It's the Percival twins' birthday and Mr. Percival got them a Hot Air Balloon ride as a treat. When Duncan learns this, he is upset, as he already has his birthday flag fixed on his cab ready to take the twins for a special birthday ride. Mr. Percival asks Duncan to collect the balloon, but as he chuffs along the bumpy track the balloon looses a binding. When Duncan sees this, he purposefully goes back and forth over the bumps until the balloon is floating off into the distance. Satisfied that he will now get to give the twins their birthday ride, he arrives at Mr. Percival's only to see the balloon float by the house and rip a big hole in its side. Feeling terrible, Duncan has an idea: to use his special birthday flag as a patch to fix the balloon! Miss Marvel, the famous storyteller, is visiting the Hills, and Peter Sam is very excited. He rushes about the narrow gauge trying to finish his work early and be the first to see and hear Miss Marvel's story of Proteus, the mystical engine. Taking an old short cut, Peter Sam crashes through a hedge, uncovering an old statue of Proteus that is standing forgotten on an old rusty flatbed. Boiling with excitement, Peter Sam decides he could make a star entrance with the Proteus statue. Redirecting the other engines away, Peter Sam plans to take the glory for him self but the statue is heavy and he crashes! With the help of his friends though the statue makes it to the storytelling and Peter Sam sees the big unveiling.
