Oct. 25 (Bloomberg) -- EMI Group Plc, the world's third- largest music company, identified a ``one-off'' accounting fraud affecting the reporting of results at its recording music business in Brazil. The stock fell 4.3 percent.

The company estimates the fraud resulted in an overstatement of EMI Music's revenue by about 12 million pounds ($22.5 million) and its operating profit by about 9 million pounds, the company said in a PR Newswire statement today. The effect of the overstatement will be reflected in EMI's first-half results.

London-based EMI said it conducted a ``full'' investigation and suspended some of the senior management at the Brazilian unit. EMI on Oct. 16 reported revenue for the six months ended Sept. 30 fell about 5 percent because this year's release schedule has a greater-than-usual weighting to the second half.

The 12 million-pound revenue shortfall means the company's drop in sales instead was about 6.3 percent, based on Bloomberg calculations. Removing the overstated amount, first-half sales fell to about 866 million pounds, rather than 878 million pounds.

The shares fell 12 pence to 268.75 pence in London, their biggest drop since July 13. The shares have gained 11 percent this year, giving EMI a market value of 2.13 billion pounds.

Adjusting for currency swings, revenue in the first half declined about 3 percent, EMI said on Oct. 16. Underlying profit before tax, amortization and exceptional items will be about 27 million pounds, it said then.

First-half revenue at the recorded music division, EMI Music, fell about 4 percent on a constant currency basis, EMI said on Oct. 16.

To contact the reporter on this story: Aisha Phoenix in London at aphoenix@bloomberg.net.

Last Updated: October 25, 2006 13:40 EDT