Profile: Elizabeth Rumsey, Virgin Galactic's FD

Elizabeth Rumsey, Virgin Galactic's FD

Space is the ultimate unexplored territory, and just a lucky few will get to see the majesty the Earth laid out below them – from a height of 65 miles above sea level.

But with every major project, there has to be someone tasked with keeping its financial feet firmly anchored to the ground and Virgin Galactic’s FD Elizabeth Rumsey has the ultimate responsibility.

At 30, Rumsey is one of the youngest FDs ever to grace the pages of Accountancy Age, but her relative youth masks her undenied pedigree in the business world. Her ultimate boss, Richard Branson thought enough of her to pick her brains for advice on a takeover deal one Saturday night when she had her feet up in front of the TV.

‘It was quite surreal. The phone rings. Richard is on the other end and he says:’I’m terribly sorry to trouble you, but what do you think about this deal?’ recalls Rumsey.

With Virgin already investing more than $100m (£60m) in a period where cash is tight even for global powerhouses, Rumsey provides a snapshot of the steely determination she brings to the job: ‘Sometimes an FD has to be the bad guy. Developing a spaceship is very expensive. You just have to say this is what you have to work with.’

Fittingly, Virgin Galactic has its offices on Half Moon Street in Piccadilly and the place is festooned with scale models of Spaceship Two, the vehicle which will carry those who have paid the $200,000.

Spaceship One was a prize-winning design, which evolved into number ‘Two’.

Rumsey, an M&A specialist with previous posts at Lehman Brothers and JP Morgan Casenove, recalls taking charge as the capital markets almost imploded after the investment banking giant’s collapse.

‘I joined in September 2008 in the worst possible conditions. I was amazed when Lehmans went down.

The thing that was slightly surprising is that it wasn’t the type of bank that would hold things off-balance sheet.’

Despite the difficulties afflicting the financial services industry, Rumsey has her own challenges to address.

Not yet a qualified accountant, Rumsey is dealing with the intricacies of accountancy on the fly as she works towards a CIMA qualification.

‘Obviously it’s challenging. This is a project trying to do a very very complicated thing, but I am loving it. With hindsight I wish I had completed the CIMA qualification by the time I started.’

Virgin Galactic Limited is the UK parent company for the project, but there is also the US subsidiary, TSC LLC, to factor into any equation.

The Virgin Group’s auditors KPMG do the lion’s share of the tax and advisory work, but Rumsey has been put on a steep learning curve when it comes to the regulatory requirements on both sides of the Atlantic.

It is rocket science

For example, the costs associated with Galactic’s spaceship prototypes are complicated. ‘We have been advised by our auditors that we would be able to capitalise these development costs in the UK, but not in the US,’ says Rumsey. ‘As these are costs relating to our US subsidiary, TSC LLC, they do not appear in the financial statements filed in Companies House in the UK for Virgin Galactic Limited.’

The auditors have been a great help Rumsey says, but, at the same time, she notes the ‘frustration’ around audit as KPMG took the company to task for cost overruns. The Virgin Group sent someone over to help with the review in the end.

Rumsey is not the first in her family to turn to accountancy. Both her father’s parents were accountants, and Galactic’s FD jokes that the accountancy gene may have missed a generation.

‘My dad’s a failed accountant. He started out in the trade, but he was more interested in cars.’

She also confesses ‘really liking management accounts’ because she can ‘dig into the detail’ – a side-effect of a data-driven personality.

Mission control

Rumsey’s light-hearted approach is refreshing in someone that bears a heavy burden of responsibility, but this is how she likes to operate. Her preferred management style is to give her team the same opportunities to flourish as given to her by her old bosses in the Virgin Group. At the heart of it, it’s all about good cost control and her main interest is developing ‘good efficient space travel’.

