2016 £m	2015 £m
Cost
At 1 January	200.6	207.4
Exchange differences	11.5	(0.6)
Recognised on acquisition of businesses	10.4	–
Derecognised on disposal of businesses	–	(6.2)
At 31 December	222.5	200.6
Accumulated impairment
At 1 January	60.6	69.0
Exchange differences	1.0	(2.2)
Derecognised on disposal of businesses	–	(6.2)
At 31 December	61.6	60.6
Carrying amount	160.9	140.0

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:

	2016 £m	2015 £m
ADE:
Western Europe	26.8	26.4
North America	49.0	46.2
AGI:
Western Europe	23.1	18.1
North America	55.9	43.7
Emerging markets	6.1	5.6
	160.9	140.0

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 13.4% (2015: 12.4%) and 14.4% (2015: 13.4%). The recoverable amount is the sum of the discounted cash flows as forecasted for the coming five years, together with a further estimate of cash flows in perpetuity.

The forecast sales reflect management's expectation of how sales will develop at this point in the economic cycle. 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. Cash flows after five years are based on an estimated growth rate of 2.8% (2015: 3.0%), being the historical weighted average growth in GDP in the markets that the Group operates in. Growth rates by cash generating unit range from 2.5% to 5.3%. This rate does not exceed the average long-term growth rate for the relevant markets.

The Group has conducted sensitivity analysis on the key assumptions applied to the value in use calculations for each cash generating unit. A decline in sales of 4.2% per annum in perpetuity would result in the recoverable amount of goodwill for the Group being reduced to its carrying value. The directors do not believe such a decline to be likely.

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 this 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	46.4	2.9	13.4
North America AGI Heat Treatment	56.0	2.9	13.4

Declines in long-term growth rate of 8.5 percentage points and 3.9 percentage points for North America ADE Heat Treatment and North America AGI Heat Treatment cash generating units, respectively, would result in the recoverable amount of goodwill for these cash generating units being reduced to their carrying values. The directors do not believe such declines to be likely.

The Board has concluded that no impairment charge is required in 2016.