THE sale of a stake in Cablelink and the continued strong performance of RTE Commercial Enterprises are the main reasons why RTE returned a £14.8 million surplus last year, the broadcasting organisation's annual report, to be published today, will show.

The report contains a strong warning that RTE faces a difficult future and the figures reveal that it lost nearly £2.5 million on its broadcasting activities last year. This compares to a profit of £3.4 million on these activities in 1994. RTE had to rely on ancillary activities for its overall stability, the authority's chairman, Dr Farrel Corcoran, warns.

"This is a cause of real concern as we face into a future in which a number of major changes in the broadcasting environment can be predicted," he says.

RTE sold a 15 per cent stake in Cablelink to Telecom Eireann last year for £13.4 million, which resulted in a consolidated gain of £10.1 million. Income from RTE Commercial Enterprises rose from £13.4 million in 1994 to £17.5 million.

Television and radio advertising revenue also rose by £6 million, to £77.4 million, compared to 1994. Income from other broadcasting sources also rose by almost £1 million to £5.6 million.

Revenue from licence fees rose by £600,000 to £51,000,000 last year. The RTE chairman says that the licence fee is among the lowest in Europe.

He also says Telifis na Gaeilge will cost RTE an extra £5.5 million a year, without any new finances being provided. "Without a new source of revenue to give long term support to this very import ant strand of programming, there will be inevitable consequences for RTE's existing commitments," says Dr Corcoran.

Total revenue increased by almost 8 per cent over 1994, in radio and television to yield £78.8 million. However, the consolidated accounts for the group show a sharp rise in operating expenses - an increase of 12.8 per cent. The report says much of the increase was due to a rise in programming costs because of an increase in broadcasting hours.

It also says the escalating costs of television sports rights put a particular strain on expenditure and independent productions expenditure increased by £1.5 million to £6.5 million, as required under the 1993 Act.

In the report, Dr Corcoran says RTE's future must lie in expansion rather than retrenchment both in broadcasting services and ancillary activities.