| 2007 | 2006 | |||
| €m | €m | |||
| Cost | ||||
| At 1 January | 47.9 | 47.6 | ||
| Additions (see Note 38) | 4.3 | 0.3 | ||
| Disposal of business (see Note 39) | (7.6) | – | ||
| Exchange movements | (1.2) | – | ||
| At 31 December | 43.4 | 47.9 | ||
| Accumulated impairment provisions | ||||
| At 1 January | 40.0 | 39.8 | ||
| Exceptional/operating impairment losses for the year | 11.1 | 0.3 | ||
| Disposal of business (see Note 39) | (7.1) | – | ||
| Exchange movements | (0.9) | (0.1) | ||
| At 31 December | 43.1 | 40.0 | ||
| Net book amount | ||||
| At 31 December | 0.3 | 7.9 |
Goodwill of €1,080.4 million arising before 1 March 1998 is fully written off to reserves (see Note 32).
In accordance with the requirements of IAS 36, Impairment of Assets, the Group ordinarily completes a review of the carrying value of goodwill at each year end. Goodwill is allocated to cash-generating units for the purpose of impairment testing, each of these representing the Group’s investment where the goodwill originally arose. The impairment review is conducted to ensure that the carrying values of the assets within cash-generating units for which goodwill has been allocated are stated at no more than their recoverable amount, being the higher of fair value less costs to sell and value in use.
Accumulated impairment provisions represent amounts provided in respect of acquired former Budget licensee operations in France, and certain former Avis licensee operations in France, Germany and Holland.
The Directors also review at each year end the carrying values of the remaining capitalised goodwill relating to the joint venture in China (see Note 14). This review (undertaken by calculating value in use) did not result in the need for any impairment provision to be recognised as at 31 December 2006 or 31 December 2007.
In determining the value in use, the Directors calculated the present value of the estimated future cash flows expected to arise from the continuing use of the assets using post-tax discount rates based upon the Group’s weighted average cost of capital with appropriate adjustment for the relevant risks associated with the businesses. Estimated future cash flows are based on management’s five-year plans for each cash-generating unit, with extrapolation thereafter based on long-term average nominal growth rates of 4.0%.
