Merant narrows losses to £10.5m

Merant, the e-business software group up for sale, yesterday narrowed its losses in the first quarter despite challenging trading conditions.

The Anglo-American group said talks with a possible buyer, which were first announced last month, were continuing. Gary Greenfield, the chief executive, said: "The discussions are at a preliminary stage."

However, analysts doubted that a firm offer would emerge for the group, which was in failed takeover talks earlier this year. Mr Greenfield said cost cutting had helped pre-tax losses, in the three months to 31 July, narrow to £10.5m from £15.9m a year earlier. Sales from continuing business rose 11 per cent to £29.7m, falling short of the £31.3m that the market had expected.

Merant, which has halved its employee base to 1,000 since last year, has recently restructured itself to focus on developing its remaining software development tool and data connectivity businesses. Last month, it sold its original business, Micro Focus, which makes software tools for programs in Cobol, an old programming language, to US private equity firms for £45m.

The profit from the sale, to be booked in the second quarter, will strengthen Merant's cash assets, at £47.7m on 31 July. Its shares closed up 7p at 106.5p yesterday.