Non-cash charge

The family is larger than depreciation. It includes amortisation of intangibles, impairment of goodwill or assets, most provisions in the year they are raised rather than paid, share based compensation, and unrealised fair value movements. All of them reduce profit and none of them move cash on the day they are recognised.

In a free cash flow build they get added back, but the reason is narrower than it looks. They are not being declared costless. They are being added back because the cash they relate to moved in a different period, either earlier, as with depreciation on assets already bought, or later, as with a provision that will be paid in three years.

That is why the add back never travels alone. Depreciation comes back and capital expenditure goes out, because the first is the allocation and the second is the payment. A provision comes back and the cash cost is deducted when it is actually settled. Adding back without pairing is where free cash flow gets overstated.

Share based compensation is the case where practice genuinely splits. It is not cash, so most bank models add it back, and it is a real transfer of value from existing shareholders, so adding it back while holding the share count flat is internally inconsistent. Either add it back and grow the diluted share count, or leave it in as a cost. Both are defensible and the mixture is not.