Welcome to Quartix Technologies plc. Following Completion of the First Half of our 2023 Financial Year, I'm pleased to share with you an overview of our business model and how we're solving for fleet visibility, a summary of our operational and financial performances, and our view of priorities for the second half of 2023 and beyond. My name is Richard Lilwall. I have over 20 years experience in the vehicle tracking and telematics sector, and today you'll be hearing from me as Chief Executive Officer of Quartix Technologies and also from our Chief Financial Officer, Emily Rees. Quartix is an AIM-listed, cash-generative, debt-free business with 94% recurring revenues and high customer satisfaction rates. We offer a value-based proposition with competitive pricing and excellent service.
The Quartix business started in the U.K. in 2001. Following its success in the domestic market, launched in France in 2010 and the U.S. in 2014, the same year the business IPO'd on London's AIM market. 2018 saw our launch in Spain, plus a Queen's Award for Innovation for our SafeSpeed product. Further launches in Italy and Germany followed in 2019, along with a Gold Award from Investors in Customers. In 2021, Andy Walters, the Quartix founder, made the decision to retire, and I joined the team as CEO in October of that year. In 2022 and early 2023, we launched our EVolve EV transition and management tool and Quartix Check product. Also this year, we've won a second Gold Award from Investors in Customers.
The Quartix business has grown its live subscriber base to over 250,000 vehicles across some 26,000 customers. This includes international expansion, which has seen us grow to over 60,000 live subscribers in France, over 30,000 in the U.S., and more than 19,000 in our other European geographies. We own our technology and the intellectual property we use to help our customers solve their business challenges. Before using our technology, prospective customers tell us their challenges are centered around a lack of visibility of their mobile assets. This fundamental issue sees those customers experience waste from sub-optimal planning and work allocation, misuse of company vehicles, a lower capacity for work due to inefficient vehicle utilization, and a heightened road risk from excess miles and poor driving behaviors.
Finally, our customers tell us they create more environmental impact than they would like and also struggle to transition from internal combustion engines to EV without significant cost and business disruption. Our solution, in addition to a small hardware unit discreetly installed in the vehicle, is a simple-to-use cloud-based platform, accessible in real time from any device. This platform gives managers new insights that empower instant improvements in their daily operations, addressing the challenges they face. High-risk driving can be controlled, better planning and resource allocation becomes possible, and green credentials can be greatly improved. We can also provide a clear path to make the transition to EV as easy as possible, addressing concerns of range and cost along the way. In terms of customer outcomes, independent surveys show excellent results on fuel reduction, vehicle utilization, worker productivity, and reductions in miles driven, employee overtime, and vehicle engine idle time.
The Quartix commercial model may be viewed, as per this chart, as a discounted cash flow model. This example is for a single new hardwired unit being added to our subscription base. On day one, we incur costs in the region of GBP 100, and we've broken even after one year. From this point onwards, our revenues mostly fall through to the bottom line, besides communication costs for the ongoing unit, which are negligible. Our typical customer stays with us for 8 to 10 years. Over this period, the customer will fund any swap-outs if they wish to move the unit between vehicles. At the end of the typical unit's lifetime with the customer, the return on investment is circa 400%, and the gross margin is upwards of 80%.
Quartix's key performance measure is Annual Recurring Revenue, or ARR, which, since 2017, has seen relatively consistent growth. ARR is the most significant forward-looking KPI and grew to GBP 28 million in the first half of 2023. Focus in the business continues to be on improved return on investment in marketing and sales headcount, using the tools that the business has invested in since 2022, resulting in stronger ARR growth. There's a core operational focus in the team on lifetime value of a customer and customer acquisition costs to ensure that sound decisions on investment are made to strengthen the returns on ARR, ensuring it will continue to see double-digit growth. Recurring revenue currently represents 94% of total revenues, up from 92% last year. I'll now go through the business's main KPIs for the first half of 2023.
