Since zero of the main scale coincides with the fifth division of the circular scale,
we have the zero error as
$5 \times \frac{0.05}{50}=0.05\, mm$
The actual measured (see the figure shown here) reading gives
$(2 \times 0.5) mm +\left(25 \times \frac{0.5}{50}\right) mm -0.05 \,mm$
$=(1+0.25-0.05) mm =1.20 \,mm$