AeroBox PLC

Elric Lloyd-Langton 11th September 2003

Aerobox (24.5p) started of as Innobox Plc which formed on 17th December 1999 to build, primarily through selected acquisition. Subsequently, floated on the London AIM market on 22nd January 2001. A later acquisition was One of those opportunities was in a company called Aerospace Composite Structures, located in the USA in Albuquerque, New Mexico January 2001. Soon to follow was Aerospace Composite Structures(ACS) also of New Mexico, which had developed a portfolio of new air cargo container products, which use composite materials instead of aluminium. Innobox made a secured convertible loan of 200,000 to ACS in January 2002, this was based on a valuation of cUS$11m.

On 20th March 2003 the entire share capital of ACS was acquired by AeroBox Plc. Innoboxs investment in ACS was converted into equity immediately prior to the Acquisition. The initial consideration payable under the Acquisition agreement was 8.4 million satisfied by the issue of 42,000,000 ordinary shares of 1p each in the capital of AeroBox Plc at 20p per share.

AeroBox plc floated on the alternative investment market (AIM) in March of this year after Aerospace Composite Structures was acquired by Greatstride plc, affectively a cash shell. Aerobox has patented a revolutionary thermoplastic LD3 air cargo container made of a lighter and stronger composite that offers improved durability and easier storage than traditional aluminium under floor cargo containers, as well as being 12% lighter. This new design has the added benefit of being able to be taken apart for logistic transfer. After extensive testing, its cargo holder ULD-3(Unit Load Devices) received FAA approval in March 2002.

The commercial benefits to airline companies using AeroBoxs containers are compelling. They provide excellent cost savings both from a fuel, repair and logistic perspective. Its ULD-3 is the first of a number of aircraft containers AeroBox is bringing to the market. On a conservative basis the global market for air freight containers is approximately 650,000 units at a price of up to $1500, which equals $975 milion. Yearly replacement and new unit sales values are approximately $200m. World cargo growth is approximately 6% and rising. The AeroBox ULD LD3 containers cost $1200 each and have an estimated life of 6-10 years. The average life of the existing aluminium type containers is 3-4 years. A win, win situation as far as costs accrue. The significance of Aerobox flat pack container should not be under estimated, effectively, the ULD LD3 container can be folded away. Example: You can fold away 12 ULD LD3`s in the same space as the conventional container.


On 21 May 2003 Aerobox announced Watermark Group PLC, a leading supplier of services to the airline industry with over 150 clients, had completed terms of a joint venture with them which has developed a new lightweight, flat pack air freight container, is in commercial trial over 150 containers with 15 airlines for its device. By utilising the Watermark Sales team the Company now has an objective of achieving a 10% market share within 18-24 months. The JV with Watermark could prove a significant one, given Watermarks expertise within the industry.

June of this year Virgin Atlantic agreed to be the first to trial the new ULD LD3 containers. Virgin, will trial the 10 Aerobox containers along side the conventional aluminium containers.

AeroBox ULD Commercial Director:

Our mission is to be the Number One provider to the aviation and logistics industry of innovative solutions in baggage and cargo containers. We are grateful to Virgin Atlantic Cargo having kindly agreed to be the first commercial airline to trial this new product.

While Aerobox has attracted the attention of the retail investor imagination, Aerobox has also attracted attention from some celebrity backers, which include British comics David Baddiel and Angus Deayton.

John Caulcutt, Chief Executive of Watermark, said, 'It is intended that this project will further expand the range of services which Watermark can provide to the airline industry. AeroBox has developed an exciting new technology with significant potential cost reduction benefits for customers, with which we are pleased to be associated.

Bob Bushman, Chief Executive of AeroBox, added: 'This tie up will allow us far quicker access to the global airline community than we had earlier envisaged through a proven international sales force. It will bring forward our business plan and allow us to focus on training, production and development.

Air cargo volumes are expected to double over the next 12-20 years. This is backed up by Airbus, which has stated that it will commission more than 700 freight aircraft over the next two decades. Potential customers for AeroBox containers include major commercial airlines operating wide-body aircraft and companies such as The Post Office FedEx and UPS, in short, the whole logistics market. The benefits of AeroBox products cannot be ignored by the airline industry. The product is light, strong, collapsible, repairable and has a long working life. Although AeroBox will have to work hard to maximise the head start it has over its competitors, we think now that the product has FAA approval and cargo carriers are already testing its ULD-3 offering, it has a very good chance of winning a good proportion of the ULD market over the next 2 years.

Aerobox should be viewed as a speculative investment until such a time as Watermark and Aerobox provide potential investors with firm contracts form the logistic fraternity. However, the more speculative investor would argue that playing the waiting game, you miss out on potentially huge rewards. Which ever you are, you should not lose sight of the fact that Aerobox has no real history to which you can judge up on.

Please note that I hold Aerobox shares.

LONDON (AFX) - AeroBox plc said its US trading subsidiary, AeroBox Composite
Structures LLC ("ACS"), has received a repeat order worth 1.75 mln usd from an
American airline for its forkliftable variant of the AeroBox.
The units are scheduled for delivery over the next ten months.
The company said that for commercial reasons ACS is unable to disclose
further details of this contract.
The group said it has now sold 5.5 mln usd of ULDs (unit load devices) for
scheduled delivery in 2006. It said it has also generated ULD sales orders of
5.4 mln usd for delivery in 2007 and beyond.
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