STRUCTURAL MONITORING SYSTEMS PLC — Proxy Solicitation & Information Statement 2008

Oct 1, 2008

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STRUCTURAL MONITORING SYSTEMS PLC

(Registered in England and Wales with company number 4834265)

Notice of Extraordinary General Meeting

______________

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

If you are in doubt about the contents of this document or about the action you should take you should immediately consult your stockbroker, solicitor, accountant or other independent financial adviser duly authorised under the Financial Services and Markets Act 2000.

If you have sold or transferred all of your ordinary shares in the Company, please send this document, together with the accompanying Form of Proxy, to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for delivery to the purchaser or transferee.

A notice of an Extraordinary General Meeting of the Company to be held at 5/15 Walters Drive, Osborne Park WA 6017 on 27 October 2008 at 11 am [WDT] is set out at the end of this document.

Shareholders are requested to complete and return the enclosed Form of Proxy to Structural Monitoring Systems plc as soon as possible, but in any event, so as to arrive no later than 5pm on 25 October 2008, whether or not they propose to be present at the Extraordinary General Meeting.

DEFINITIONS

In this document and in the accompanying Form of Proxy, the following words and expressions shall, except where the context requires otherwise, have the following meanings:

“Admission”

the admission of the New Ordinary Shares to trading on ASX becoming effective in accordance with the Listing Rules

“ASX”

the Australian Stock Exchange Limited

“Board” or “Directors”

the board of directors of the Company

“certificated” or “in certificated form”

the description of a share or other security which is not in uncertificated form (that is, not in CHESS)

“Company”

Structural Monitoring Systems plc

“CHESS” the Clearing House Electronic Subregister System

“Form of Proxy”

the form of proxy for use by Shareholders in connection with the Extraordinary General Meeting

“Listing Rules”

the Listing Rules of ASX and any other rules of ASX which are applicable to the Company while the Company is admitted to the Official List of ASX, each as amended and replaced from time to time, except to the extent of any express written waiver by ASX

“Official List of ASX”

the official list of entities that ASX has admitted and not removed

“Record Date”

close of business on 7 November 2008 (or such other time and date as the Directors may determine)

“uncertificated” or “in uncertificated form”

shares being held in uncertificated form in CHESS and title to which may be transferred by means of CHESS

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STRUCTURAL MONITORING SYSTEMS PLC

(Registered in England and Wales with company number 4834265)

Directors:

Registered Office:

Mark Vellacott Sir John Walker Professor Malcolm R Richmond Robin John Dean

Inkerman House 4 Elwick Road Ashford Kent TN23 1PF United Kingdom

Australian Office:

Unit 5 15 Walters Drive Osborne Park WA 6017 Australia 2 October 2008

To shareholders (“ Shareholders ”) of ordinary shares of £0.05 in the Company (“ Existing Ordinary Shares ”)

NOTICE OF EXTRAORDINARY GENERAL MEETING

Dear Shareholder

1 INTRODUCTION

I am writing to you with details of the extraordinary general meeting which we propose to hold on 27 October 2008 at 11am [WDT] (“ EGM ”). The formal notice of meeting is attached to this document.

The business to be proposed and considered at the EGM is summarised below.

2 REORGANISATION OF THE SHARE CAPITAL

The par value of the Company’s Existing Ordinary Shares is 5 pence, which is the minimum price at which the Existing Ordinary Shares can be issued. As the Existing Ordinary Shares are now, and have been for some time, trading at below this price, we are proposing to undertake a re-organisation of the Company’s share capital. The proposal, which would be implemented by resolution 1 (as set out in the attached notice) if passed, would involve splitting each issued Existing Ordinary Share into one new ordinary share of 0.5 pence (“ New Ordinary Share ”) and one deferred share of 4.5 pence (“ Deferred Shares ”) and each unissued Existing Ordinary Share into 10 New Ordinary Shares.

The rights of the Deferred Shares are very limited (they do not carry voting rights and carry no rights to dividends and only have rights to return of capital after very substantial sums have first been paid to the holders of the New Ordinary Shares). As such, all the value in the issued shares is vested in the New Ordinary Shares and not the Deferred Shares. Only the New Ordinary Shares will be listed on the Official List of ASX, in place of the Existing Ordinary Shares and application for the New Ordinary Shares to be admitted to trading in place of the Existing Ordinary Shares with effect from the passing of resolution 1 (as set out in the attached notice) will be made to ASX. The terms of issue of the Deferred Shares enable the Company to acquire them for nominal consideration and for the Company to transfer such shares on behalf of the holders.

