The share price of spread betting firm London Capital has taken a battering since Irish bookmaker Paddy Power dropped it as a partner but it clawed back some of its losses Tuesday after well received results. Total revenue in 2010 rose by a quarter to £34.5m from £27.6m in 2009, while adjusted profit before tax climbed 8% to £6.5m from £6.0m the year before.The firm, which trades as Capital Spreads, took a £3.2m exceptional charge relating to its software assets after conducting a review of its information technology, and another £3.2m was set aside to cover anticipated payments relating to the Financial Ombudsman Service (FOS) investigation into customer complaints originating from transactions first initiated in 2009. "The £8m placing (13.3m shares at 60p) will address the regulatory risk raised by the FOS judgement although the issue is not fully resolved and the group intends to appeal," noted broker finnCap, which rates the share a "buy" on the basis of its recovery potential.In addition, the company has experienced a default on a debt by a professional client, all of which has made it "inappropriate to pay a final dividend" and prompted the company to raise fresh funds, which it plans to do so by means of a placing of shares to raise £8m.On the trading front, average trades per day rose by 22% over the full year but client acquisition for the group's own brands and its White Label partners saw numbers fall by some 34%, due in part to the late delivery of technology upgrades. Low market activity in the second half saw the financial spread betting (FSB) business average revenue per user decrease 40% in the second half from the first half, though for the year as a whole we have seen an increase of 38%.Group net cash resources at the end of the year stood at £13.9m, up from £10.0m at the end of 2009."Whilst earnings are difficult to predict with any certainty, 2011 has started well for our UK spread betting and institutional FX businesses," said group finance director Siobhan Moynihan. "Our ProSpreads business is trading profitably so far and we are working hard to develop our CFD [contracts for difference] offering internationally," Moynihan added.finnCap reckons that "visibility remains an issue for the core business." Greater volatility has become a feature of the market recently, which is good for spread betting firms, but range-bound conditions can return, the broker notes. "Although previous estimates assumed improving conditions for 2011, without the costs of new product development, those initiatives will take time to become a significant part of the group earnings, so we feel a cautious line on forecasts remains appropriate and therefore will review our 2011 estimates. However, at the current underlying run-rate of £6.5m, earnings per share [for fiscal 2011] on the diluted equity base following the fund raise would be 8.7p," finnCap forecasts.