Skip to content
GLOSSARYTERMS AS A CREDIT DESK USES THEM

Exceptional items (non-recurring items)

What are exceptional items in the accounts, and does a lender add them back?

ONE OF 416 TERMS · FREE · NO SIGNUP

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED

// THE SHORT ANSWER

Exceptional items, often called significant items in Australia and New Zealand, are costs or income a business shows separately, in the income statement or its notes, because of their size or nature: a restructuring, a large impairment, a profit on selling a property. Neither IFRS, IFRS 18 included, nor FRS 102 defines the term, so what goes in the line is the preparer's judgement. A lender reads it across several years: a restructuring cost that appears every year is a cost of running the business and stays in EBITDA, exceptional gains come out as readily as exceptional costs go back in, and the cash spent has still left the business.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.

// THE FULL PAGE

Exceptional Items: a Worked Example →

A cost that comes every year is not exceptional to the bank.

// WHAT IT IS NOT

Adjusted EBITDA is management's own figure, usually outside the audit, although IFRS 18 from 2027 brings such measures into an audited note when a company uses them in public communications; exceptional items are a line in the financial statements themselves, inside the audit where there is one. An adjusted EBITDA usually starts from them and often goes further.

// WORKED IN

// NEXT TO IT

READING THE NUMBERS

All 416 terms on one page