Mortgage company Firstfolio has announced a strategic review of its business in the wake of a 50 per cent fall in earnings.Yesterday, the company reported net profit of A$3.2 million for the 12 months to June - down from $6.4 million in the previous financial year. Profit before tax was down 16 per cent (the company had the benefit of a significant tax benefit in 2010/11).The company has been on a busy acquisition program in recent years and this has left it with higher finance costs (up 50 per cent to $4.9 million), a big jump in depreciation expenses (up 114 per cent to $911,000) and $2.7 million of acquisition and restructuring expenses. Operating costs rose 6.2 per cent.At the same time, strong competition in a subdued mortgage market has meant the company has not been able to capitalise on its acquisitions. Revenue was up 0.8 per cent on a like-for-like basis and the gross margin (net commission and net interest income) rose three per cent to $37.7 million.Firstfolio chief executive David Hancock said in a statement: "Industry pressure on Australian mortgage lending margins will continue to be influenced by, among other factors, the level of activity in the housing finance sector and the margins available to mortgage brokers, managers and lenders."Hancock, who took over as CEO in June, said that, in light of market conditions, Firstfolio would undertake a review of its corporate strategy and options to improve shareholder value.The company has already outsourced some of its mortgage-processing and customer service.It has a loan book of $19.9 billion. Settlement volumes were up 5.9 per cent. During 2011/12, Firstfolio acquired Calibre Financial Services (which has been re-branded Firstfolio Capital). The acquisition gave Firstfolio access to a warehouse funding structure and the ability to carry loans on its own balance sheet.