Lines Overseas Management (Holdings) Ltd. (LOM) saw its net earnings rise by almost 50 percent last year compared to year end 2006, to $2.5 million.

Diluted earnings per share also increased from 26 cents to 38 cents over same period, while total revenue was up 29 percent to $16.5 million for 2007.

The company's expansion, however, caused operating costs to climb 26 percent to $14 million.

Assets under administration grew 15 percent to $1.1 billion.

"LOM had a very good year and these results reinforce our confidence in LOM's ability to perform well in a dynamic global economy," said LOM's president and chief executive officer, Scott Lines.

"Our performance is a tribute to the way we have repositioned our company over the past several years, as well as the hard work of our employees."

The group's overall balance sheet remained strong and debt free, with cash levels at $8.5 million or 33 percent of total assets.

In a letter to shareholders, Mr. Lines admitted that 2007 had proved to be a difficult enivronment for global equity markets, with rising inflation, strong commodity prices and the implosion of the US housing market and its knock-on effects, as most of those markets suffered double-digit percentage declines since the end of last year.

"A year ago we feared that the unusually low real borrowing costs had allowed a massive increase in asset prices," he said.

"Asset prices were afloat on an ocean of cheap credit and that tide has turned. Despite swinging cuts to short-term interest rates by the US Federal Reserve aimed at avoiding a collapse in the US housing market and financial system, the price of 'risk' continues to rise."

He also believes the depreciation of the dollar over the first quarter of 2007 has accelerated to such an extent that it threatens the global finance system and any further speeding up of the decline would also undermine world trade, while the weakness of the dollar has resulted in funds being put into hard and soft commodities, leading to dramatic increases in foodstuff prices, which in turn is pushing headline inflation higher world-wide.

"The toxic mortgage and asset-backed paper that is causing such problems in the US banking and broking sectors is a global virus infecting all major financial institutions," he added.

"Global credit contraction will impact growth in all major economies and we expect to witness interest rate cuts in the UK and Europe as well."