Investment Memorandum - Thankyou Payroll
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Investment Memorandum
2 Introduction
4 Our story
6 How Thankyou Payroll works
8 The opportunity
The challenge
The change
10 What we need
Use of capital
12 Becoming a Thankyou Payroll investor
Dividends
Share specifics
Selling shares
Share breakdown
Convertible loan note
16 What we expect
18 What we provide
For businesses
For government
For social good
20 Our clients
22 Our journey
24 Our team
Board of directors
30 Philanthropy
32 Environment
34 Media
36 The landscape
38 Our financials and forecasts
40 Risk factors
42 Important information
46 Contact us
2 3
Introduction
Thankyou Payroll is a free, cloud based payroll
$80,000
intermediary service that provides high
quality payroll for businesses and charities
and donates 25 cents per person, per pay, to
DONATIONS TO 7 YEARS
community organisations. Since our beginning
in 2010, we’ve processed more than $900 DONATES
COMMUNITY
ORGANISATIONS OLD
25c
million in pays, provided services for more than
4,300 clients and donated more than $80,000
to community organisations.
PER PERSON
We’ve been investing in businesses and
communities for the last 7 years
PER PAY
140
- now we hope you’ll invest in us.
With a growth rate of 220% over 3 years, a
new clients each month
diverse team of talented staff, a dedicated
board and thousands of happy clients, we
believe that with your support we can
accelerate our growth and continue to improve
our service offerings.
And this is the moment to do it.
In April 2019, the IRD will implement
significant changes to PAYE payments and
payroll processing. These changes will push
$900m
an estimated 60,000 businesses into the
intermediary space and will mean changes
to our business model. It’s an incredible
PAYS
opportunity and one we intend to pursue with
vigour. WE
LLI
NG
TO
N
In order to meet this opportunity, we need
investment. We are looking to raise between
$400,000 and $600,000, up to 9.375% of the
company. Shares will be $1 per share, and the
4,300
DU
minimum investment is $500. NE
DIN
Please read through this document, ask
questions, and think about becoming an
investor. Over the next few pages you’ll be able CLIENTS GROWTH RATE OF
to learn more about our founding, our future,
our philanthropy and how you can be a part of
what we do.
220%
OVER 3 YEARS
2 3
Our story
In 2008, our founder Hugh Davidson was Please see:
working as a service designer at the IRD. He www.thankyoucharitabletrust.org for more
realised there was an opportunity to leverage details.
the IRDs payroll intermediary subsidy and
create community good. Version 1 of our online payroll system emerged
from the creative depths of a Port Chalmers
At the time the IRD was receiving around garage in 2010, and in 2013 Lani Evans joined
150,000 PAYE returns each month, in the mail, the team as growth stage CEO, expanding
on actual pieces of paper. It was a logistical the team, growing our client base and
nightmare and the subsidy was put in place to launching the second version of our proprietary
encourage businesses to switch to online filing software. Version 2 offered greater versatility,
via registered payroll intermediaries. Hugh a friendlier, more intuitive user interface and
PORT CHALMERS
figured out that the subsidy was generous easier integration with services like Xero and
enough to support a social business and so, WorkflowMax.
Thankyou Payroll was born. HUGH’S GARAGE
Since then we have been steadily improving
Thankyou Payroll provides free, cloud based Version 2, adding a range of client requested
payroll intermediary services to 4,300 features and functionality. Version 3 is
businesses and charities around the country. scheduled for a 2018 release and while
We leverage the IRD subsidy as our primary keeping the basic structure of the much loved
revenue stream, alongside income from current system, it will be a fresh build offering
interest, and fast-service fees. Our service a seamless experience across mobile devices THANKYOU
sorts and tracks PAYE, leave liability, kiwisaver, and the web, and with added features for CHARITABLE
student loans, and other obligations. We pay custom reporting and payroll management. TRUST WE
LLIN
GT
ON
staff, email branded payslips, and have a range
CH
of reporting features. Our payroll is highly In 2015, Lani stepped into a Directors role, and RIS
TC
HU
RC
customizable, has a simple, user-friendly Christina Bellis came on board as CEO. We
H
interface, and can be integrated with Xero. opened a second office in Wellington, doubling DU
NE
DIN
our users and staff numbers in 2016.
We operate as a social enterprise and our aim
is to provide holistic benefits to government, Our client base continues to grow at a steady
business and community: for the government, rate, primarily via word of mouth. We have
we provide accurate, on time payroll and robust, human centred policies and procedures,
taxation data, reducing their logistical load; such as domestic violence and mental health
for business, we provide high quality, easy leave, and pay our staff above the living wage.
to use payroll services, and for community We support a strong philanthropic model,
we provide regular community donations. have a skilled and diverse board of directors APRIL 1
VERSION 3 IS
We donate a proportion of the IRD subsidy
to the Thankyou Charitable Trust, a non-
(60% women), a growing commitment to
environmental responsibility, and we are SCHEDULED FOR 2019
profit organisation that’s innovating in the developing a boundary-pushing, high level A 2018 RELEASE IRD NEW RULES
philanthropic sector. The trust provides micro- marketing and communications strategy.
grants up to $3,000 to grassroots community
groups in Christchurch, Dunedin and Wellington We plan to take the world by storm and we
(with more locations to come!) hope you’ll join us.
4 5
How Thankyou
Payroll works
For all that work, and because they love getting
beautifully formatted, fastidiously correct
calculations and data, the IRD pay us $2 per
pay, per employee, up to 5 employees as part of
the PAYE Intermediary Scheme. That’s how we
can make it free to our clients AND contribute
to important causes all over New Zealand too!
Rad!
6 7
The opportunity OUR FORECASTS SHOW BY THE END OF MARCH
IRD has recently proposed changes to how it
2020, PROFITS SIT BETWEEN
Registered New Zealand charities will continue
$1.2 — $2m
manages PAYE and payroll processing. The to have free access to all of our services and
changes will require employers to submit their we’ll make every dollar go further into the
payroll data to the government after every community because social good, and its
pay cycle, instead of once per month, which impact, will always be a strong component of
significantly increases business administration. our business model.
