(*) Underlying results (net of tax) in Q1-2014 are based on IFRS, adjusted to exclude share-based compensation charges and related charges for National Insurance of US$3.8 million, excluding US$0.6 million of amortisation of intangibles associated with the acquisition of SiTel (now Dialog B.V.), excluding US$2.0 million non-cash effective interest expense in connection with the convertible bond, excluding US$ 0.2 million non-cash effective interest expense related to a licensing agreement, excluding US$0.3 million acquisition and integration expenses in connection with the purchase of iWatt, excluding US$3.6 million of amortisation and depreciation expenses associated with the acquisition of iWatt and US$17.8 million one-off non-cash deferred tax credit resulting from an intra-group re-organisation of certain intellectual property.
The term "underlying" is not defined in IFRS and therefore may not be comparable with similarly titled measures reported by other companies. Underlying measures are not intended as a substitute for, or a superior measure to, IFRS measures. Underlying results (net of tax) have been fully reconciled to IFRS results (net of tax) above. All other underlying measures disclosed within this report are a component of this measure and adjustments between IFRS and underlying measures for each of these measures are a component of those disclosed above.
(**) EBITDA in Q1 2015 is defined as operating profit excluding depreciation for property, plant and equipment, (Q1 2015:US$5.3 million, Q1 2014:US$5.4 million), amortisation of intangible assets (Q1 2015:US$7.5 million, Q1 2014:US$7.9 million) and losses on disposals and impairment of fixed assets (Q1 2015:US$0.1 million, Q1 2014:US$0.1 million).
(***) Free Cash Flow in Q1 2015 is defined as net income of US$38.8 million (Q1 2014: 31.0 million), plus amortisation and depreciation (Q1 2015:US$12.8 million, Q1 2014:US$13.2 million), plus net interest expense (Q1 2015:US$2.9 million, Q1 2014:US$3.6 million), plus change in working capital (Q1 2015:US$57.8 million, Q1 2014:US$88.9 million) and minus capital expenditure (Q1 2015:US$14.3 million, Q1 2014:US$9.0 million).
Dialog is playing its part a global enabler of the Internet of Things (IoT). In Q1 2015, we built on the success of our first DA14580 SmartBond(TM) Bluetooth Smart System-on-Chip by announcing four new devices in the product family. In 2014, the revolutionary DA14580 offered less than half the power consumption and size of competing solutions and was adopted rapidly across multiple IoT segments by leading consumer companies. Volume shipments started in Q4 2014 and continued to ramp in Q1.
The new 2015 SmartBond(TM) SoCs are optimised for emerging high volume consumer markets including wireless charging, wearables, smart home and human interface devices. They integrate application specific functionality, and feature even lower system power consumption. Equally important, the high level of functional integration reduces our customers' bill of materials. For smart remote control units, which will replace traditional infrared controls, our latest SmartBond(TM) device includes ultra-low power audio codecs for voice control, a technology that remote control manufacturers are adopting in growing numbers. For wearables, one of the highest volume opportunities in the IoT, we launched the DA14680 Wearable on Chip(TM) SmartBond(TM) SoC. This leverages Dialog's power management expertise to provide all the power management needed for wearable computing products, including those powered using energy harvesting techniques. Dialog is now well placed to capture design wins in all of the major high volume consumer electronics segments of the IoT with innovative Bluetooth Smart solutions.
Our proven success with leading smartphone customers for custom power management IC's (PMICs) continued through Q1 2015 with new design wins. Additionally, during the quarter we continued to ramp several new high volume custom PMIC products for hugely popular smartphone models and recently launched wearable products.
Our sub-PMIC - DA9210 - multi-phase DC-DC converter powers the latest MT6795 MediaTek Octa-core Application Processor and is a key component of MediaTek's reference platform. This is in addition to the MT6595 platform where the DA9210 is already successfully used in many China tier 1 smartphone designs. Post the quarter close, we announced HTC's latest smartphones, the HTC One M9+ and HTC One E9+ have adopted this sub-PMIC technology.
In Q1, we launched two new products from the Power Conversion Business segment. We entered the MR16 - low voltage (12 volt) downlight LED form factor - market segment with an excellent dimming and universal transformer compatibility solution. Additionally, we launched a new dimming platform, delivering the ultimate in dimming performance while eliminating more than 20 external components from the bill of materials. These two devices allow Dialog to continue its market leadership in the dimming segment of the fast growing LED domestic retrofit market.
The shift to higher power and faster charging continues as the China smartphone market transitions through 2015, with our rapid charging technology broadly adopted by the top China smartphone manufacturers.
This week we announced a joint venture (JV) with the Lite-On Group in
Taiwan for a strategic investment in Dyna Image a wholly owned
subsidiary of Lite-On. Upon closing Dialog will be the largest
shareholder with a 40% stake. Additionally, ShunSin Technology
(Zhongshan) LTD, part of ShunSin Technology Holdings LTD, a subsidiary
company of Foxconn will also hold an equity stake. The focus of the JV
will be to accelerate adoption of Dyna Image's sensors technology into
the smartphone and IoT markets, leveraging Dialog's broader power saving
and Bluetooth(R) Smart expertise and ShunSin's packaging technology for
smart system sensing solutions.