The Seventh Doctor and Ace arrive in Shoreditch in 1963. They meet a military unit led by Group Captain Gilmore and Sergeant Smith, tracking abnormal local magnetic fluctuations, originating mainly from Coal Hill School where a transmat device in its basement is tied to a Dalek ship in geostationary orbit. A second, weaker fluctuation is emitted by a grey Dalek in a nearby junkyard. Evidently, two Dalek factions are present: the Imperial Daleks on the orbiting mothership, controlling the school, and Renegade Daleks, who reject the Emperor's authority, controlling the junkyard. Both sides seek the Hand of Omega, a Time Lord device the Doctor left on Earth during his first visit to 1963.