They will also require businesses to only use
their online portal, which some employers will
find cumbersome, and challenging to navigate. The change AFTER CHARITABLE DONATIONS.
If we continued under business as usual, we
In 2009, the vast majority of employers were
would be on track to clear $1.3m in revenue at
filing PAYE via paper forms. In assuming
the end of the 2018 financial year, with over
consistent growth rates from other payroll
$200,000 in profit. The changes presented,
intermediaries, and the accuracy of published
and the reconfiguration of our business
data on client numbers, we have calculated
model and forecasts, are now offering a great
that 50-60,000 employers will be looking for
opportunity for us to grow well beyond our
services like ours that simplify their payroll and
original trajectory in the next 2 years.
tax related responsibilities. Our past forecasts
have been meeting their anticipated trajectory,
Under our new business model, which includes
and current forecasts estimate we are in a
the monthly subscription and an increase in
favourable position to pick-up up to 8,000 of
client uptake, our forecasted revenue in 2018-
these new clients by March 2019.
19 financial year is estimated at $3.38million,
and clearing $5million in 2019-20. We’ve
invested our 2016-2017 profits into this
The challenge equity crowdfunding campaign, which means
IRD have also announced they are removing we’ll show a loss this year, and a loss next WE HAVE CALCULATED THAT
the payroll intermediary subsidy which we have year because we’re investing in positioning
been leveraging to run our business and offer
our service free of charge to our clients, and our
business model will need to change to reflect
ourselves for 2018-19 where expected profits
sit between approximately $500-$750,00
depending on the capital raised in this
50-60,000
this. Our current model has 3 main revenue campaign. Our forecasts show by the end of BUSINESS WILL BE LOOKING FOR
streams: the IRD subsidy (approx 65-70%), March 2020, profits sit between $1.2 and $2m SERVICES LIKE OURS
income from interest (approx 20-25%) and after charitable donations.
fast-service fees (approx 5-10%).
We are raising a minimum of $400,000 and
In April 2018, we will be moving to a monthly maximum of $600,000 to be able to meet the
subscription payment model, with a scaled demand the government changes are likely WE ARE IN A
pricing model determined by the number of to make on our business, and to market our FAVOURABLE POSITION
employees a business employs. This will be services much more widely in order to take TO PICK-UP UP TO
priced competitively for the market, while advantage of this opportunity.
aiming to continue offering the best value for
money: a great product, friendly and supportive
help staff, and regular donations through
8,000
Thankyou Charitable Trust. NEW CLIENTS
BY MARCH 2019.
8 9
What we need Use of capital
We are raising $400,000 to $600,000 in
investment for marketing, design, sales, and the Marketing Development and
development of our newest version of the software. push design
$215,000 $235,000
We currently have over 4300 clients on word We need to bring forward the release of our
of mouth alone - that’s strong testimony - but newest version of the software and will be
we’ll need greater brand awareness and name bringing on expert coders and front-end
recognition, before the IRD switch-over, in order designers. Version 3 will still keep the basic
to position Thankyou Payroll at the forefront of structure of the much loved current system,
potential clients minds. We are constructing and will simplify complex areas of the user
a high-level marketing and communications interface. It will be a fresh new build that will
strategy, and hiring a Communications and offer a seamless experience across mobile
Marketing specialist to deliver it. We’ll be devices and the web with a focus on usability
leading with our strong point of difference, and at every step.
building a team that will be ready for thousands
of employers looking for a payroll solution.
Sales
staff
$150,000
We will also be expanding our excellent Help Desk team who support and assist our clients to
We also plan to engage a couple of sales staff
navigate their payroll accounts.
who share our values and the social model
that drives us. These skilled and personable
With the minimum $400,000 investment we believe we will still be successful in attaining our
people will work with the Communications
goals, and our forecasts predict we will still be turning a significant profit in 2018-19, however we
and Marketing to reach those businesses and
would need to reduce the marketing budget, delay a developer hire, and possibly only hire one sales
organisations that will be looking for a simpler
staff. A reduction in marketing and sales could result in a lower client pickup without the wider
solution for their payroll. Along with sharp
reach of our brand and product.
advertising, we expect this will enable us to
reach our intended audience.
10 11
Becoming a Thankyou
Payroll investor
Our share offer Our valuation Share specifics
Our initial goal was to become a commercially Thankyou Payroll has assessed the opportunity The Investor Shares (if investment is less than $50,000) have limited voting rights and do not give
sustainable business, and based on trends, around IRD’s upcoming changes and believe the holder the right to vote at meetings of shareholders. In very limited circumstances (to ensure
forecasts and assumptions, we believe we are we are well positioned to grow as a result. the shareholder’s core rights are protected) each Investor Share gives the holder the right to one
in a position to be a profitable organisation, We’ve followed the Saas-Capital valuation vote. This only occurs where there is a proposal or resolution:
while continuing our philanthropic activities. methodology, and found we were positioned • That will affect the rights attached to the Investor Shares
Shareholders will have the potential to share for a 4.9 multiplier on annualised revenue • To put the company into liquidation
in the portion of profits, while also enabling of $1,189,380 (annualised based on our • For the disposal of the whole, or substantially all, of the property, business and undertaking of
valuable community activities. February 2017 results, with a churn rate of Thankyou Payroll Limited
2.5% per annum). We believe we have the
We are issuing a minimum of 400,000 and team, the track record, the technology and the Investor Shares will also give the holders:
a maximum of 600,000 shares, at $1 per opportunity to justify a pre-money valuation of • The right to an equal share in dividends and other distributions made by Thankyou Payroll
share with a minimum investment of $500. $5.8million. Limited
This represents up to 9.375% of the business. • The right to an equal share in the distribution of surplus assets of Thankyou Payroll Limited.
