Firstfolio has announced plans to restructure and integrate operations in the New Year, after suffering a dip in profit.
At the company’s annual general meeting yesterday, the company outlined a new strategy to reduce costs in a subdued demand environment, in order to avoid the same loss-of-profit recorded in the 2012 financial year.
Firstfolio saw a 49.5 per cent drop in profit after tax to reach $3.2 million, due to higher depreciation, amortisation and interest expenses and lower tax benefits.
Operational earnings before interest, taxes, depreciation and amortisation, which reflects underlying operational performance, declined 2.4 per cent to $15.2 million.
“Firstfolio faces challenges, but also some exciting opportunities to improve value for shareholders,” Firstfolio chairman Eric Dodd said.
“Firstfolio will focus on maximising revenue growth, operational efficiency and the value of its brand to support shareholder returns.”
As part of the strategy, the company will be looking to integrate operations to increase service delivery and lower borrowing costs.
Despite the slight decline in profitability, Firstfolio are confident that its restructuring will allow the company to see stronger returns in 2013.
“Firstfolio is pursuing margin improvement through a combination of lower costs, revenue growth and revenue mix,” Firstfolio executive director Tony Harris said.
“There are significant challenges facing the industry, but also attractive opportunities for improving our competitive position and shareholder returns.”
The company recently acquired non-bank lender, Calibre Financial Services, which was rebranded Firstfolio Capital to provide its own funding capability.
However, Firstfolio had said the subdued rate of Australian housing credit growth compared to the last 20 years and the full effect of the Reserve Bank’s interest rate cuts on mortgage demands, remain a concern for the yearly outlook.
“Revenue and earnings in the current year will be influenced by, among other factors, the level of activity in the Australian mortgage sector and the margins available,” Mr Dodd said.
