BT Group today warned it could face "further substantial" charges at its troubled Global Services division as it revealed an 81% collapse in third-quarter profits.

It also said it will have shed well over its targeted 10,000 jobs in the year ending this March. Global Services, BT's largest division, supplies telecoms and computing services to central and local government and multinational companies. Its clients have ranged from the National Health Service to defunct furniture chain MFI.

BT issued a profits warning in October, and announced major writedowns last month after admitting many of its Global Services contracts were far less profitable than it had been reporting.

"There is no question of there having been criminal behaviour," said chief executive Ian Livingston today. "But we have got to get Global Services sorted this year. We have taken a very conservative approach to the way it now accounts for contracts. We have already changed its management, and are making significant financial and operational changes."

But Livingston also admitted there are likely to be further major charges in the final quarter, covering one-off charges against contracts and costs of reorganising the division. He added: "Both of these will be substantial, which means several hundreds of millions of pounds each."

BT has yet to complete discussions on contracts with two its largest Global Services customers, NHS and a non-government client. The outcome of those discussions will determine the scale of the extra writedowns.

Livingston also said the City could also be disappointed by cashflow in the final quarter because "in the past Global Services always made a huge effort to pull in money in the final quarter which stretched the business too far and regularly took money out of the first quarter".

He added: "We want to change that cashflow so this quarter's figure will be significantly lower than last year's exceptionally high figure."

He said Global Services' orders had remained steady at £1.8 billion for the three months. BT shares, which have fallen by more than 50% in the past 12 months, lost a further 6.8p today to an all-time low of 98.4p.

Global services crashed into the red in the third quarter, swinging from operating profits of £22 million to losses of £501 million including the £336 million of writedowns. That was entirely responsible for BT Group's 81% fall in pre-tax profits from £601 million to £113 million on revenues up 5% at £5.44 billion. Earnings before interest, tax and depreciation, the City's preferred yardstick, dropped 32% to £1 billion.

Livingston said BT had cut its workforce by 9500 in the nine months to 31 December, and expected to exceed its target of 10,000 this financial year. He would not say how many more posts would go, adding that three-quarters of those who had left had been contract rather than directly employed staff.

BT said that while it could not yet forecast the final damage at Global Services, it expects the rest of the business to produce earnings growth of about 3% in the final quarter, down from 5% in the third quarter.