2017 £m	2016 £m
Cost
At 1 January	222.5	200.6
Exchange differences	(4.1)	11.5
Recognised on acquisition of businesses	0.4	10.4
At 31 December	218.8	222.5
Accumulated impairment
At 1 January	61.6	60.6
Exchange differences	(0.4)	1.0
At 31 December	61.2	61.6
Carrying amount	157.6	160.9

During the year a £0.4m hindsight adjustment was made to a 2016 acquisition.

Goodwill acquired in a business combination is allocated, at acquisition, to the business units that are expected to benefit from that business combination. After recognition of impairment losses, the carrying amount of goodwill has been allocated to the Group's cash generating units, which are summarised in the following operating segments:

	2017 £m	2016 £m
ADE:
Western Europe	27.0	26.8
North America	47.5	49.0
AGI:
Western Europe	24.1	23.1
North America	52.5	55.9
Emerging markets	6.5	6.1
	157.6	160.9

The Group tests goodwill at least annually for impairment, or more frequently if there are indications that goodwill might be impaired.

The recoverable amounts of the cash generating units are determined from value in use calculations. The key assumptions for those calculations are the discount rates and growth rates in respect of future cash flows. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the cash generating units. This rate is risk adjusted, for specific countries, where the Group perceives a risk premium is appropriate. The rates used to discount the forecast cash flows for cash generating units are between 11.7% (2016: 13.4%) and 12.7% (2016: 14.4%). The recoverable amount is the sum of the discounted cash flows as forecast for the coming five years, together with a further estimate of cash flows in perpetuity.

The forecast sales in the initial 5 years reflect management's expectation of how sales will develop at this point in the economic cycle. This is based on the approved 2018 budget and a growth rate of up to 3% year on year. The expected profit margin reflects management's experience of each cash generating unit's profitability at the forecast level of sales. As outlined in the Business review, these forecasts take into account the current and expected economic environment both in respect of geography and market sectors. Annual growth in cash flows after five years are in the range 2.4% to 5.4% depending on the geographical region of the cash generating unit and are based on historical weighted average growth in GDP in the respective geographies.

If the goodwill allocated to a cash generating unit represents more than 15% of the Group's total goodwill carrying value, the cash generating unit is considered to be individually significant. The Group considers the North America ADE Heat Treatment and North America AGI Heat Treatment cash generating units to be significant cash generating units. The long term growth rates applied to cash flows after five years and the rates used to discount the forecast cash flows for these significant cash generating units are shown below:

Cash generating unit	Goodwill carrying value £m	Long term growth rate %	Discount rate %
North America ADE Heat Treatment	47.5	2.9	11.7
North America AGI Heat Treatment	52.5	2.9	11.7

The Group has conducted sensitivity analysis on the key assumptions applied to the value in use calculations for each cash generating unit. The separate sensitivity scenarios analysed include reduction in the forecast sales of 20% to 50% in the first year of the forecast and reduction of the long-term revenue growth assumptions of 50% to 100% from year five of the cash flows.

The Directors do not consider that there are any reasonable possible sensitivities for the business that could arise in the next 12 months that could result in a material impairment charge being recognised.

The Board has concluded that no impairment charge is required in 2017.