30 June 2014 Notes to the Financial Statements For personal use only Notes to the  Financial  Statements Construction contracts NOTE 3. RESTATEMENT OF COMPARATIVES Statement of profit or loss and other comprehensive income Construction contracts require significant estimates and assumptions in relation to: These uncertainties may result in future project outcomes that differ from the amounts currently expected.  Where the outcome of a contract cannot be reliably estimated, contract costs are expensed as incurred. Where it  is probable that the costs will be recovered, revenue is recognised to the extent of costs incurred. An expected loss  is recognised immediately as an expense.  Royalties of $32,794,000 which were presented as raw materials and consumables in the statement of profit or  loss and other comprehensive income in prior period, have been more appropriately classified as other expenses.  The reclassification has affected financial statement line items for the prior period as follows: •  determining the stage of completion; •  estimation of total contract revenue and contract costs,  •  acceptance of the probability of customer approval of variations and acceptance of claims,  •  estimation of project completion date  •  assumed levels of project execution productivity Extract Consolidated 30 June 2013 $’000 Reported $’000 Adjustment 30 June 2013 $’000 Restated Expenses Raw materials and consumables (145,659) 32,794  (112,865) Other expenses (53,319) (32,794) (86,113) The reclassification has no impact on profit before income tax, net profit or total comprehensive income.  Mineral Resources Limited Annual Report 2014  65