Loan broker franchise operator Mortgage Choice has suffered a setback in its strategy of diversifying its business. A sharp increase in expenses related to new initiatives and marketing was not matched by increased revenue in the December 2011 half year.The company yesterday reported a cash net profit of A$6.5 million for the six months to December - 26 per cent down on the previous corresponding period.A five per cent increase in revenue (to $72.7 million) was offset by a 35 per cent increase in operating expenses.Mortgage Choice chief executive Michael Russell said one of the company's new ventures, the comparison website HelpMeChoose.com.au, had earned "lower than expected" revenue.HelpMeChoose made a loss of $709,000 during the half, compared with a loss of $153,000 in the previous corresponding period. Russell said some of the expense items were one-offs and operating expenses would come down in the second half.However, all the company's divisions reported weaker earnings. Cash net profit for the core broking business fell from $9.1 million, in the six months to December 2010, to $7.5 million in the June half, and to $7.4 million in the latest half.Another new venture, the aggregator LoanKit, made a loss of $215,000 in the latest half - down from a loss of $155,000 in the previous corresponding period.Another area of weakness was sales of products other than home loans. Total revenue from insurance, commercial loans, car finance, reverse mortgages and deposit bonds was $1.05 million during the half-year. This compares with $2.4 million for the full 2010/11 year.Russell said he expected both LoanKit and HelpMeChoose to make profits in 2012/13.He said the company was preparing for further diversification. "During the course of the next financial year we will launch our financial planning business."The group's loan book grew to $43.5 billion, which was in line with system growth of 5.6 per cent over the previous corresponding period. The company's share of new home loans was 4.5 per cent - its highest level since 2007.The average upfront commission paid by lenders was 0.59 per cent and the average trail commission was 0.17 per cent.The broker network increased from 354 to 372.