Profile: 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.