RTÉ has posted a much-improved surplus of €6.8 million for 2004 despite rising costs, higher staff numbers and a €10 million charge needed to upgrade its Donnybrook headquarters.

The State-owned broadcaster said it would use the surplus funds to invest in digital television and renew its broadcasting equipment. As recently as 2002, the station was grappling with a deficit of €56 million.

The chairman of the RTÉ authority, Paddy Wright, whose term of office has come to an end, said the surplus was a "prudent" one. The station's turnover was up from €312 million to €342 million.

Meanwhile, details of the salaries of the station's 10 highest-paid broadcasters will be released today. It is understood six of the 10 have benefited from increases during 2004.

The 2004 annual report shows that several of the station's channels posted strong surpluses for 2004. RTÉ 1 increased its surplus by 35 per cent from €11.8 million to €16 million, while the radio station 2FM increased its surplus from €3.8 million to €4.6 million. However, RTÉ 2 television posted a deficit of €8.9 million.

The company's director general, Cathal Goan, said the station's costs rose in 2004 because it was making more home-produced programming. The annual report shows operating costs rising from €291 million to €315 million.

Staff numbers have risen from 1,919 to 2,017, while the payroll costs overall were up from €110 million to €118 million.

The company's chief financial officer, Conor Hayes, said that, while employee numbers were up during the year, they were far lower than they were five years ago.

Mr Goan said that making programmes depended on people and the station had committed itself to increasing the levels of home-produced programming.

The station's underlying surplus would have been higher if RTÉ did not have to put aside €10 million for upgrading its Montrose headquarters in Donnybrook. Mr Hayes said the station was allowing for a €10 million "building impairment" charge, which was needed to improve its 47,000 sq m of space in Donnybrook.

Mr Hayes said that certain deficiencies in the fabric of the buildings were discovered following a survey by a firm of chartered surveyors. He said that some of the buildings needed to be fireproofed more adequately and others needed to be expanded so that they could handle more modern broadcasting equipment.

The station did have one substantial gain during the year when it sold a transmitter site in Beaumont, north Dublin, for €16.5 million. Mr Goan said the station remained concerned about the level of licence fee revenue not collected each year by An Post. Mr Hayes said evasion rates were running at about 13.5 per cent, whereas in the UK it was about 7 per cent.

The annual report shows that licence fee revenue increased in 2004 to €166 million from €157 million the year before. Despite the strong increase in licence fee revenue, commercial income was more important to the broadcaster in 2004, coming in at €176 million.