People that invest less than $50,000 will
receive investor shares with limited voting Dividends Limited voting Investor Shares do not have the right to vote on appointment or removal of
rights, and those that invest more than Investor shares will be entitled to equal Directors, or strategic operations. All shareholders are welcome to be part of the Annual General
$50,000 will receive ordinary shares with full distribution of dividends, and an equal share in Meetings and will be issued annual reports on the company’s financial position and business
voting rights. distribution of any surplus assets (any money activities. There may also be opportunities for the right shareholders to sit on the Board of
leftover after the company pays all debts Directors.
We are about enabling growth and prosperity and sells or closes the business). We will be
in Kiwi businesses and organisations, and working hard to derive strong profits within 3 Pledgers who invest more than $50,000 will receive ordinary shares with full voting rights.
embodying a social enterprise model by years. Decisions on dividend payments will be
10%
supporting social good. We have chosen equity made when those profits are realised.
crowdfunding because it offers an opportunity
to our supporters and our clients to be impact
investors and to share in Thankyou Payroll’s
successful journey. We also chose to use OF
PledgeMe’s equity crowdfunding platform as
they share our values, are a social enterprise,
and strive for positive community impact.
SHARES MINIMUM
WILL BE INVESTMENT
$1 PER SHARE $500
12 13
Selling shares Share breakdown
We appreciate that shareholders may want to sell their shares in the future and we will do our best
to facilitate these transactions. Shareholders are asked to inform us when they wish to sell shares Post Equity
and periodically we will try to match anyone interested in buying with those interested in selling. Pre Equity
Crowdfunding
It’s also possible there will be other opportunities to sell shares and shareholders will be kept up to crowdfunding
(if fully subscribed)
date on any developments. Number of Number of
Shareholder
Shares
%
shares
%
Hugh Davidson 2,372,200 40.900% 2,372,200 37.07%
Convertible loan note
Thankyou Payroll entered into a $75,000 convertible loan with Rosey McConnon for cash flow Helena Kate Stevens 725,000 12.500% 725,000 11.33%
flexibility. This convertible loan has a 5% interest rate, and repayments will commence in June 2017 Carolyn Timms 401,650 6.925% 401,650 6.28%
at a rate of $2000 per month (plus interest for that month) until paid in full. The noteholder can
elect to convert any remaining balance into shares at any time. The Company can also convert the Blair Boswell 355,250 6.125% 355,250 5.55%
balance into shares if it experiences or anticipates solvency issues. The conversion price is fixed at Thomas Bond 290,000 5.000% 290,000 4.53%
the same price as shares are being offered under this offer. If the loan is converted into shares, this
would create a minimal dilution in current shares. Lani Evans 155,150 2.675% 155,150 2.42%
Susan Davidson 145,000 2.500% 145,000 2.27%
Tom Mulder 145,000 2.500% 145,000 2.27%
Duncan and Rosemary Boswell 137,750 2.375% 137,750 2.15%
Seonaigh Stevens 137,750 2.375% 137,750 2.15%
Lewis Stevens 130,500 2.250% 130,500 2.04%
Sue Clarke 116,000 2.000% 116,000 1.81%
Nicola Bould 108,750 1.875% 108,750 1.70%
Rosey McConnon 104,400 1.800% 104,400 1.63%
Rhys Evans 72,500 1.250% 72,500 1.13%
Jennifer McMahon 65,250 1.125% 65,250 1.02%
Stephen Walker and Liana
65,250 1.125% 65,250 1.02%
Machado
Lucy Clark 58,000 1.000% 58,000 0.91%
Jonathon Clearwater 58,000 1.000% 58,000 0.91%
Amanda Burgess 58,000 1.000% 58,000 0.91%
Andrew Kilsby 58,000 1.000% 58,000 0.91%
Rob and Ngaire Tigeir 40,600 0.700% 40,600 0.63%
Crowd Investors - - 600,000 9.375%
TOTAL 5,800,000 100% 6,400,000 100%
14 15
What we expect Our financials and forecasts
Being a part owner of a business can be an important role, no matter how small your share. We all Currently we provide a free, cloud based payroll intermediary service to over 4,300 businesses and
want Thankyou Payroll to do well, and the more help we can get, the better. charities around the country. We leverage an IRD subsidy as our primary revenue stream (approx
65-70% of revenue), alongside income from interest (approx 20-25%) and fast-service fees
(approx 5-10%). The fast-service fees are: $0.50 for 1-day processing per employee, and $0.75 for
As an investor, we would hope that you would become an advocate for our organisation, the work
overnight processing per employee.
we do, and the value we bring. This doesn’t need to take up much time, or be a big part of your week
- but word of mouth and social media are excellent ways to spread the word. We would love it if you
This revenue model is shown in our historic financials below.
would talk about us when you get the chance and share our good news stories on social media. The
more positive stories people hear about us, the more clients we get, the more profit you make, and
But IRD is changing how they operate. Our forecasts have been calculated with the upcoming
the more the community benefits. It takes most people three interactions with a company or an
changes in mind:
idea before they adopt it.
• From April 2018 the IRD is removing the payroll intermediary subsidy, so our business model will
need to change.
If you hear of any good opportunities for us to get out and about, please let us know! We’re keen to • From April 2019 employers will be required to file payroll information online to the IRD after every
take advantage of speaking opportunities, networking events, and media promotion possibilities to pay cycle (is currently once per month). Due to this, there is an expected increase in the number
communicate the story of our service. of employers using payroll providers, as our calculations show over 50,000 businesses will be
looking for a simpler way of managing payroll responsibilities.
• We believe our social enterprise model offers added value for our clients.
When the subsidy is removed, we will move to a monthly subscription payment model, with a
scaled pricing model determined by the number of employees an organisation employs. This cost
will be competitive with the market, and we are establishing a price clients should be able to afford
based on the size of their organisation. Registered charities will continue to have free access to all
of our services and regular donations from revenue will still go to Thankyou Charitable Trust. We’ll
make every dollar go further into the community because social good, and its impact, will always
be a strong component of our business model.
We believe the changes presented, and the reconfiguration of our business model and forecasts
are now offering a great opportunity for us to grow well beyond our original trajectory in the next
2 years.
