This article was published on April 1, 2025, at 3:52 p.m. on the ChosunBiz MoneyMove site.
The operator of the furniture and interior distribution platform "Ohouse," Bucketplace, reverted to its original accounting standard within a year after the introduction for listing purposes. The market interprets that "Ohouse" is likely not planning to initiate an initial public offering (IPO) immediately, now that it has returned to the accounting standards typically used by unlisted companies.
On the 1st, according to the investment banking (IB) sector, Bucketplace achieved an operating profit of 570 million won in 2024, marking its first return to profitability since its founding in 2014. It is attracting attention as restructuring continues within the e-commerce sector, due to incidents involving Timi and WeMef, and Balaan. Revenue was 287.9 billion won, an increase of 22.3% compared to the previous year (235.5 billion won). Net profit also rose to 5.26 billion won, up 127.4% from the previous year (2.31 billion won).
The most striking aspect concerning Bucketplace's performance is the total capital (net worth). "Ohouse"'s net worth was minus (-) 794.6 billion won at the end of 2023, but it significantly rebounded to 224.3 billion won by the end of 2024. This was due to the fact that the redeemable convertible preferred shares (RCPS), which were previously recognized as liabilities in the last audit report, are now being recognized as capital. Consequently, capital surplus increased to 300 billion won, and liabilities from derivatives that had reached 820 billion won disappeared.
This is because "Ohouse" changed its standards for financial statement preparation in the audit report from the commonly used Korean International Financial Reporting Standards (K-IFRS) to the General Corporate Accounting Standards (K-GAAP). Unlike K-GAAP, which views RCPS as capital, K-IFRS classifies them as liabilities. This is because RCPS possesses the characteristics of a redemption right, which is a liability, and a conversion right, which has the nature of capital, along with a preferred stock feature.
"Ohouse" had changed its accounting standards to K-IFRS in 2023. This is interpreted as it was preparing for an IPO in collaboration with investors like Korea Development Bank (KDB) and IMM Investment. As publicly listed companies or companies seeking to be listed must use K-IFRS, it is common for startups to switch from K-GAAP to K-IFRS as they grow larger.
The issue is that in this process, the conversion of RCPS to common stock was not carried out, resulting in the funds secured from RCPS being recognized as liabilities instead of capital. The accumulated investment of 330 billion won that "Ohouse" received is recorded as "liabilities" along with the evaluation amount of the conversion and redemption rights based on the valuation of 700 billion won at that time. In August last year, a media report revealed that "Ohouse" was in a state of complete capital impairment, leading to rumors among investors that it might be "failing." As the controversy grew, "Ohouse" promptly released a statement clarifying it as "an optical illusion due to accounting standards."
An industry insider noted, "After securing a 230 billion won Series D investment in 2022, "Ohouse" proactively introduced K-IFRS but faced a crisis linked to the Timi incident," adding that "while it hasn't given up on the IPO, it seems to have shifted to observe the market situation more closely due to the unfavorable atmosphere in the retail industry following recent incidents involving Homeplus and Balaan."
According to the Act on External Audit of Corporations, companies that are scheduled to be listed in the current or next fiscal year must adopt K-IFRS. Given this, it is estimated that "Ohouse" will not pursue listing at least until the end of next year.
The issue of financial statement distortions due to RCPS is commonly occurring among startups, including "Ohouse." Viva Republica, which operates the financial application (app) Toss, also faced delays in the review process for months as the financial authorities pointed out capital adequacy issues related to RCPS while preparing to enter internet banking and securities in 2019. Ultimately, Viva Republica held an extraordinary general meeting and converted all RCPS into CPS by removing the redemption rights (R).
"Ohouse" is also showing signs of converting RCPS into common stock from August 2024. The 29,997 shares of RCPS issued on August 2, 2014, were converted into common stock upon expiration of their duration, with an issue amount of 50 million won. More than 100,000 shares of RCPS are also scheduled to expire this year and next.
A source in the accounting industry stated, "Since most RCPS include refixing clauses and investor redemption rights, K-IFRS, which is adopted mandatorily by listed companies, evaluates RCPS as liabilities," adding, "For this reason, the Korea Exchange recommends converting RCPS into common stock before applying for preliminary examination for listing."