Term · Profitability & Growth
Non-recurring Items
In briefNon-recurring items are special effects that are allegedly non-recurring, such as restructuring, legal costs, impairments or transaction costs. In the small-cap segment, adjustments are heavy, which is why recurring special effects can obscure true profitability.
Definition
Special effects that are allegedly non-recurring, such as restructuring, legal costs, impairments or transaction costs.
How it is calculated
Formula. Adjusted result = reported result ± genuine, clearly delineated special effects.
Why it matters for small caps
In the small-cap segment adjustments are often used heavily; recurring special effects can obscure true profitability.
Common misreadings
- Anything management calls "non-recurring" is often accepted; repeated special costs are operationally relevant.
In the process
Frequently asked
What are non-recurring items?
They are expenses or income presented as one-off. These include, for example, restructuring or transaction costs.
How do you deal with special effects?
You adjust the reported result for genuine, clearly delineated special effects in order to see the ongoing earnings power. Each effect should be individually traceable.
What danger lies in non-recurring items?
What management labels as one-off is often accepted uncritically. But repeatedly occurring special costs are operationally relevant and must not be permanently excluded.
Related terms
Sources
Primary
ESMA – Guidelines on Alternative Performance Measures
https://www.esma.europa.eu/document/esma-guidelines-alternative-performance-measures
https://www.esma.europa.eu/document/esma-guidelines-alternative-performance-measures
Methodology
U.S. SEC – Non-GAAP Financial Measures
https://www.sec.gov/rules-regulations/staff-guidance/corporation-finance-interpretations/non-gaap-financial-measures
https://www.sec.gov/rules-regulations/staff-guidance/corporation-finance-interpretations/non-gaap-financial-measures
Education only, not investment advice. Ranges and thresholds are didactic orientation values, not an official standard.