AUB Group has moderated its adjusted net profit after tax forecast to 3-5% this financial year, due to a business slowdown and cost blowouts from a new IT system.

It previously projected earnings near the lower end of 7-12%.

“Primarily, this is the consequence of continued weak performances in risk services, reducing the forecast adjusted impact by $2 million, as well as the $500,000 impact from the IT underwriting system cost over-run,” CEO Mike Emmett said.

“Disappointingly, we now expect a reduced growth rate of 3-5%.”

Altius Group and Allied Health Australia, two of three units that make up the risk services division, are feeling the effects of reduced case volumes from the NSW workers’ compensation scheme.

“That’s fundamentally the challenge,” Mr Emmett said. “A significant reduction in our volumes means the utilisation in the way in which we can deploy the capacity of our medical professionals across the state has been hampered.

“So, we have a significant portion of fixed cost both for professionals and for physical premises etc, which remain even though the case volumes have reduced.”

Remedial action related to an Austbrokers Canberra alleged fraud case are in progress. The business cannot yet determine the net impact on the group.

AUB reported a $19.8 million net profit for the December half and included $1.6 million of costs in the result from the Canberra case.