The unique technology used in the spacecraft has been developed by Burt Rutan’s Scaled Composites and is now exclusively licensed to Virgin. Fortunately the spacecraft design overcomes many of the safety and cost issues that had previously made space travel the preserve of the privileged few.

Virgin’s experience in aviation, adventure, luxury travel and cutting-edge design, combined with the unique technology developed by Burt Rutan, will ensure an unforgettable experience unlike any other available.

With safety at the forefront, the spacecraft is being designed at Rutan’s base in Mojave, California, alongside a concerted research and development programme.

According to Richard Branson, the deal with Mojave Aerospace Ventures is just the start of what he believes will be a new era in the history of mankind, one day making the affordable exploration of space a real possibility.

As would be expected with taking a commercial flight into space, there are some serious regulatory safety checks to run through before anyone gets near the launchpad and these are all part of Rumsey’s remit.

Safety is at the heart of the design and will be at the core of the Virgin Galactic operation. Agreed designs for Space Ship Two have multiple levels of redundancy on all key systems in order to achieve an extremely robust system in every phase of flight, the company says.

Commercial operations will only start once a full testing programme has been completed. With test flights slated for the end of the year, Rumsey has been flying between London and the Mojave desert in Nevada, where the spaceport is located.

That’s not to say tickets, which have been on sale since 2005, are cheap. But this is still about 100 times less expensive than that paid by your average space tourist to date. Virgin Galactic is hoping to reduce this price as fast and as far as possible, which would allow many thousands of people to experience space for themselves.

Rumsey sets out three tiers of Astronaut reservations. Founders will be the first 100 to fly. These affluent individuals deposit $200,000 (£121,000), which is the full price of a ticket.

Pioneer class passengers will fly in Virgin Galactic’s first year of operation and are expected to be among the first 1,000 people to go to space. They will deposit between $100,000 and $175,000.

Voyagers make reservations to travel immediately after pioneers, depositing $20,000, so it’s obvious to see how the money will stack up if everything goes to plan. ‘This will be a once in a lifetime experience for people from all over the world,’ says Rumsey.

Back on Planet Earth, controversy about the glass ceiling is something that still rages on, but Rumsey says she has never experienced it, not even in the male-dominated world of investment banking.

People may make assumptions, that you have to be a real battleaxe to make it all the way, says Rumsey, but Erin Callan (former CFO of Lehmans) was proof that that wasn’t the case. ‘She was a fantastic role model when you’re 20 years old and it’s nice to know you don’t have to be a Dragonlady to be a CFO.’

Rumsey concludes, ‘Because I’m young, it’s the type of business I can grow into as it develops from where it is now into a genuine business with revenues when it is up and running.’

The nuts and bolts

Virgin Galactic has already successfully completed the first phase of tests of the rocket motor that will propel space tourists, scientists and payloads into space.

In the desert of southern California, Virgin Galactic’s key supplier, Scaled Composites and its subcontractor SNC (Sierra Nevada Corporation), put the innovative rocket motor that will propel space tourists, scientists and payloads into space through its paces.

The hybrid nitrous oxide system being used is the largest of its kind in the world and it will send Virgin’s customers up into sub-orbital space at speeds over 2,500 mph (4,000km/h), to heights over 65 miles (110km) above the Earth’s surface, before the spaceship descends back down through the atmosphere using its pioneering feathered re-entry system.

The Virgin MotherShip (VMS) launch vehicle Eve is up an running, while SpaceShipTwo, which will air launch from Eve, is largely constructed and awaiting the start of its own test flight programme later this year.

The rocket motor burns for a very short period of time because the spaceship is launched from Eve in the upper atmosphere rather than from ground level. This means much less fuel is required and the fuel burn is more environmentally benign than the solid rockets used in most ground-based systems.

While the rocket motor is extremely powerful, it is also completely controllable. This system can – if necessary – be shut down at any time, allowing the spaceship to glide back down to land at a conventional runway. This is a significant feature in the overall safety of the Virgin system for human space flight.