AGL Energy Limited Annual Report 2012 Acquisition of Silverton Wind Farm Holdings Pty Ltd On 30 April 2012, AGL Energy Limited acquired the development  rights for the Silverton wind farm in New South Wales through the  acquisition of 100% of the voting shares in Silverton Wind Farm  Holdings Pty Ltd. The consideration was paid in cash. The wind farm site is located near the township of Silverton,  approximately 25 kilometres north-west of Broken Hill. Silverton  wind farm has development approval for 282 wind turbines in  Stage 1 and concept approval for a further 316 wind turbines in  subsequent stages. Subject to electricity network capacity, the  consolidated entity will develop up to 300 MW in Stage 1, with  the option for subsequent stages to bring the site capacity up  to 1,000 MW. Acquisition-related costs amounting to $0.7 million have been  excluded from the consideration paid and have been recognised as  an expense in the year, within the ‘other expenses’ line item in the  income statement.  From the date of acquisition, the entity has contributed $nil to the  revenue and $nil to the profit before tax of the consolidated entity.  On 25 July 2011, the consolidated entity acquired the Victorian  based solar photovoltaic business, EKO Energy, from the privately  owned company, Rezeko Pty Ltd. The consideration paid comprised  cash and contingent consideration. EKO Energy specialises in solar systems, from design through to  installation, for both residential and commercial properties in  Victoria, South Australia, Queensland and New South Wales. Acquisition-related costs amounting to $0.6 million have been  excluded from the consideration paid and have been recognised as  an expense in the year, within the ‘other expenses’ line item in the  income statement. From the date of acquisition, the business has contributed  $21.8 million to the revenue and $1.0 million to the profit  before tax of the consolidated entity. It is considered  impracticable to estimate what the revenue and profit before tax  of the consolidated entity would have been if the acquisition had  been effected at 1 July 2011. As part of the purchase agreement with the four founders of the  EKO Energy business, a contingent consideration arrangement has  been agreed. There will be additional cash payments to the four  founders of the business of: If a founder has ceased or given notice to cease employment at the  relevant deferred payment date, then their share of the contingent  consideration amount is forfeited. As at the acquisition date, the fair value of the contingent  consideration was estimated to be $4.3 million, using a pre-tax  discount rate of 13.4%. The contingent consideration as at 30 June 2012 has been  increased by $0.2 million to $4.5 million reflecting the fair value  of the discounted cash payment. The fair value adjustment of  $0.2 million is included in finance costs in the line item  ‘unwinding of discount on contingent consideration’ in Note 8. Acquisition of EKO Energy solar business Contingent consideration > $3.1 million, representing 20% of the purchase consideration  which is payable one year from the acquisition date; and > $1.55 million, representing 10% of the purchase consideration  which is payable two years from the acquisition date. 107