16 17What we provide
For businesses For government For social good What’s more...
Our cloud based payroll provides a core service We provide accurate, online reporting and We believe businesses have a responsibility to On top of this, we are made and operated
for businesses and charitable trusts. We timely payments to the government on support the communities that support them. in New Zealand. We have an excellent and
take care of payroll complexities offering an behalf of thousands of employers for PAYE, Thankyou Payroll has donated $325,000 in responsive customer support team, and great
affordable, easy-to-use system with a friendly kiwisaver, child support, student loan, and other in-kind services to community organisations reporting functionality. Our system saves
user interface. We stay on top of legislative obligations. We make certain the government and we donate a percentage of the IRD subsidy businesses time, money, and effort, and
changes, manage leave and communicate receives the necessary calculations and to the Thankyou Charitable Trust. So far, we’ve makes payroll a breeze for people who might
with the IRD on behalf of employers. We have breakdown for each individual employee. Our donated more than $80,000, which gives normally find it a struggle. We have proven our
customisable reporting, including leave liability system helps businesses comply with New grants to community organisations around the product with over 220% revenue growth and
and group administration abilities for multiple Zealand’s payroll regulations. country. By using Thankyou Payroll, our clients 700% client based growth in the last 3 years.
client management. are part of an organisation creating greater
This saves government auditing costs on social impact. We strive to foster generosity, and
We provide on time and accurate filing individual businesses, and ensures that they our pay-it-forward model waives fees for fast-
data to the IRD for PAYE and payroll related are receiving the correct taxation percentage processing plans if a client chooses to make
tax obligations, relieving employers of this from employees each month. It has also meant monthly charitable donations. We also make
responsibility, thus reducing stress, and a reduction in paper filing, which government payroll giving simple, and when any employee
freeing up time to concentrate on growing and employees had to transmit into online gives to their charity of choice, we administer
managing their business. documents, and a considerable amount of an instant tax rebate. Everybody wins.
savings in time and money.
18 19Our clients
Over 80% of our clients have fewer than 10 employees, and 12.5% are not-for-profit organisations.
Our clients are wide ranging, from tradespeople to sports centres, law firms to construction
companies, religious institutions to restaurants. Our product meets the needs of most Kiwi
businesses and organisations, and client feedback is consistent - they find the software easy to
use, and our staff are described as friendly, supportive and responsive.
But don’t take our word for it!
“In short, Thankyou payroll has been amazing to work with. We “Have just used Thankyou Payroll for the first time on behalf of a
have been using them for a number of years and find that their client. So easy to use and very responsive when I needed assistance.
ethos is brilliant and it works well with our own values at Kapai. The Will definitely recommend to other clients who have employees.”
Thankyou Payroll team is helpful and any queries always receive
a prompt response. They’ve also been able to accommodate us as TRACY
we’ve grown from 10 employees to more than 50. Admin Assist Ltd
Thank you, Thankyou Payroll, we love what you’re doing.”
JUSTIN LESTER
Kapai Director and current Wellington Mayor
“I have been involved and had dealings with Thankyou Payroll for
at least 3 years. I was first introduced to Thankyou by assisting
clients of mine who run the Aussie Butcher in Tauranga. I hadn’t
“You guys are just doing such a marvellous job in there. A great used a payroll system for some years and was relieved to find that
system and the best Help Desk I have ever encountered. Thankyou!” not only was Thankyou Payroll user friendly, the support behind the
scenes was brilliant. I have since registered other clients of mine to
Thankyou Payroll and process their weekly pay run.”
MARGETTE
Pure Dance Ltd SUE CALLAGHAN
Office Sidekick Bookkeeping and Administration
20 21Our journey
APRIL 1
2019
IRD NEW RULES
11,300
Client growth C L I E N T S
Numbers as at April 1
140
new clients each month 6220
C L I E N T S
4350
2782 C L I E N T S
Launch out
492 1526 C L I E N T S
of garage in
Port Chalmers, 186
C L I E N T S C L I E N T S
C L I E N T S
Dunedin
15
10
11
12
13
14
16
17
18
19
20
20
20
20
20
20
20
20
20
20
Staff growth
Permanent Staff
NEW
WELLINGTON
OFFICE
Annual donations to Thankyou Charitable Trust, philanthropic arm of Thankyou Payroll
2014-2015 2015-2016 2016-2017
$7,600 $27,650 $44,600
16 GRANTS 44 GRANTS 19 GRANTS
(thus far)
22 23Our team
Christina Bellis - CEO Hugh Davidson - Director & CTO
Christina joined Thankyou Payroll in 2015, with a focus on growing and Hugh Davidson is a service designer by trade, a technology fanatic at
scaling the business, while ensuring solid foundations and processes heart, and a fanatical coder. He has degrees in Design for Technology (1st
are in place as Thankyou Payroll doubled its staff and clients. She brings Class honours) and Philosophy and is passionate about creating elegant,
twelve years of management, leadership, and strategic planning, and technology-driven solutions to problems. In 2008, Hugh identified a
has extensive experience building effective teams, and in consolidating gap in the payroll service market and decided to build a useful, free-to-
and growing social enterprise. In 2013, she managed the transformation user payroll service that has the advantage of being a holistically useful
of a windowless carparking building hidden down a potholed lane into a service for New Zealand that is also capable of providing enough revenue
national award winning environment centre. She is the founding Chair for his personal entrepreneurial projects and the projects of community
of Environment Hubs Aotearoa, a network of community and social groups around Aotearoa.
enterprises working collaboratively across the country, and is a trustee
of Frocks on Bikes Aotearoa, helping increase sustainable transportation. Hugh taught himself how to write code that securely and accurately
She also sits on the board of Thankyou Charitable Trust. manages the calculation of highly complex payroll scenarios. He has an
extensive knowledge of tax and leave legislation, enabling him to design
software that can keep track of hundreds of payments and transfers
for thousands of employees and employers. The systems he created
are scalable and designed to be easily integrated with both information
providing systems (such as time-keeping services) and data end user
systems such as Xero. Hugh’s claim to fame is his seven-year streak
winning the Alexandra Blossom festival Trolley Derby. Hugh is focused on
refining our current proprietary software development for Version 3 of
Thankyou Payroll. He is also focused on his puppy, Hale-Bopp.