I'm pleased to report that growth of the subscription base in all our geographies continued to drive an increase in Annualized Recurring Revenues, which increased by GBP 2.1 million at a constant currency rate to GBP 28 million at June 30, 2023. The number of existing units installed into the base was over 33,500 units, a 5% increase year-on-year, and a record for a six-month period. This growth was achieved despite adverse economic headwinds impacting the confidence and additional fleet investment of existing customers, with 12-month rolling U.K. van registrations at the beginning of 2023 matching record lows seen during the COVID-19 pandemic. Attrition has been higher, at 13.5%, up from 11.6% in the prior year. This is primarily due to an increase in business closures and customers downsizing their fleets.
We've therefore overall ended with a subscription base of just under 252,000 units, a 14% increase year-over-year, with 26,300 customers in the base. Price erosion on a constant currency basis continues to improve and was 4.6%, down from 4.8% in the prior year. More on that from Emily to come later. As we've seen, there's been an increase in attrition over the first half. Internally, we categorize attrition into two categories: avoidable and unavoidable. Avoidable attrition has causes such as product fit, service levels, ROI realization, and so forth, all things Quartix could potentially influence. Unavoidable attrition is more sensitive to the economy, as it has causes such as business failures, liquidations, and customers reducing their fleet sizes.
In these cases, there is little, if anything, we can do, and it's here we're seeing the cause of the slight increase in the level of attrition. In the UK, company liquidations are up some 40% versus this time last year, and like everyone else, we're seeing the impact of this. We are confident we're serving our customers at a very high level, and despite the small increase we've seen, we're still very pleased with our overall level of attrition in the context of our sector. For new subscriptions, again, we categorize two ways. Firstly are new units from new customers. In this case, the customer already owns the vehicle and employs the driver. They're just adding Quartix. The low financial commitment and value proposition to ensure the driver is safe and productive is very compelling, and our sales continue to reflect this.
The second source of new units is adds from existing customers, and it's driven by them expanding their fleets, meaning the customer must purchase a vehicle and hire a new employee before they can add the Quartix system. Naturally, this is a high financial commitment, especially so for small business operators, and as such, is more economically sensitive. This has proven to be a moderate headwind in the first half of the year and correlates with the rolling year totals for new van registrations already mentioned. Despite these headwinds, we've achieved a record half in new subscriptions, which underlines the robustness of our business model. I'll now hand over to Emily Rees, our Chief Financial Officer, who will provide a summary of our financial results for the first half of 2023.
Thank you, Richard. I'll start with summarizing the financial results for the half year ending 30th of June, 2023. As discussed in the 2022 financial statements, the group implemented a new policy in 2022, which recognized hardware and associated installation and carriage costs over their expected initial contract term, typically 2 years, on a systematic basis that more accurately reflects the revenue stream generated by them. The capitalization and subsequent amortization of these incremental costs are more aligned to the core principles in IFRS 15, and make the reported EBITDA more comparable with that reported by companies with a similar business model. All comparative monetary amounts for 2022 have been restated in line with this change in policy. Group revenue for the period increased by 10% to GBP 14.6 million.
Total fleet revenue now represents 98.9% of total revenue. Gross profit increased by 5% to GBP 10.1 million. The drop in gross margin from 72.4% to 69.4% year on year is due to two main factors. The first is the migration of all Quartix servers to be cloud-based rather than physical server locations. The ongoing cost of these servers is higher than the depreciation that Quartix recognized in previous years for the physical servers. In addition, all new units being installed have modem improvements that make them 4G compatible, which future-proofs all units installed this year from needing replacement following the sunsetting of the 2G network across the U.K. and Europe.
We are in the testing phase of modem assemblies that have been built with alternative components to try and improve the margin on the hardware to ensure that cost of sales return to more standard underlying levels. Adjusted EBITDA remained constant at GBP 2.7 million year-on-year. The main costs impact at administrative expenses on Adjusted EBITDA include an FX impact year-on-year of GBP 200,000. There were higher payroll costs in our services functions by a further GBP 200,000. This payroll cost increase is from larger salary increases in average at the end of 2022 to accommodate cost of living pressures, rather than additional headcount, which has remained relatively flat despite an increase in the subscription base of 14% year-on-year, reflecting results from improved operational efficiencies.
