                                                          
|2.10(2 | )  | Form of Indemnity Agreement entered into by Merant Incorporated, a subsidiary of Merant ("Merant Incorporated"), with each of its directors and certain executive officers of Merant and Merant Incorporated
|2.11(4 | )  | Agreement and Plan of Reorganization among Micro Focus Group plc, Tower Merger Sub, Inc. and INTERSOLV, Inc. dated June 17, 1998.                                                                           
|2.12(5 | )  | Asset Sale and Purchase Agreement by and between NetObjects Inc. and Merant Inc. dated January 8, 2001.                                                                                                     
|2.13(5 | )  | Purchase Agreement by and between Merant plc and Micro Focus International Limited dated June 11, 2001.                                                                                                     
|2.14(5 | )  | Amendment No. 1 to Purchase Agreement by and between Merant plc and Micro Focus International Limited dated August 10, 2001.                                                                                
|2.15(5 | )  | Purchase Agreement by and between Merant plc and Data Direct International Limited dated September 10, 2001.                                                                                                
|2.16(5 | )  | Agreement for the Sale and Purchase of Land at The Lawn 22-30 Old Bath Road, Newbury, Berkshire.                                                                                                            
|21.01* |    | Schedule of principal subsidiaries undertakings at April 30, 2002                                                                                                                                           
|23.01* |    | Consent of Independent Auditor dated October 30, 2002                                                                                                                                                       
|99.01* |    | Section 906 Certification for Gerald Perkel                                                                                                                                                                 
|99.02* |    | Section 906 Certification for Scott Hildebrandt                                                                                                                                                             

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82

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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this annual report on its behalf.

| |  | By: | /s/SCOTT HILDEBRANDT
| |  | --- | --------------------
| |  |     | Name:               
| |  |     | Title:              

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Certifications of Chief Executive Officer  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I,
Gerald Perkel, the Chief Executive Officer of Merant plc (the "Company"), certify that:



| |  | /s/GERALD PERKELGerald Perkel
Chief Executive Officer
October 31, 2002 |  | 
| |  | ---------------------------------------------------------------------- |  | 

84

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Certifications of Chief Financial Officer  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I,
Scott Hildebrandt, the Chief Financial Officer of Merant plc (the "Company"), certify that:



| |  | /s/SCOTT HILDEBRANDTScott Hildebrandt
Chief Financial Officer
October 31, 2002 |  | 
| |  | ------------------------------------------------------------------------------ |  | 

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