2018
£m
2017
£m
Cost
At 1 January218.8222.5
Exchange differences3.2(4.1)
Recognised on acquisition of businesses3.20.4
At 31 December225.2218.8
Accumulated impairment
At 1 January61.261.6
Exchange differences0.1(0.4)
At 31 December61.361.2
Carrying amount163.9157.6

In 2017 a £0.4m hindsight adjustment was made in respect of 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:

2018
£m
2017
£m
ADE:
Western Europe27.027.0
North America48.447.5
AGI:
Western Europe24.324.1
North America57.852.5
Emerging markets6.46.5
163.9157.6

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 9.8% (2017: 11.7%) and 10.8% (2017: 12.7%). 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 to 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 in the range of 2.3% (2017: 2.4%) to 5.4% (2017: 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. This rate does not exceed the average long-term growth rate for the relevant markets.

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 unitGoodwill carrying value
2018
£m
Long-term growth rate
2018
%
Discount rate
2018
%
North America ADE Heat Treatment48.42.89.7
North America AGI Heat Treatment57.82.89.7
Cash generating unitGoodwill
carrying
value
2017
£m
Long-term
growth rate
2017
%
Discount rate
2017
%
North America ADE Heat Treatment47.52.911.7
North America AGI Heat Treatment52.52.911.7

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 a reduction in the forecast sales of 20% 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 2018.