A RADICAL shake-up of operations by textiles company Coats Viyella has paid off for the business, with a 35 per cent rise in pre-tax profits at its remaining operations.

Sir Harry Djanogly, chairman, said the past year had seen "heartening improvements" in the group's continuing businesses of thread and retail - which includes the Jaeger and Viyella brands.

Last year, workers at the company's Tees Valley operations, including a site in Darlington, escaped the axe when Coats pulled out of its contract clothing business, cutting 5,000 jobs into the bargain.

Instead it has focused on its global thread business, which employs 100 staff at its factory in McMullen Road, Darlington.

Sir Harry said: "The significant refocusing of the group is well advanced. Much of the hard work is behind us, and those businesses which remain for sale are all the subject of current negotiations."

Operating profits from its continuing business, stripping out one-off costs, rose 35 per cent to £114.8m, while sales were up eight per cent at £1.36bn.

However, after taking into account losses on sale or termination of discontinued operations, the group reported a pre-tax loss for the year to December 31 of £29.9m, against a profit of £63.6m last time.

Kazia Kantor, who stepped down as finance director yesterday, said the largest business yet to sell was the Dorma bedwear operation.

Commenting on the future, she said: "The business is clearly now focused on the Coats thread business, and we have retained two retail businesses which we think would benefit from stability and continuity."

Commenting on whether the group was considering selling the Viyella or Jaeger brands, she said: "If someone came up with a large cheque I am sure we would look at it very seriously but we are not actively looking for buyers."

Martin Flower, formerly chief executive of the thread business, has been appointed chief executive of the Coats Viyella group.

The board changes are part of a shake-up, which will also see Jonathan Lea, formerly finance director of the thread division, appointed finance director of the group.

Mike Hartley, chief executive of the Viyella operation, will also step down. Lord Owen, non-executive director, will retire.

The changes come two months after three non-executive directors joined the Coats board, following pressure by rebel shareholders who had requisitioned an extraordinary general meeting.

Coats Viyella plans to rename itself Coats at its annual general meeting in May.