Bermuda-based investment company Lines Overseas Management (LOM) yesterday reported a drop in its earnings for the first half of 2003.

Net earnings for the period were $165,000 compared to $217,000 during the first six months of 2002 but the company painted the possibility of a brighter future as equity markets were now showing signs of modest recovery after small gains made during the first part of the year.

LOM managing director Scott Lines wrote in a letter to shareholders that net brokering revenues after execution costs had risen 3.4 percent and represented 61 percent of net revenues.

In addition, a greater demand for margin loans was said to have netted 32 percent more in net interest earnings. Asset management fees also saw a healthy increase - 33 percent year over year - while other revenues gained 30 percent. The company's leasing business also turned a profit in the first part of the year with its generation of $32,044 compared to $8,763 last year.

Despite these gains, Mr. Scott said: "The flat performance of our brokering divisions resulted in overall net revenues for the group rising only 0.5 percent."

Revenues for the period stood at $5.5 million compared to $5.48 in the first half of 2002. On the expense side, the company said it was working to contain costs with overall operating costs having risen 1.5 percent during the period. But LOM cautioned that significant cost reductions could be difficult unless there was a reduction in the organisation's services.

In total the company's operating bill came to $5.34 million compared to $5.26 million during the same period last year. Looking forward, LOM said its outlook for the remainder of the year was "cautiously optimistic" with Mr. Lines adding: "Though business conditions remain difficult our assets under administration are growing."

In conclusion, Mr. Lines said that the company remained strong despite the period's disappointing results.

"LOM's balance sheet remains very healthy with net equity of $22.4 million. The group carries no debt and holds cash and equivalents of $9.3 million or 39 percent of total assets. As of June 30, LOM's book value was $3.55 per share."