All combat damage is applied simultaneously to all targeted ships at this point.  A damaged ship has its operational rating reduced according to the damage it sustains.  As a ship's OR decreases, that ship's guns, engines, and scan ratings all decrease accordingly, and the ship will be able to fire fewer guns, move fewer hexes, and scan fewer sectors until it is repaired.  It is entirely possible for any or all of these ratings to be reduced to zero.  A ship with a zero gun rating is no longer considered a conquering ship.  A ship with a zero move rating is immobile.  A ship with a zero scan rating has only SRS ability and cannot scan beyond the sector it occupies.