Submitting the report, Renata Dogan of Zagreb Holding said that in 2010 the company's revenues dropped by 709 million kuna to 3.8 billion kuna, while expenses totalled 4.3 billion kuna (197 million less than in 2009).

She explained that expenses had increased due to investments in the purchase of real estate and means of public transport, which she said were not yielding return.

Dogan went on to say that due to a budget revision in November 2010, the revenues of Zagreb Holding's subsidiaries dropped as well. For example, the city public transportation company ZET in 2010 incurred a loss of 274 million kuna. Revenues from utilities dropped as well, Dogan said.

She warned about the non-flexibility of labour costs as defined by collective agreements as well as about high depreciation charges.

"Labour costs account for as much as 42 percent of all expenses," Dogan said, adding that the number of employees was reduced by 91 in relation to 2009. Investments, too, were radically reduced in relation to 2009.

The Committee on Supervision adopted a six-month report on the execution of the City of Zagreb budget in 2011, and the head of the city office for finances, Marija Cikes, said that in the first half of this year, 44.31 percent of planned revenues were earned, amounting to 3.035 billion kuna.

She added that a positive financial result of 151.4 million kuna was realised in the first half of this year.

Igor Radjenovic of the Social Democrats said that the trend of declining budget revenues was continuing, noting that the current model of running the city was obsolete. He added that the city was being developed without proper preparations and plans, which he said resulted in more expensive construction work of poor quality.

Zagreb Mayor Milan Bandic said today that he would request an audit of Zagreb Holding operations from the period since its establishment in 2006.

"The City has had no jurisdiction over Zagreb Holding for two years now," Bandic told a news conference, stressing that in 2006, at the time when the city took over the company, Zagreb Holding had 2.5 billion kuna in its accounts.

The head of the city office for finances, Slavko Kojic, confirmed that the city was meeting all of its financial obligations towards Zagreb Holding in line with the city budget, making payments as its obligations matured.

The deputy head of the city office for economy, Davorka Pejnovic, said that Zagreb Holding had not adopted a revised business plan or carried out austerity measures or measures designed to overcome the crisis.