When shares are placed at a price above par value, the excess is not added to share capital but is recorded as a separate equity item. Share capital increases only by the par value of the placed securities.
Economically, share premium reflects investors' willingness to pay more for a stake in the company than its nominal value. For successfully developing companies, this item can significantly exceed share capital over time.
Share premium is not profit from operations: it represents funds contributed by shareholders, not earned by the company. Therefore, it does not affect earnings per share calculations and typically is not a source of dividends.
For investors, this item is useful when reading the balance sheet: it shows the terms on which capital was raised in the past. Comparing past placement prices with the current market price provides insight into how investors' valuation of the company has changed.