The practical effect of this change, if implemented, will be that each Shareholder will receive the same number of New Ordinary Shares as they hold Existing Ordinary Shares, without any diminution in rights or value. The Deferred Shares can be purchased back from Shareholders for nominal consideration to facilitate tidying up the share capital in due course.

In addition to implementing the reorganisation of the share capital, resolution 1 (as set out in the attached notice) will, if passed, amend the Company’s Articles of Association to set out the rights attached to the new classes of share, which are set out in full in the resolution.

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3 ADMISSION TO ASX

The reorganisation of the share capital is conditional upon the New Ordinary Shares being admitted to ASX. Application for such Admission will be made so as to enable the New Ordinary Shares to be admitted to trading on ASX on a deferred settlement basis the next business day after the meeting. It is expected that Admission will become effective at 8.00 am on 29 October 2008, whereupon the reorganisation of the share capital will be effective.

4 SETTLEMENT

If you hold a share certificate in respect of your Existing Ordinary Shares in the Company, your certificate will no longer be valid from the time that the proposed reorganisation of the share capital becomes effective. You will be sent a new share certificate evidencing the New Ordinary Shares to which you are entitled under the reorganisation of the share capital on the Record Date of 7 November 2008. Such certificates are expected to be dispatched no later than 12 November 2008. Upon receipt of the new certificate, you should destroy any old certificates. Pending the dispatch of the new certificates, transfers of certificated New Ordinary Shares will be certified against the Company’s share register.

If you hold your Existing Ordinary Shares in uncertificated form, you should expect to have your CHESS account credited with the New Ordinary Shares to which you are entitled on implementation of the reorganisation of the share capital on 12 November 2008 or as soon as practicable after the reorganisation of the share capital becomes effective.

5 AUTHORITY TO ALLOT SHARE CAPITAL AND WAIVER OF PRE-EMPTION RIGHTS

The Board will be renewing its authority to allot relevant securities:

• (a) up to an aggregate nominal amount of £50 million; and

• (b) as if statutory pre-emption rights did not apply to any such allotment,

to provide the Company with sufficient capacity to allot further shares over the coming year to, inter alia , raise further finances for the Company if the Directors consider this appropriate and in the best interests of the Company, subject always to the Listing Rules.

6 AMENDMENT TO ARTICLES OF ASSOCIATION

The Companies Act 2006 was enacted on 8 November 2006 and its provisions are in the process of being brought into force with all provisions expected to be in force by 1 October 2009. The Company intends to amend its articles of association to fully reflect the provisions of the Companies Act 2006 once all of the provisions are in force. However, the Company proposes to adopt new articles of association at the forthcoming EGM to incorporate some of the key changes introduced by the Companies Act 2006 which are currently (or soon to be) in force, other recent changes in the law and certain new provisions. Whilst the Company is proposing to adopt entirely new articles of association in order to generally update its constitution some of the key changes are intended to:

• (a) enable the Company to communicate with shareholders via a website;

• (b) remove the chairman’s casting vote in the case of an equality of votes at a meeting of the Shareholders (as this is incompatible with the relevant provisions of the Companies Act 2006);

• (c) reduce the notice period for calling an extraordinary general meeting from 21 clear days to 14 clear days (the Companies Act 2006 permits a company to call a general meeting on 14 clear days notice unless required otherwise by its articles of association);

• (d)

• incorporate certain protections similar to those provided in the City Code on Takeovers and Mergers;

• (e) enable proxies to vote on a show of hands, as well as on a poll as currently provided for and to allow multiple proxies to be appointed (provided that each proxy is appointed to exercise the rights attached to a different share held by the shareholder); and

• (f) allow the directors to authorise conflicts or potential conflicts of interest, where appropriate, although such provisions will only take effect once all of the relevant provisions of the Companies Act 2006 are in force.

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The Companies Act 2006 sets out directors’ general duties which largely codify the existing law but with some changes. Under the Act, from 1 October 2008 a director must avoid a situation where he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the company’s interests. The requirement is very broad and could apply, for example, if a director becomes a director of another company or a trustee of another organisation. The Act will allow directors of public companies to authorise conflicts and potential conflicts where appropriate, where the articles of association contain a provision to this effect. The Act will also allow the articles to contain other provisions for dealing with directors’ conflicts of interest to avoid a breach of duty. The new articles of association will give the directors authority to approve such situations and to include other provisions to allow conflicts of interest to be dealt with in a similar way to the current position.

