Lines Overseas Management's first half net earnings fell by more than $1 million in the face of tough global trading conditions.

LOM saw its earnings drop from about $1.3 million or 20 cents per share in the first six months of 2007 to $47,806 for the same period this year, according to its 2008 Half Year Financial Results.

Meanwhile broking fees declined 29 percent to represent 48 percent of group revenues as the financial services company's brokerage subsidiaries suffered from the current bear market.

But operating costs for the group, excluding commission payments related to brokerage revenue, dropped three percent, with overall operating expenses down five percent. Employee expenses, however, rose 14.5 percent as the group hired additional staff to prepare for future growth.

Other revenue figures included unchanged asset management revenues, while fees realised from corporate finance work were cut to almost nothing in the first half of this year, net interest earnings declined 11 percent in line with clients reducing their exposure and leverage, revenues from proprietary trading fell 72 percent to $131,980, and overall revenues for the group were down 23 percent.

The report cited the impact of the US' looses lending policies over the past six years on the world's financial markets and the credit crisis, in particular with the collapse of Bear Stearns and the current hardships facing Fannie Mae and Freddie Mac, as well as Lehman Brothers, Citigroup and General Motors, as the main driving force behind difficult market conditions.

"We have witnessed negative returns in all major stock markets so far this year and are now officially in a global bear market (with declines in excess of 20 percent)," it read.

"Given this background, LOM has witnessed significantly lower transaction volumes and a consequent decline in revenues.

"We have faced higher staff costs as we continue to add enhancements to the services we offer our customers. This meant additional staff in the areas of corporate finance and investment research.

"To compound the situation, we are in the middle of implementing our new client accounting system, CAMRA, along with a new market order entry system and suffering those associated costs."

Other financial highlights included the company's assets under administration declining to $976 million as of June 30, 2008, but net equity was up at $21.4 million, with no debt, and annualised return on equity at 0.5 percent.

LOM paid its regular dividend of seven cents to its shareholders in June, with its current price on the Bermuda Stock Exchange $4.05.

The company will continue its share buy-back scheme for cancellation to a total outlay not exceeding $1 million, having already purchased 69,500 shares for cancellation during the first half of this year.

"Given conditions in the market and the normal summer slowdowns we expect that business will remain subdued over the third quarter," the report concluded.

"The ability of revenues to rebound in the fourth quarter of the year will depend mainly on developments during the rest of the summer."