24 25Our team
Thomas Bond - Front End Designer Lesleigh Romond - Client Happiness Specialist
Thomas Bond is a designer and front-end developer and is primarily Lesleigh is a colourful individual, with tremendous warmth, a quirky
responsible for brand management and user experience (UX) within the sense of humour and a genuine affinity with people. She brings
Thankyou Payroll team He brings a wide range of creative and technical considerable experience to Thankyou Payroll after working with
experience to the fore with well over 15 years in web related work both many other forward thinking agencies both here and in her former
in New Zealand and the UK. He is also one of the first Thankyou Payroll US based work. Lesleigh is also firmly of the opinion that business
employees and has a wealth of knowledge of the system and helps our expansion starts with staff waistlines, regularly arriving with
larger clients to navigate the software. sublime baking. She adores spending time with her family including
Tom is also an avid and excellent Ultimate Frisbee player, having her 3 SPCA fur babies - Pixie, Poppy and Tuck!
represented New Zealand three times in international competition. He
also represented Scotland once. Elliot Ashton-Stretch - Client Happiness Specialist
Tom’s all round experience is a unique asset in our dynamic business. Elliot is a telephonic charmer, going the extra mile with patience
and consideration with every client that ring ups. He’s our office
Saima Ali - System Happiness Specialist speedster with hands that blur when wielding keyboard and mouse.
Saima moved to Wellington from Christchurch to be with the He is also a creative animal, enjoying writing in various forms. Elliot
team (formerly worked remotely). She joined us in 2015 in her very also diligently helps to eat Lesleigh’s baking and distributes office
capable capacity as a developer and is driving the considerable dog cuddles despite the inherent dangers.
increase of new features and system updates.
Outside of work, Saima loves hanging out with her family, friends and Letisha Nicholas - Environment Specialist
exploring wonderful Wellington! Saima is a delight to work with, bringing Letisha moved from warm, sunny Northland to chilly ol’ Dunedin
warmth humour and sharing a strong desire to make the TYP experience 6 years ago to study a BSc in Zoology. She joined the Thankyou
even better for our clients. Payroll team in 2014 and is currently working part-time so she
can concentrate on completing her Masters of Science (‘Landlord
Bjorn Gronberg - System Happiness Specialist decision making about the energy performance of rentals’).
Bjorn means bear apparently, but we know, Bjorn is really a Ninja. He Recently she moved to Wellington and is working to build TYP
be like a bear-ninja. A Beanja. Bjorn is clever. He has degrees, diplomas a stronger environmental strategy, keeping track of our carbon
and certificates in ninja’ing and is always up for adventures in codeland. emissions, and making changes that improve environmental
At home, he continues to be a busy bear ninja: TV/movie marathons, outcomes. In her spare time, Letisha likes to fish, is a staunch
gaming, building computers and flying robot (ninja) suits, keeping the defender of equality, is busy solving climate change and developing
Ninja den clean and drinking more tea and coffee than non-ninja people. a social enterprise to improve rental housing in New Zealand.
Heather Allott - Team Leader: Client Happiness Specialist
Heather kayaks across the Cook Strait for fun in the weekends, so Carolyn Timms - Captain of process
you know, in terms of sanity she fits right in here! She also comes Caro makes sure our now considerable batch processes run like
to us with considerable banking experience, payroll knowledge they should. She is a sharp cookie, and must operate across all
and has a long history of involvement with not-for-profit groups areas to make sure people get paid and PAYE gets filed. She also
and sports clubs. Heather is a very active person, regularly taking knows an awful lot about rocks. Caro is also a new Mum, likes to
groups out on the water and loves Wellington for it’s proximity to our paddle board, walk around, and climb over and wade through the
wonderful, wild coastline. wild places, which is one of the many attractions of living in
the South.
26 27Board of directors
Thankyou Payroll has five directors who meet every second Anchali Anandanayagam - Director
month. They help to set the strategy and direction for the Anchali is a senior commercial lawyer and business advisor with
business specialist expertise in technology, media and intellectual property. She
helps creative people who have come up with great new ideas or new
Steve Walker - Chair technology to achieve their full potential. Anchali has a unique set
Steve has lived in Port Chalmers since 2003 and is serving of skills that she brings to the board developed through 14 years of
his fourth term on the West Harbour Community Board (three practice in the legal services industry. She has advised businesses both
previous terms on the Chalmers Community Board). Prior to as an external advisor (here and in London) and as in-house counsel
settling down in Dunedin’s West Harbour he worked in London on corporate governance matters. Anchali is currently a Principal at
from 1988-1994 for a small import company as their sales and Hudson Gavin Martin, a boutique corporate and commercial firm with
marketing director. His interests include golf, tramping, cycling a particular focus on telecommunications, technology, media and
and football (he refuses to call it soccer!) intellectual property. She also sits on the boards of Women in Film and
Television New Zealand, the New Zealand Software Association and the
Steve is Chairperson of the West Harbour Community Board, Asylum Seekers Support Trust.
and is a member of the Dunedin Red Cross’s executive
committee, a trustee at the Thankyou Charitable Trust, Deputy Rosey McConnon - Director
Chair of Keep Dunedin Beautiful, a member of the Institute Rosey is a philanthropist and an investor, she comes from a local
of Directors, a notorious quiz master and he is a committee business family and lives between Dunedin and Melbourne. A mentor
member of the Rothesay News where he writes regular to many, she is a motivated individual who says she is just fortunate to
columns. Steve also established and Chairs the West Harbour work alongside some great young minds! Rosey contributes to projects
Beautification Trust which helps to enhance what he describes around the Dunedin community sector as time allows.
as “the most beautiful place on earth”.