There are safeguards that will apply when directors decide whether to authorise a conflict or potential conflict. First, only directors who have no interest in the matter being considered will be able to take the relevant decision, and secondly, in taking the decision the directors must act in a way they consider, in good faith, will be most likely to promote the company’s success. The directors will be able to impose limits or conditions when giving authorisation if they think this is appropriate.

It is the board’s intention to report annually on the Company’s procedures for ensuring that the board’s powers of authorisation of conflicts are operated effectively and that the procedures have been followed.

7 EXTRAORDINARY GENERAL MEETING

In order to give effect to the matters detailed above, the resolutions set out in the attached notice need to be approved by Shareholders in general meeting.

You will therefore find set out at the end of this document a notice convening the Extraordinary General Meeting to be held at 5/15 Walters Drive, Osborne Park WA 6017 at 11 am on 27 October 2008 at which the resolutions set out in the notice of meeting will be proposed.

8 ACTION TO BE TAKEN

A Form of Proxy is enclosed for use by Shareholders at the EGM. If you are a Shareholder, you are requested to complete, sign and return the Form of Proxy, whether or not you intend to be present at the meeting, and return it to Po Box 2067, Churchlands WA 6018 or by fax to +61 8 9204 4866. The completion and return of a Form of Proxy will not prevent you from attending the meeting and voting in person should you subsequently wish to do so.

9 RECOMMENDATION

The Directors consider that the proposed resolutions are in the best interests of the Company and its Shareholders as a whole.

Accordingly, the Directors unanimously recommend that you vote in favour of the resolutions being proposed at the EGM, as they intend to do or procure to be done in respect of their own and their connected persons’ beneficial holdings.

10 KEY DATES

Extraordinary General Meeting 27 October 2008 Deferred trading of securities on ASX 29 October 2008 Record date 7 November 2008 Despatch of certificates 12 November 2008

Yours faithfully

Colin McDonald

Company Secretary

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STRUCTURAL MONITORING SYSTEMS PLC

(Registered in England and Wales with company number 4834265)

NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of members of Structural Monitoring Systems plc ("the Company ") will be held at 5/15 Walters Drive, Osborne Park WA 6017 on 27 October 2008 at 11 am [WDT] for the transaction of the following business:

To consider and, if thought fit, to pass the resolutions set out below of which resolutions 1, 2 and 3 will be proposed as ordinary resolutions and resolutions 4 and 5 will be proposed as a special resolution:

ORDINARY RESOLUTIONS

1 THAT ,

• (a) each ordinary share of 5 pence each comprised in the authorised share capital of the Company and in issue at the time of passing this resolution be divided into one ordinary share of 0.5 pence and one deferred share (“ Deferred Share ”) of 4.5 pence, each having the rights set out in paragraph (c) below;

• (b) each ordinary share of 5 pence each comprised in the authorised share capital of the Company and not in issue at the time of the passing this resolution be divided into ten ordinary shares of 0.5 pence, having the rights set out in paragraph (c) below;

• (c) the following rights and restrictions shall be attached to the Deferred Shares:

• (i) As regards income

The holders of the Deferred Shares shall not be entitled to receive any dividend out of the profits of the Company available for distribution and resolved to be distributed in respect of any financial year or any other income or right to participate therein.

(ii) As regards capital

On a distribution of assets on a winding-up or other return of capital (otherwise than on conversion or redemption on purchase by the Company of any of its shares) the holders of the Deferred Shares shall be entitled to receive the amount paid up on their shares after there shall have been distributed (in cash or in specie) to the holders of the Ordinary Shares the amount of £100,000,000 in respect of each Ordinary Share held by them respectively. For this purpose distributions in currency other than sterling shall be treated as converted into sterling, and the value for any distribution in specie shall be ascertained in sterling, in each case in such manner as the Directors of the Company in general meeting may approve. The Deferred Shares shall not entitle the holders thereof to any further or other right of participation in the assets of the Company.

(iii) As regards voting

The holders of Deferred Shares shall not be entitled to receive notice of or to attend (either personally or by proxy) any general meeting of the Company or to vote (either personally or by proxy) on any resolution to be proposed thereat.

