LONDON — Sales company Winchester Entertainment’s troubled topper Gary Smith has been cleared of insider trading by Blighty watchdogs.

The Financial Services Authority found no evidence of wrongdoing in its investigation of Smith’s sale of shares just before the company issued a profits warning in February.

FSA has accepted Smith’s claim that he had no knowledge that the warning was coming.

That good news was, however, offset by the announcement of Winchester’s financial results for the year to March. These showed a 61% collapse in sales to $12.9 million and a net loss of $11.6 million, compared with a profit of $3.4 million the previous year.

Winchester confirmed that it has put its poorly performing TV division up for sale but has received no offers. Its film division has suffered from production delays and the global slowdown of TV sales.

Company has invested $2 million over the past 18 months in 10 scripts with L.A.-based producers Wind Dancer and the Donner Co. It expected two of these to go into production in the past financial year, generating fees of over $1 million for the company, but this did not happen.

Since year’s end, Winchester has raised $22 million in pre-sales for the $28 million “Harv the Barbarian,” which it is co-producing with Wind Dancer, including a North American deal with DreamWorks. Winchester will receive a production fee of $840,000 when the pic starts shooting.

U.S. shuffles

It has also promoted Hadeel Reda to CEO of U.S. subsid Winchester Films and appointed Melissa Goddard, formerly at Wind Dancer, as head of development and production in Los Angeles.

Winchester admits that its production deal with the Donners “has progressed relatively slowly.” Pics in development include Paramount’s “Sam and George,” which Richard Donner will direct, with Mel Gibson expected to star.

Outside its Wind Dancer and Donner deals, Winchester is developing “Li’l Homies” with Sony.

Winchester is currently taking legal action against a German film fund over $4.34 million the company claims it is owed with regard to the film “Last Orders.”