Favorite project: Ignite Consultants - A truly visionary student run
Lani Evans - Director and Former CEO organisation and one of her favourite success stories. Rosey currently
In 2010, Lani signed up as the very first client of Thankyou sits on the Thankyou Payroll Board, the Otago Polytechnic Foundation
Payroll. She was an enthusiastic proponent of the service and and recently stepped away after 10 years from the Dunedin Arts Festival
it’s holistic business model and stepped into the CEO role from in order to create a better work - life balance! As former CEO at the
2013-2015. Malcam Charitable Trust she has a developed a strong understanding
of the local community sector. Rosey also spent 18 years of her career
Lani now heads the Vodafone New Zealand Foundation and is an in Melbourne, Australia working for two major companies in the
advocate for generosity in all its forms. She has a background hairdressing industry. Time spent within the Australian corporate world
in leading regional and national organisations. She was a 2015 developed Rosey’s skills in sales training, business development, strategy
Winston Churchill Fellow, was awarded a National Geographic and negotiation. She describes her network as varied and diverse.
Grant in 2013, was a finalist for the Emerging Business Leader
award in 2014 and received the World of Difference Award. She Hugh Davidson - Director
has a strong history of governance, with past roles including Hugh retains his place on the Board of Directors
The Generosity Hub, Philanthropy New Zealand and the steering
committee of Kia Tutahi - The Government Community
Relationship Agreement. Lani is currently the co-chair of Action
Station, Chair of the Thankyou Charitable Trust and on the board
of the West Harbour Beautification Trust and the JR McKenzie
Trust Peter McKenzie Project. When she’s not thinking about
generosity, business or citizen engagement, she can usually be
found running around in the mountains.
28 29Philanthropy
Thankyou Payroll has been developed as a social business and we put approximately 10% of our
income into the Thankyou Charitable Trust.
The Thankyou Charitable Trust (TYCT) is an independent, registered charity (CC50391) that
launched in 2013. TYCT was founded by Lani and Hugh as a mechanism for effectively distributing
the donations generated by Thankyou Payroll. TYCT aims to help communities grow their resilience,
connectedness, well-being and sustainability by giving out grants of $100-$3000. The trust aims
to address some of the challenges of philanthropy through their funding model.
The application process is fast and easy, and all online, and accountability is a potluck dinner
party. TYCT doesn’t want organisations spending time on reporting; instead, they’ve designed
an accountability process that is informal and personal, including the community and their
peers. Healthy relationships play a role in creating successful change interventions and this
accountability model provides opportunities for cross sector community leaders to meet and hear
about each others projects and ideas. TYCT hopes this will contribute to greater system fitness and
more collaboration.
TYCT also operates on a “Pay-It-Forward” funding model. Successful applicants of each grant
round make decisions on the next lot of grant recipients in their area. TYCT believes that this grant
making method creates greater connection among community leaders and organisations by
providing a space for them to meet and engage in collaborative decision-making and values the
knowledge that is within communities. Who understands the need of a local community better Profile of Newtown Playcentre
than the people who are actively working for its betterment? The Thankyou Charitable Trust wants
to break down the power imbalance between fund giver and fund receiver by role modeling high- Newtown Playcentre is a parent-led early childhood education centre situated on Harper Street
trust relationships, handing over power and using more devolved, user-centric decision making in central Newtown. We are a diverse group of parents, who share in common that we are
processes. This is as an opportunity for intervention within communities, an opportunity for all raising preschool aged children. We work together to learn, nurture, grow and love each
growing connection, collaboration, leadership and for providing funding for projects. other’s children. Newtown playcentre is a group of around 20 families, and our centre is
entirely run by volunteers.
With the money from the Thankyou Charitable Trust we were able to purchase two great
new purpose made sandpit covers, to protect our sandpit from the Wellington weather and
animals using it as a litter tray. Our sandpit is a key part of our centre, facilitating play and
learning, real-life mathematical challenges, mixing, tipping and digging. The sandpit covers
make a real difference to our sandpit and the well-being of our children using the sandpit.
We feel excited and grateful for this financial contribution. As well as sandpit covers, the
gift of this money is also a symbol of encouragement to our families through the
knowledge that the voluntary contribution that we give to our local community is supported and
endorsed by others.
EMMA
Newtown Playcentre
30 31Environment
Thankyou Payroll believes that businesses should take responsibility for the effects we have
on our environment. We calculate our carbon emissions and have an annual carbon-offsetting
event where our team, our board, and our friends help plant hundreds of trees alongside local
environmental stewards to help minimise the carbon we’ve used in our business activities.
We have recently started working with Catalyst in Wellington, who will help us to design and
implement an improved carbon calculation and mitigation strategy.
The majority of our computers and monitors are purchased second hand, and we are looking to
engage with a community composting initiative to turn our organic waste into nutrient rich soil. Our
environmental plan also includes purchasing electric bikes for office meetings, and we encourage
staff to use sustainable transport to commute. We are currently investigating putting beehives on
the roof of our Wellington office.
CARBON OFFSETTING
470 PLANTED OVER
trees two years
32 33Media
2014 OBIZ Award Winner
(Otago Chamber of Commerce):
Ethics Award Sponsored by Combined Rotary
Clubs of Dunedin
Finalist in the Emerging Business person of the
year award
34 35The landscape
We believe we are quite different from our competition in New Zealand.
First off, we are a social enterprise. We provide a great service and support the wider community
by giving a proportion of our revenue to community groups via Thankyou Charitable Trust.
Secondly, our churn rate is low which we think is down to our great people, and the continual
feedback we get is that our Help Desk support is exceptional. Even though the IRD landscape is
changing, we will still be price competitive to our clients, and still provide our services to charities
and community groups for free. We believe we will always offer the best value for money over
our competitors.
Competitor How we’re different
They’re a more traditional provider, and we believe we
MYOB can move quicker and provide more personalised service
to our customers.
They’re still new in this space, and we believe our
Xero
customer service is a great point of difference.
We’re competitive on price, and according to their
iPayroll, Smart Payroll, Netpay
published numbers we’re currently growing more quickly.
