Mortgage specialist Firstfolio is showing signs of strain, as it copes with the management demands of a very busy acquisition program over the past couple of years.Yesterday, the company reported a 35 per cent increase in revenue for the year to June - up from A$65.6 million to $88.9 million.Expenses rose even more - up 39 per cent, from $61.8 million to $85.9 million.Some of those expense items included a 20 per cent increase in contractor and consultant expenses, a 49 per cent increase in finance costs, a 57 per cent increase in employee benefits and a doubling of depreciation and amortisation expenses.Profits before tax fell from $4.5 million, in 2009/10, to $3.4 million in the year to June. Net profit was bumped up to $6.4 million, after the company drew on $3 million of deferred tax loss benefits.The company reported an increase in earnings per share from 75 to 85 cents a share. But if the tax benefit is taken out of the equation, earnings per share fall to 45 cents.Last financial year, the company paid $19.5 million for Club Financial Services, a finance broker, and $4.5 million for Apple Loans, a Tasmanian mortgage broker.Last month, Firstfolio announced the acquisition of a boutique lender, Calibre Financial Services. That deal is set to be completed next month.Firstfolio chief executive Mark Forsyth said that after financing and some accounting items were taken out of the equation, the company's performance was very solid. Earnings before interest, tax, depreciation and amortisation rose 22 per cent, to $11.8 million.He said the group was still rationalising expenses following recent acquisitions and expected to reduce a number of expense items in future.Forsyth said he was excited about the Calibre acquisition because it offered a different funding structure and an opportunity to use the Calibre platform to develop new products. Firstfolio has wholesale funding agreements with Commonwealth Bank and ING Direct, and with National Australia Bank's third-party funding arm, Advantedge. Loans written under these agreements go on the funder's balance sheet.Calibre has a warehouse structure, with equity supporting the loans, and it carries the loans on its balance sheet. In 2007, it completed a $200 million issue of residential mortgage-backed securities.Firstfolio's mortgage portfolio is in excess of $20 billion and increased nine per cent in the year to June.