(iv) Variation

The rights attached to the Deferred Shares shall not be deemed to be varied or abrogated by the creation or issue of any new shares ranking in priority to or pari passu with or subsequent to such shares. In addition neither the passing by the Company of any resolution for the cancellation of the Deferred Shares for no consideration by means of a reduction of capital requiring the confirmation of the Court nor the obtaining by the Company nor the making by the Court of any order confirming any such reduction of capital nor the becoming effective of any such order shall constitute a variation, modification or abrogation of the rights attaching to the Deferred Shares and accordingly the Deferred Shares may at any time be cancelled for no consideration by means of a reduction of capital effected in accordance with applicable legislation without sanction on the part of the holders of the Deferred Shares.

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• (v) Repurchase

Notwithstanding any other provision of these Articles, the Company shall have the power and authority at any time to purchase all or any of the Deferred Shares for an aggregate consideration of £1.

(vi) Transfer

The Company shall have irrevocable authority to appoint any person to execute on behalf of the holders of the Deferred Shares a transfer/cancellation of the Deferred Shares and/or an agreement to transfer/cancel the same, without making any payment to the holders of the Deferred Shares to such person or persons as the Company may determine as custodian thereof and, pending such transfer and/or cancellation and/or purchase, to retain the certificate(s) if any, for such shares.

(vii) Cancellation

The Company may, at its option and subject to compliance with the provisions of applicable legislation, at any time after the adoption of this Article, cancel such shares by way of reduction of capital for no consideration.

(viii) Certificates

Notwithstanding any other provision of these Articles, and unless specifically required by the provisions of applicable legislation, the Company shall not be required to issue any certificates or other documents of title in respect of the Deferred Shares.

• 2 THAT , the authorised share capital of the Company be increased from £25,000,000 to £50,000,000 by the creation of an additional 7,459,752,620 New Ordinary Shares of £0.005 if resolution 1 set out in this Notice convening the meeting to which this resolution is to be put is passed or an additional 500,000,000 Existing Ordinary Shares of £0.05 if resolution 1 is not passed, each ranking pari passu in all respects with the existing ordinary shares and all such shares to have the rights and be subject to the restrictions set out in the articles of association of the Company.

• 3 THAT , in substitution for all existing authorities under the following section to the extent unutilised, the directors be and are hereby generally and unconditionally authorised pursuant to section 80 of the Companies Act 1985 (the “ 1985 Act ”) to exercise all powers of the Company to allot, grant options over, offer or otherwise deal with or dispose of any relevant securities within the meaning of that section to such persons at such time and on such terms as the directors think proper (including in connection with the Acquisition) up to an aggregate nominal amount of £37,298,763.10 for a period expiring (unless previously renewed, varied or revoked by the Company in general meeting) on the earlier of the date falling 15 months after the passing of this resolution and the conclusion of the annual general meeting of the Company in 2009, but so that the Company may make an offer or agreement which would or might require relevant securities to be allotted after the expiry of this authority and the directors may allot relevant securities in pursuance of that offer or agreement.

SPECIAL RESOLUTIONS

• 4 THAT , subject to and conditional upon the passing of resolution 3 set out in this Notice convening the meeting to which this resolution is to be put, the Directors be and they are empowered, to allot equity securities (within the meaning of section 94 of the 1985 Act) for cash pursuant to the authority given by resolution 3 as if section 89(1) of the 1985 Act did not apply to any such allotment provided:

• (a) the allotment of equity securities where such securities have been offered (whether by way of a rights issue, open offer or otherwise) to the holders of ordinary shares in the capital of the Company in proportion (as nearly as may be) to their holdings of such ordinary shares but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient to deal with equity securities representing fractional entitlements and with legal or practical problems under the laws of, or the requirements of, any regulatory body or any stock exchange in, any territory; and

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• (b) otherwise that pursuant to (a) above up to an aggregate nominal amount of £37,298,763.10

and this power shall, unless previously revoked or varied by special resolution of the Company in general meeting, expire on the conclusion of the Annual General Meeting of the Company to be held in 2009. The Company may, before such expiry, make offers or agreements which would or might require equity securities to be allotted after such expiry and the Directors are hereby empowered to allot equity securities in pursuance of such offers or agreements as if the power conferred hereby had not expired.