Other smaller payroll providers We believe we’re competitive on price.
You need to have historic information to do leave
Paper based / online do it yourself calculations. Doing it yourself can be tedious, time
consuming and prone to error.
They manage on behalf through the likes of IMS. This is
Outsourced consultants (eg. a desktop solution. We’ve believe we’re typically cheaper
Bookkeepers) than these options, and the customer has more control
and visibility.
36 37Our financials and forecasts
FY 14 FY 15 FY 16 FY 17 FY 18 FY 19
(Actual) (Actual) (Actual) (Current) (Forecast) (Forecast)
Revenue $ 69,954.04 $ 300,373.04 $ 607,154.83 $ 1,011,871.97 $ 1,468,000 $ 3,308,000
Operating expenses $ 92,069.10 $ 255,907.68 $ 484,646.51 $ 988,241.40 $ 1,817,000 $ 2,561,000
EBITDA $ (20,615.06) $ 46,465.36 $ 125,508.32 $ 26,630.57 $ (344,800) $ 827,600
Net Profit $ (77,965.96) $ (11,385.54) $ 66,657.42 $ (32,220.33) $ (404,600) $ 741,000
The forecasts include a switch to a subscription model in 2018 and are based on our pricing Our current balance sheet (as at March 2017)
proposals. We have included options to our pricing plans, which include full and partial intermediary
services. Our forecasts include presumptions that, over time, more clients might move to the Financial year 2017
cheaper and more basic do-it-yourself online version of our service (partial intermediary) in place ASSETS
of the full service intermediary option. Total cash assets $66,035
Our assumptions underpinning the forecast include: Total current assets $70,645
• The inclusion of sales staff will grow our customer base.
Total non current assets $14,824
• Increased marketing activity will grow our customer base. Our growth so far has been mainly
organic as we have spent almost nothing on marketing historically. We believe our social Total assets $151,504
enterprise model offers added value for our clients.
• A 25% increase nationally in the number of employers looking for payroll services by the end of
the 2018 financial year due to wider awareness of the coming IRD changes. LIABILITIES
• Our churn rate (currently 2.5%) won’t increase significantly once we move to a subscription Current liabilities $16,119
model as our price will be competitive, and clients likely won’t want the administrative and
cumbersome task of navigating the MyIR site, nor deal with increasing payroll legislative Non current liabilities $75,000*
complexities. Our charitable model makes our clients part of a positive impact, which will make Total liabilities $91,024
them feel good.
Total Net Assets $60,480
They also assume a significant increase in the numbers of employers looking for payroll services
during the 2019 financial year, and increasing rapidly as we near the date it becomes a requirement
to file payroll information online to the IRD with every pay cycle. EQUITY
Share Capital $123,667
We’ve invested what would have been our 2016-2017 profits into this equity crowdfunding
Retained earnings ($63,187)
campaign.
Total Equity $60,480
* See page 14 for a description of the $75,000 convertible loan note.
Please also see the disclaimer “Important Information” at the end of this document for an
important note on forecasts.
38 39Risk factors
Competition: There are other commercial payroll companies that exist, and we have outlined a few Underfunded (not reaching maximum $600K raise): We believe that with the minimum amount
of them in the landscape section and how Thankyou Payroll is different. We have an established of $400K we will still be able to meet the majority of our targets. In this event, we might need to
brand, and an excellent reputation with both our clients and with a network of professional postpone the launch of the newest software for a few more months as we would delay hiring a
accountants and bookkeepers who help us grow extensively through word of mouth. We sign up developer. We might also reconsider and only hire one sales staff. In this forecast, we still expect
approximately 140 new clients every month without any paid advertising. A high-profile marketing good profitability in the 2019-2020 year.
campaign, our social enterprise impact, and our premium cloud based payroll software, will
make us well positioned as a favourable payroll services company. No other payroll company Interest rates decrease: Currently bank interest is approximately 20% of our revenue. We have
has our social enterprise and philanthropic model, which is a key point of difference. If another been keeping a close eye on the interest rates as they have been steadily decreasing over the past
business adopted this model, we’d be thrilled as we believe it’s the business model we should all be year. We have been carefully managing the money we hold and investing in higher growth, short
championing, however Thankyou Payroll has had this model since inception. term deposits.
Loss of key staff: Performance planning and regular feedback is sought and given to enable staff Regulatory risks: The changes IRD is making pose a risk on our business as they disrupt our
retention. We have documentation and training modules in process to help induct new staff quickly. current business model, and our trajectory. However, we are also able to see the opportunity this
We also ensure that any one task can be conducted by at least two different staff members. In new legislation offers because we have a great software, and an excellent reputation, to meet the
addition, our staff all earn above the living wage, they receive 5 weeks of paid holidays per year, and demand of employers looking for payroll solutions. New legislation can also be built into our cloud
have access to human centred policies like mental health leave and family violence leave. based business reasonably easily, and legislation doesn’t usually change overnight, which gives
businesses like ours time to meet the new demands.
Slow uptake of new clients: We have a great reputation with current clients and a large network
of professionals that continue to sell our business via word of mouth. We are creating a high level Business continuity in the event of natural disaster: Unless a meteor hits Aotearoa (and in that
communications and marketing strategy, and hiring a Communications and Marketing Specialist event, payroll might be a lesser priority!) we have offices in both Wellington and Dunedin and staff
to drive it, along with sales people to follow up leads. We will be putting money into paid advertising in both areas that can conduct all the necessary day to day business functions to ensure continued
to increase our brand and name recognition. With the changes IRD is making to legislation, we service. Our servers are off-site and in controlled zones. Our servers in ChCh were not affected at
predict a large number of SMEs will be looking to outsource their payroll needs. We are planning all in the 2010-11 earthquakes. In the unlikely event of issues, Thankyou Payroll has a backup server
a great promotional marketing campaign, using current client testimonials to help secure new that can be activated within a couple of hours to retrieve latest data and run the system. For our
clients, and we are building a database of potentials. Our product is known by thousands of office in the shaky capital, a high NBS rating (New Building Standard) was an important factor to
business owners as a reputable, seamless, and user-friendly payroll software. help keep our employees and our business safe.
