Blue Nose or Red Nose, the Profits Still Mightily Flow: A Valuation of Nova Scotia Liquor Control Commission

Valuation of Crown Corporations, Crown Corporations, Ian Madsen

Nova Scotia Liquor Control Commission, or ‘NSLC’, is the monopoly Crown corporation which controls and retails all beverage alcohol in that province. Using an intrinsic value method, and discounting to the present, NSLC’s projected future free cash flows, as the company is today, but taxed at statutory rates, the range of estimates is $2.2B to $15.3B, with a tighter range of a median (midpoint of the array of values) of $3.8B to a mean (simple average) of $4.9B.

Under the market-based valuation system, the current, ‘as is’ – but now fully taxed-value ranges from $770M to $3.2B, with a median (midpoint of the array of values) of $1.89B and a mean (simple average) of $1.91B. That the median and mean are very close does not mean that there is any great precision or authoritativeness of the determination of these estimates. Five of eight available valuation metrics were usable. It needs to be emphasized that these values are all on the optimistic side, as the company has monopolistically high profit margins which may not be allowed to continue were the company to be divested.

Read the entire Valuation here: VS28_NSLC-Valuation_MR0419_F1