• 5 THAT the draft Articles of Association produced to the meeting which are initialled by the Chairman of the meeting for the purpose of identification be adopted as the Articles of Association of the Company in substitution for, and to the exclusion of, the existing Articles of Association (subject, in the event that any or all of the resolutions numbered 1, 2, 3 and/or 4 above were not passed, to the appropriate changes being deemed to have been made to Article 3).

BY ORDER OF THE BOARD

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Colin R McDonald COMPANY SECRETARY

Dated: 2 October 2008

Registered office: Unit 5, 15 Walters Drive OSBORNE PARK WA 6017

Notes:

1. Any shareholder who is entitled to vote at the meeting is entitled to appoint one or more proxies to attend and, on a poll, to vote instead of him. A proxy need not be a member of the Company.

2. In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the votes of any joint holders. For these purposes, seniority shall be determined by the order of the names appearing in the register of members in respect of the joint holding.

3. In the case of a corporation, the form of proxy must be executed under its common seal or signed on its behalf by a duly authorised attorney or duly authorised officer of the corporation.

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STRUCTURAL MONITORING SYSTEMS PLC

(Registered in England - No 4834265)

FORM OF PROXY

for use by shareholders at the Extraordinary General Meeting to be held on Monday 27 October 2008 at 11 am (WDT)

I/We, the undersigned shareholder(s) of Structural Monitoring Systems plc (the “ Company ”) hereby appoint the Chairman of the Meeting *(see note 1) as my/our proxy to vote in my/our name(s) and on my/our behalf at the Extraordinary General Meeting of the Company to be held at 5/15 Walters Drive, Osborne Park WA 6017 on Monday 27 October 2008 at 11 am [WDT] and at any adjournment thereof.

Please indicate with an “X” in the appropriate boxes below how the proxy should vote and then sign in the space provided below. If no specific direction as to voting is given, the proxy may vote or abstain at his discretion.

ORDINARY RESOLUTIONS

For Against Withheld

Resolution 1 – (reorganisation of share capital) Resolution 2 - (increase in authorised share capital) Resolution 3 - (general power to allot shares)

SPECIAL RESOLUTIONS Resolution 4 - (disapplication of pre-emption rights) Resolution 5 - (adopt new Articles of Association)

For Against Withheld

I/We authorise my/our proxy to act at his/her discretion in relation to any other business arising at the Meeting (including in respect of the question whether to adjourn such meeting) and at any adjournment of such Meeting.

Signature(s) .........................................................Dated ......................................................... Name: ......................................................... (in block capitals)

Address ......................................................... ......................................................... .........................................................

Initials and surnames of joint holders if any ……………………………..

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Notes:

• 1 *If you wish to appoint any person other than the Chairman of the Meeting as proxy, please delete the words “Chairman of the Meeting” and insert his or her name and address in the space provided and initial the alteration. The person appointed to act as a proxy need not be a member of the Company.

• 2 As a shareholder of the Company you are entitled to appoint a proxy to exercise all or any of your rights to attend, speak and vote at an extraordinary general meeting of the Company. A proxy need not be a member of the Company.

• 3 In the case of a corporation, this form must be expressed to be executed by the corporation and must be signed by a director and the secretary or by two directors or under the hand of a duly authorised officer or attorney.

• 4 In the case of joint holders the vote of the person first named in the register of members tendering a vote will be accepted to the exclusion of the votes of the other joint holders.

• 5 To be valid, this form and any power of attorney or other authority under which it is signed or a notarially certified copy of such power or authority must be posted to PO Box 2067 Churchlands WA 6018 or faxed to +61 8 9204 4866 not less than 48 hours before the time of the meeting.

• 6 Any alteration to this form must be initialled.

• 7 The completion and return of a proxy card will not affect the right of a member to attend, speak and vote in person at the meeting convened by this notice.

• 8 You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not appoint more than one proxy to exercise rights attached to any one share. To appoint more than one proxy, please contact Colin McDonald (telephone number +61 8 9204 4844).

• 9 To direct your proxy how to vote on the resolutions mark the appropriate box with an “X”. To abstain from voting on a resolution, select the relevant “withheld” box. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the meeting.

• 10 Pursuant to regulation 41 of The Uncertificated Securities Regulations 2001, members will be entitled to attend and vote at the meeting if they are registered on the Company’s register of members 48 hours before the time appointed for the meeting or any adjournment thereof.

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