Increased churn rate: With the introduction of a monthly user-pays subscription, replacing our The apocalypse: payroll is canceled for today.
free service, there is the possibility that we could lose a few more clients than our current 2.5%
churn rate. Cost conscious clients might need to leave due to affordability, and our system has
a few dormant accounts that are ‘live’ but not active. Our forecasts assume many of these will
cancel but believe we will retain the vast majority of current clients. Many will not want the added
administration of the IRD requirements, and will offset that cost against the monthly subscription.
Our cost will be competitive with other payroll service providers, our platform and service are
exceptional, and we have the added benefit of social good for clients to be proud of.
Security: We are a low priority target for hackers, and our internal auditing system looks at
accounts daily and matches money in for money out. We have the usual two authorisation step,
and if a server is compromised, we have a back-up that can be activated within hours to restore
the latest data and system operation. Staff getting ‘phishing’ attacks is more of a concern, and we
have regular discussions with staff on phishing, security, and procedures. We also have basic cyber
security insurance.
40 41Important information
This document has been prepared by Thankyou Payroll Limited. The purpose of this document is Equity Crowdfunding
for information in relation to the Thankyou Payroll Limited share offer on PledgeMe. All efforts have
been made to ensure the accuracy and reliability of the content as of the date of this document. Equity crowdfunding is risky. Issuers using this facility include new or rapidly growing ventures.
Investment in these types of business is very speculative and carries high risks. You may lose your
PledgeMe is licensed and regulated by the Financial Markets Authority, and the share offer made entire investment, and must be in a position to bear this risk without undue hardship. New Zealand
by Thankyou Limited will only be available for acceptance through the PledgeMe website. law normally requires people who offer financial products to give information to investors before
they invest. This requires those offering financial products to have disclosed information that is
important for investors to make an informed decision. The usual rules do not apply to offers by
Disclaimer issuers using this facility. As a result, you may not be given all the information usually required. You
will also have fewer other legal protections for this investment.
This document may include forward-looking statements which reflect various judgements and
assumptions which: Ask questions, read all information given carefully, and seek independent financial advice before
• may or may not prove to be correct, reasonable or reliable; committing yourself.
• are subject to the emergence of new risk factors and to unexpected impacts of known risks;
and
• may be affected by subsequent events.
Neither the Company nor any of its shareholders or directors will have any liability for, nor do any of
them give any representation or warranty (express or implied) as to:
• the accuracy, completeness, reliability, adequacy or reasonableness of any statements,
opinions, information or matters (express or implied) contained in this document or
subsequently provided to anyone; nor as to
• the reasonableness of any assumption, estimates, projections, targets, forecasts or forward
looking statement contained in the document or otherwise made available.
No audit or independent verification of this document has been conducted and this document does
not have regard to the investment objectives, financial situation or particular needs of anyone.
Any reliance by anyone on any information contained in this document is a matter for that person’s
own judgement. To the maximum extent permitted by law, neither the Company nor any of its
shareholders, or directors will be liable to compensate any person for any liabilities, costs, losses or
expenses incurred by anyone in connection with their review, investigation, evaluation or analysis
of this document and the Company.
All amounts, unless otherwise stated, are denominated in NZD. This document is governed by, and
is to be construed in accordance with the laws of New Zealand.
42 43APPENDIX
Calculations for numbers of employers likely to seek out
new systems for processing payroll:
In 2008 our founder, Hugh Davidson, worked for the IRD on a project aimed at moving employers
that filed paper based returns to them each month to electronic filing. The project team recognised
that there were over 170,000 registered employers filing returns every month and approximately
85% of those filed their returns on paper. Using this figure and the information published on
provider total client numbers as below we can derive a good approximation of the number of
employers in New Zealand that are yet to start using online payroll solutions and approximate the
number that will be looking to sign up to one over the next 2 years.
Payroll providers have on several occasions made their total client numbers available showing
steady growth rates allowing us to estimate the total number of clients changing to online payroll
solutions over time. For our key source on client numbers see NZ Business Magazine’s annual
payroll edition published in February (link to most current one here) .
Only two providers have not provided solid data on client numbers: MYOB and Xero. MYOB provides
predominantly desktop payroll solutions but have launched a cloud payroll platform recently.
Desktop solutions will become undesirable as the gap between the time burden of using them
versus online systems widens with the new changes. Xero’s payroll platform has been available in
NZ for just on two years. They will be one of the strongest growing providers in the market between
now and the changes as they have the greatest reach and most resources.
Providers other than Xero will likely grow at a slightly elevated rate due to more employers looking
for online solutions with the upcoming changes. Providers like MYOB will have to convince their
many desktop solution clients that when they look to upgrade they should consider staying with
them over the many alternatives.
From this reasoning we predict that there are currently over 80,000 employers in NZ not using
cloud based service providers for payroll. Based on the limited data that New Zealand’s major
provider of desktop payroll solutions MYOB makes public our understanding is that about half of
these are using a desktop solution and that the rest are using informal systems (spreadsheets
and wage books). We predict around 50,000 of these will be in the market for a new cloud based
system before April 2019.
44 45Contact us
Thank you for considering investing! Our equity crowdfunding officially opens at 6pm on
Friday, 7th April and you can pledge your investment here: http://pldg.me/thankyou
If you have any questions, we are more than happy to answer them. Please send us an
email to: invest@thankyoupayroll.co.nz
If you’re interested in using Thankyou Payroll please sign up at www.thankyoupayroll.
co.nz. If you have questions about it, we have a customer service desk open from
Monday to Friday, 10am - 5pm. You are welcome to give us a call on our freecall number
0800 895 146 or email help@thankyoupayroll.co.nz
Contact our CEO Christina directly.
M. 021 150 3536
E. christina@thankyoupayroll.co.nz
W. www.thankyoupayroll.co.nz
46 47You can also read