Please note that sales and marketing costs have also remained flat year-on-year on a GBP basis, but have improved as a % of sales. Operating profit decreased to GBP 2.4 million. In addition to the cost increases impacting Adjusted EBITDA, the cost of new director options introduced in December 2022 account for a further GBP 200,000 impact year-on-year on operating profit. Basic earnings per share were GBP 0.0421. On a diluted basis, earnings per share were GBP 0.0416. Cash generated from operations increased by 7% to just under GBP 2.1 million, or 86.5% of operating profit. Cash flow from operations after tax and investing activities, or free cash flow, reduced to GBP 1.4 million, primarily due to a higher tax payment in April 2023, following the change in accounting policy.
For tax purposes, the transition to the new accounting policy in 2022 caused an exceptional decrease in deductible costs, which led to an increased tax charge for the year. This caused the final tax installment in April 2023 to be circa GBP 500,000 higher than the previous year. Net cash decreased to GBP 3.2 million at the 30th of June 2023, following this larger tax payment. To further bolster free cash flow, one of the key priorities for the business for the remainder of 2023 is improving stock days of the business in the second half, now that pressures from the component shortage from the past couple of years have eased. The following chart presents the recurring revenue broken down by the year that a customer joined Quartix.
A good proportion of our subscription base continues to be from customers between 2002 and 2010, and through our strong operational excellence and customer service, we are able to maintain a low attrition rate in our base across all years. Our more than 26,000 customers typically use the group's vehicle telematic services for many years. Accordingly, the group focuses its business model on the development of subscription revenue, providing the best return to the group over the long term. I will now provide the breakdown of performance by geography. Each geographical market registered increases in the subscription base for the period. In the UK, where economic challenges are more significant due to the larger subscription base, growth was supported by a strong performance in new customer acquisition, with 6% year-on-year subscription base growth and an increase in total revenue of 3% to GBP 9.1 million.
We also recorded our highest results in Europe following accelerated investment into the region over the past two years. Year-on-year subscription base growth in France was excellent at 32%, and revenue increased by 25% to EUR 3.7 million. Year-on-year subscription base growth in the other European territories was also very strong at 53%, respectively, as our operations continued to grow in Spain, Italy, and Germany. As part of a review on ensuring Quartix focuses on profitable growth, the group has redirected investment and resource from our wider U.S. business in Q1 of 2023 to European territories that present improved returns on investment in the shorter term. The U.S. strategy going forward will therefore have a narrower field sales approach focused specifically on Texas. As a result, the growth was more modest at 2% year-on-year.
The following graph shows the retail price of new installations on a monthly basis between January 2015 until June 2023. On a trend basis, the average retail price of new units being sold at Quartix, as per the last time this was presented, has been relatively steady for the last four years. New pricing has been slightly lower than the four-year average in the first half of 2023, mainly due to the accelerated sales in the rest of Europe, specifically in Italy and Spain, which has seen heavy competition leading to lower pricing. By gaining market share now with these lower prices, we will be able to invest in direct marketing in future, which will result in higher prices on new units sold. Please note that the U.K. ARPU continues to be maintained at similar levels to previous results.
Overall, the price erosion, as per our KPIs, continues to not be from new business joining Quartix, but from our historical base, either from the loss of customers at a higher price point than the current average or attrition derived from customers renegotiating their current pricing plan. Thank you. I will now hand back over to Richard, who will provide an update on Quartix's product launches.
Thanks very much, Emily. We're very pleased with customer take-up of the first of our new products. This is our EVolve platform that helps fleet managers transition to and manage EV fleets successfully. We do this by taking the wealth of data we collect on each journey, combine this with other data sources to deliver a comprehensive, dynamic planning and management tool for EV fleet operation. As anticipated, local government has been an early mover. We've won several significant council fleets that have testified to the value we can offer. Firstly, we have David Maisey from Rhondda Cynon Taf, who operates 485 vehicles. He's tasked to move as many light goods vehicles to EV by 2025 as possible, and all by 2030. David is finding EVolve to be an excellent tool, helping him on his journey over the coming years.
