ALU Net Profit (NPAT) Margin

Hi all,

I'm still weighing up Altium as an investment. I've looked through the company's financials from 2016 through to 1H 2019. The company has and is experiencing exceptional growth and it's EBITDA (32% for FY 2018) and NPAT (26.7% for FY 2018) margins are not only impressive, but improving half by half and YOY.

But I've noticed something regarding the NPAT margin. The company tax rate in the United States (after Trump's corporate tax cuts) is 21%. But Altium has only been paying between 6% - 10% tax. They explain this as follows (this exert is taken from the 1H 2019 financials):

"The effective tax rate for the year was 9% (2017: 9.7%). This reflects the tax effect of the utilisation of the deferred tax assetrecognised as a result of both temporary differences arising on relocation of Altium’s core business assets to the USA andthe effect of permanent differences associated with the transaction. Altium utilises the tax benefits and re-evaluates thevaluation of the deferred tax asset on an annual basis."

I don't know what this means. But it raises the following questions for me:

1) When will Altium start paying the full 21% corporate tax rate on it's NPAT?

2) When it does start paying the full 21%, this will significantly impact it's NPAT margin, as well as the companies YOY NPAT growth. In turn, this could hammer the share price. It would be handy to know when the tax benefit/deferral runs out.

3) The company carries a "Deferred Tax Liability" on it's balance sheet. Is this the reason why Altium isn't paying all it's tax today? It's deferring the payments to a later date?

Any insight would be greatly appreciated.

Thanks in advance.