## 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. 

## Acquisition of EKO Energy solar business 

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. 

## Contingent consideration 

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: 

> $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. 

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. 

