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Shares in consultant Mouchel fell 5% this morning after the firm said profits would be at the ’lower end of expectations’ when it reports annual results next month.

In a pre-close trading update, it added it had also incurred additional restructuring costs of between £10-15m which would also have to be factored in to expected earnings. Shares fell 5.25p to 111.75p by 9am, after falling as much as 9% in the first minutes after stock markets opened.

The firm said: “The group anticipates reporting results for the year ended 31 July 2010 in line with the board’s expectations, albeit towards the lower end of the range, and excluding one-off costs of restructuring.

It added: “Trading remains challenging in some areas given the uncertainty that exists in many public sector markets. We expect this situation to continue until the government’s announcement of the Spending Review on 20 October 2010 and probably for some months thereafter, as we work with our clients to help them respond to the changing environment. 

However, it said bank debt had been reduced by more than expected, to £90m. In addition it said that the government’s plan to reduce spending by 25% would lead to a greater demand for firms that could deliver public sector efficiencies. It said its order book and bidding pipeline totalled £1.8bn and £2.2bn respectively, the same as last year.