As he says here, "EVolve helps us to reduce or electrify the fleet wherever we can." secondly, we have Denzil Calford, who is the fleet manager for Bridgend County Borough Council. Their fleet of 181 vehicles is on a similar journey to electrification and ongoing EV management. As Denzel says here, "EVolve has helped us generate our capital program for the next seven years, which will align us with Welsh Assembly guidance on decarbonization." It's excellent to see these organizations and others gaining such high value from our offering. The full video case studies are available on our website. A more recent release in 2023 was Quartix Check. This smartphone-based app allows fleet operators to ensure their vehicles are safe to drive every day. Drivers simply download the app to their device and carry out the necessary daily checks.
The fleet operator can view checks are being carried out in real time and report on exceptions, enabling any necessary remedial actions. The application was released on iOS and Android in January of 2023, and some of our early wins have been very encouraging, such as a recent contract win with Bristol Water. They have adopted 254 licenses for their drivers. As their fleet manager, Csaba Ujvári says, "Q Check from Quartix is helping Bristol Water carry out daily vehicle checks to reduce road risk. Keeping our drivers and the public safe is a top priority for our team." Again, this is very pleasing to hear such good feedback. Next, an update on our three-year plan. Firstly, on driving sales execution, the overall plan here is to ensure we minimize our customer acquisition costs, particularly in the face of rising prices from suppliers.
Over the last six months, we've been seeing increased adoption of a new toolset, and over the next six months, we'll be working on optimization of our sales processes, customer interactions, and reporting capability with a dedicated sales operations manager in place to drive this important initiative. Secondly, on building operational scalability, this means simplification, digital transformation, and automation, ensuring we can offer our value-based proposition with excellent levels of service to more customers without a corresponding increase in cost. Our early successes are now part of business as usual, and our work to take a systematic review of our operational business processes is well underway, including a three-day process mapping event taking place in June. Previously, the third pillar was to deeply understand our customers, and I'm pleased to say we've made faster progress here, and we now have a number of ways to stay informed about our customers.
These include transactional-based surveys on customer satisfaction, Net Promoter Scoring, the Investors in Customers award system, in which we, again, we achieved the top Gold ranking for 2023, plus many customer conversations taking place at all levels of our business, including CEO and senior team. We collate this qualitative and quantitative information and use it to help guide our decisions moving forward. Given our fast progress here, we are replacing this pillar with our move from 2G technology to 4G technology over the coming years. This project will likely last, in fact, longer than the three-year timeframe, extending most likely to the current proposed shut-off dates for the UK in around 2030. Between now and then, we will both be replacing and upgrading customer hardware from 2G capability to 4G. We're currently in the planning phase of this, and we'll update more as we understand the project further.
We have confidence from our previous and now complete U.S. 4G upgrade experience, and with longer to complete the European phase, we expect to be able to take advantage of both natural attrition and other opportunistic unit touchpoints to reduce cost impact. We're able to recycle units, driving costs down further. In the long term, Quartix will stay firmly focused on value. That means providing excellent service at highly competitive prices. We want to be the leader in customer experience for affordable vehicle tracking. Our innovation efforts will keep our product simple to use, with valuable features and up-to-date with current and future fleet operator challenges. Our ability to upsell with genuinely value-adding services will help us further delight our base of customers. Our sales execution and operational scalability mean we'll keep our prices where customers want them to be.
Furthermore, we'll continue to partner with and listen to our customers as they help us shape our future. At Quartix, we're committed to providing exceptional customer experience while supporting our customers with affordable pricing. We believe that customers deserve the best service and support, and we strive to delight them every day with every interaction, every single time. We have confidence of meeting expectations in the second half of 2023.